Only a third of the world’s population had access to drinking water as at the end of 2015. Nearly half of this population was in sub-Saharan Africa.
This is contrary to the expectations of the UN’s Sustainable Development Goals (SDGs) which envision access to clean water as a right.
This also contributes to waterborne diseases and downward economic pressures from the related opportunity cost of protecting human life.
In Kenya, citizens’ rights to access “adequate quantities” of safe and clean water is enshrined in the Constitution and Vision 2030.
County governments are mandated to take over current water delivery mechanisms under the Fourth Schedule of the Constitution. On September 20, 2016, the Water Act No. 43 was assented to by Parliament repealing the Water Act of 2002 with an effective date of April 21, 2017.
In 2009, the Water Services Regulatory Board (WASREB) reported that only nine of the 55 water service providers delivered reliable supplies.
In addition, 15 of the 25 water service providers (WSPs) were not profitable due to high operating costs.
In 2008, WSPs experienced revenue losses due to illegal connections and leaking water pipes.
In addition, provision of water services is currently plighted by several hurdles. The environment has become degraded mainly due to unpredictable climatic patterns and undue pressure on water sources from increasing demand by the rapidly rising population.
Erratic climatic conditions are now evident in food shortages, power rationing and damage of infrastructure. Exposure of water sources to heavy human activities leads to depletion or reduced volume.
Unhealthy competition among WSPs is a key contributor to this. For instance, there is rising drilling of boreholes despite legal restrictions on extraction.
There should be concerted efforts from both the government and individuals towards protection of water sources and conservation of the environment. This may range from afforestation, reforestation, and soil conservation, among others.
Counties should devote a sizeable budget to enhancing efficient sustainable water resource generation, usage and management. For instance, harvesting rain water and recycling waste water should be a priority to the water security of the nation.
Secondly, most WSPs use ageing or low quality infrastructure for water storage, transmission, treatment and metering leading to huge financial losses from unaccounted-for-usage.
There is need for an overhaul or rehabilitation of the water infrastructure in the country and embrace recent technological developments in the sector such as smart-metering as well as encourage accountability in the management of such infrastructure.
Third, governance challenges. Despite the enactment of the Water Act of 2016, there are conflicting roles in water provision between national government bodies and county governments.
Indeed governors went to court in December 2016 to block implementation of the Water Act of 2016 because they perceived it as taking away most of their power in the provision of water services at the county level.
Activities of various water management bodies need harmonisation, especially in supervising as well as M&E of the performance of the WSPs at the county level. These bodies include WASREB, Water Service Boards (WSBs) and Ministry of Water and Irrigation (MoWI)
Most WSPs do not have adequate governance structures to operate as profitable ventures.
Others lack succession planning policy and collapse soon after the departure of the main staff.
Fourthly, the water sector lacks comprehensive strategies on reducing financial losses arising from insufficient water resources, unaccounted for water (from illegal connections and leakages), fiscal mismanagement and infrastructural inefficiencies.
There are hurdles in arriving at proper utility rates based on market forces, billing and proactive management of loss incidents. Only a few WSPs possess tangible investment strategies despite expectations of stakeholders in getting decent return on the water asset.
Due to reorganisation arising from changes in regulation over recent years as cited above, financial feasibility of some of the water bodies has been affected leaving them without assets.
Besides these challenges, most WSPs’ profit margins are eroded by huge operational costs such as electricity bills, administration, repair and maintenance.
Lastly, there is a gap for “innovative financing” of various key initiatives in the water sector.
Based on market forces of demand and supply, together with technical analysis of the anticipated water requirements, financial engineers can come up with attractive products that can rope in both domestic and international investors in financing feasible water initiatives.
For instance, well managed and sustainable WSPs can issue bonds to raise sizeable capital instead of relying on donors, governments or existing water users.
Hillary Wachinga is Head of Risk & Compliance at Kenya Reinsurance and a PhD Candidate at University of Nairobi.