Abstract:
Over the last 200 years, most water
utilities have been publicly owned and
managed. For this reason, public utility
firms have been getting financial support
from the government in form of subsidies
in addition to the revenue they generate
internally. However these water utilities
have not been able to generate sufficient
internal revenue to ensure sustainable
financial investments. There has been low
level of investment in the sector especially
in peri-urban markets mainly due to poor
cost recovery. The study explored
moderating effect of government
regulations on the relationship between
cost recovery and financing of water
investments in Kenya. The study adopted
descriptive survey research design. A two
stage sampling technique was used to
obtain a sample population of 150 small
scale water service providers. The study
utilized self-administered questionnaire
and content analysis for collecting data.
SEM was used to analyse the relationship
between cost recovery and financing of
water investments.The findings of the
study indicated that factors inhibiting cost
recovery includes poor water pricing, low
users’ charge and externalities. The
recommended remedies to cost recovery
includes cross-subsidization, gradual
increase of user fees, and service
improvement. The results of the study will
be of great importance as it will contribute
to greater understanding of various factors
that inhibits cost recovery among water
utilities and how these factors can be
improved.
