Productive Efficiency of Water Utilities in Kenya in the Millennium Development Goals Era: Implications on Operations and Service Delivery
AbstractThe policy framework in Kenya requires water utilities to operate efficiently. This study investigates productive efficiency of the utilities using cross-sectional data from Water service Regulatory board between 2011 and 2015. Productive efficiency focuses on optimal utilization of resources and capacity. The study establishes an overall productive efficiency of 66 percent, which is a product of technical efficiency (75 percent) and scale efficiency (89 percent). The standard deviation on technical efficiency, scale efficiency and overall efficiency were 20 percent, 14 percent and 21 percent respectively. The wide standard deviations indicate significant disparity in efficiency across the utilities which may be indicative of inadequate information sharing, limited peer-learning and skewed capacity building mechanism. Higher efficiency is associated with large size, rural environment, higher O+M coverage, higher production per capita, higher staff productivity, higher revenue efficiency, higher metering ratio and higher connections density. Data Envelopment Analysis was used to estimate efficiency scores while probability and correlations analysis were used to investigate factors association with efficiency differentials. Other recommendations are; scaling up of the water utilities to reap economies of scale, review of optimum staffing requirement, building capacity among rural water utilities on productive efficiency, focusing on both functionality of meters and metering ratio.
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