EFFECT OF PRIVATIZATION ON FINANCIAL PERFORMANCE OF WATER UTILITIES IN KENYA: A CASE OF WATER COMPANIES UNDER COAST WATER SERVICE BOARD.
DOI:
https://doi.org/10.47604/ijfa.246Keywords:
private sector participation, delegated management, leasing contracts, corporatization, financial performanceAbstract
Purpose: This study therefore sought to evaluate the effects of privatization on financial performance of water utilities in line with water sector reforms objectives aimed at improving performance in the sector in Kenya in order to fulfill the global and national goals. The target population of the study was all seven water utilities registered as public limited companies commonly referred to as water service providers (WSPs) that operate under Coast Water Service Board (CWSB) in coast region.
Methodology:The study used a census approach hence, included the whole population. Secondary data was used in the study for analysis using the Statistical package for Social Sciences (SPSS) to generate descriptive statistics, trend analysis and inferential statistics.
Results: Descriptive results indicate that private sector management is an efficient means of privatization which some water companies in Coast County adopt. Delegated management a method of privatization is most used by most Water Service companies as it improves efficiency in operations, productivity and service delivery. Leasing contracts are considered expensive means of privatization; however, it is equally a performance efficient means of privatization. Corporatization on the other hand promotes efficiency and service delivery. Regression results show a positive and significant relationship between private sector participation, delegated management, leasing contracts and corporatization. ANOVA statistics indicate that the overall model was significant. Pearsons’ bivariate correlations show that all the variables had strong and positive correlation, private sector participation (0.893), delegated management (0.151), leasing contracts (0.441)and corporatization (0.536)respectively.
Unique contribution to theory, practice and policy: These results imply that privatization positively affects the overall performance of a company. Through privatization companies are able to positively affect their service delivery, production levels, profitability and increase investment through stock trading.
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