Playing with privatisation – experiences in Kenya’s water sector

As water resources become scarce in several developing countries, many are considering different ways to manage water supplies. Some experts argue that private sector participation will lead to a more efficient and sustainable market-based system of water supply. However, Kenya’s attempts to privatise the water sector demonstrate some difficulties of giving control to private companies.

Supporters of water privatisation argue that it will reduce wastage, which is a common characteristic of public supply. It also helps companies recover costs, enabling them to maintain water infrastructure. Critics argue that there is no evidence that the private sector is better than the public sector at supplying water.

In Kenya, the government started to privatise several public services, including water and electricity. Research from the University of Westminster in the UK assesses whether Kenya’s efforts to privatise its water sector have been successful.

Kenya reformed its water sector through the Water Act in 2002 and the Privatisation Bill in 2004. Under the Water Act, the public Water Services Regulatory Board (WSRB) grants licenses to regional Water Services Boards (WSB) and public agencies, which then contract these licenses to Water Services Providers (WSP).

However, these changes to the water sector created many complications. The author notes that:

• Only WSBs can apply for a license from the WSRB, which means the process of application is unnecessary.
• The state has designated public WSPs, which are given contracts to provide water in preference to private companies. Therefore, bidding for contracts does not take place.
• The WSBs pay license fees to the WSRB, but this is just a transfer of funds from one public sector organisation to another, and does not enable private companies to get involved.

This ‘new’ water sector is similar to the old system. The new structure is still dominated by unaccountable public organisations, which do not promote good governance or more efficient use of water. Privatisation in Kenya’s water sector has been disorganised, creating a situation in which public institutions trade amongst themselves but describe this as a ‘commercial’ system. Far from allowing the private sector to create market competition for water provision, the Water Act does not allow private companies to participate.

The authors recommend that the government:

• shows it is serious about privatisation by enforcing the Privatisation Bill. This will require all public sector authorities to fulfil the objectives of the Bill, which aims at managing resources for national benefit.
• take the opportunity to improve water supply by using the money, skills and knowledge available in the private sector.
• consider potential public opposition to privatisation and use a combination of public and private authorities. This approach is best suited to developing African nations.

Source(s):
‘Privatisation Model for Water Enterprise in Kenya’, Water Policy No.8, pages 539-557, by O. A. K’Akumu, 2006 (PDF) Full document.
‘Good Intentions, Structural Pitfalls: Early Lessons from Urban Water Commercialisation Attempts in Kenya’, CDR Working Paper 02.2, Centre for Development Research; Copenhagen Joseph Onjala, 2002 (PDF) Full document.

id21 Research Highlight: 15 February 2007

Further Information:
O. A. K’Akumu
School of Architecture and the Built Environment
University of Westminster
35 Marylebone Road
London, NW1 5LS
UK

Tel: +44 (0) 207 911 5000 or +44 (0) 7881 495654
Fax: +44 (0) 207 911 5171
Contact the contributor: owiti.kakumu@yahoo.com

University of Westminster, UK

Other related links:
Ministry of Water and Irrigation, Government of Kenya

'Success for water cooperative in Bolivia'

'Have developing countries benefited from privatisation?'

'Will water privatisation deliver the services?'

See id21's links for water