Neither public utilities nor small-scale private service providers are serving urban Kenyans well. Water use levels are low, prices are high and service is dismal for both poor and non-poor households. The findings challenge current prescriptions, especially the belief that ‘correct’ (i.e. high) prices and competition can automatically and dramatically improve service delivery.

Using an in-depth survey of 675 households in three urban centres in Kenya, a paper published in 'Urban Studies' investigates the extent and nature of the urban water problem and possible solutions. The survey, conducted in Nairobi, Mombasa and Kakamega, examined water use, prices, sources and service preferences of both poor and non-poor households. It reveals that:

• Although half of the sampled households are connected to the public utility, they have to supplement irregular water supply with purchases from small-scale private service providers such as kiosks, tankers, vendors.
• Only five percent of those connected to the public utility are poor; hence poor people have no option but to rely on small-scale private providers.
• Given their (forced) reliance on private providers, both poor and non-poor households pay very high prices – the median price is US$ 2.1 per cubic metre.
• All households consume little water – median water use is 30 litres per capita per day (lcd) and the average is 40 lcd.
• Kiosks receive water from the public utility at a subsidised price of US$ 0.15 per cubic meter but charge their customers, on average, 18 times that price. This subsidy mechanism has therefore not had the desired result of reducing prices for customers.
• Overall, neither public utilities nor private providers deliver a desirable water service and the majority of households rate ‘improvement in water supply’ as their top development priority.

The study shows that although public utilities charge tariffs at cost-recovery level they deliver poor service. Further, although there is a well-established private market for water with many competing suppliers, prices remain high. This indicates that the market is not functioning well either.

Consumers in Nairobi, Mombasa and Kakamega are informed and rational decision makers who treat water as an economic good. Price and quantity determine whether they will switch from their current water source, not socioeconomic variables such as education and gender, as previous research suggests.

These findings directly challenge the notion that higher prices and competition can provide sufficient incentives for water providers – public or private – to improve service delivery. The Kenyan case also indicates the limitations of an increasingly common prescription – that utilities should move from a low-price, low-quality service for everyone to a high-price, high-quality service for those willing to pay.

In Kenya, effective reform that will help people get water at affordable prices is urgently needed. The Kenyan government has already embarked on a major programme.

For Kenyan policymakers engaged in that task, this study emphasises that:

• In expanding and sustaining access to affordable water services for people in Kenya, the key challenges are political and institutional (rather than economic or financial).
• Strong and sustained political will is required to implement changes in the framework within which water utilities function. Equally important is the need to inform the public and build popular support for water sector reforms.
• The focus must be on providing strong incentives for utilities to improve performance and especially for reaching un-served poor people.
• Poor incentives, embedded in the weak institutional and governance framework, are the key reason why, for instance, service is declining and utilities are losing money even though cost recovery at current tariff rates is possible.
• There are limitations to using tariffs as a targeting tool. Current targeting approaches, including subsidies to kiosks, should be re-evaluated and improved to ensure that they actually benefit poor people.
• The efficiency and cost-effectiveness of small-scale service providers, such as kiosks and tankers, need to be improved through better incentives and appropriate regulations.

Source(s):
‘Universal (Non)Service?: Water Markets, Household Demand and the Poor in Urban Kenya’, Urban Studies, Vol. 42, No. 8, 1247-1274, July 2005, by Sumila Gulyani, Debabrata Talukdar, and R. Mukami Kariuki.

Funded by: World Bank

id21 Research Highlight: 17 August 2005

Further Information:
Sumila Gulyani
Infrastructure and Poverty Action Lab (I-PAL)
1172 Amsterdam Avenue
Columbia University, NY 10027
USA

Tel: +1 212 854 8235
Contact the contributor: sumila.gulyani@columbia.edu

Columbia University, USA

Debabrata Talukdar
School of Management
State University of New York at Buffalo
Buffalo, NY 14260
USA

Tel: +1 716 645 4243
Contact the contributor: dtalukda@buffalo.edu

State University of New York at Buffalo, USA

R. Mukami Kariuki
Water and Sanitation Unit (EWDWS)
World Bank
1818 H Street, N.W.
Washington, DC 20433
USA

Tel: +1 202 473 2468
Contact the contributor: rkariuki@worldbank.org

World Bank

Other related links:
Water for the Urban Poor: Water Markets, Household Demand, and Service Preferences in Kenya

'Boosting water and sanitation services in Ecuador'

'Can water and sanitation services reach low-income communities? Lessons from Africa'

'Communities can create their own water supply and sanitation'

'Can pro-poor water and sanitation tariffs deliver water for all?'

'Can local governments generate enough revenue to deliver services?'