Revenue Collection Strategies and Financial Sustainability of Water Services Providers in Kenya: A Case Study of Malindi Water and Sewerage Company Limited
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Date
2024-10
Authors
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Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Malindi Water and Sewerage Company can contribute overwhelming to the growth of the economy if efficiently managed. However, it has failed to collect revenue from 18% of its customers, with revenue collection efficiency being 76% of the budget, non-cost recovery tariff and high non-revenue water losses at 28%. Generally, Malindi Water and Sewerage Company, has been performing poorly over the last two years based on financial sustainability, ranking at position 17 down from position one out of 88 regulated Water Services Providers in the country with a score of 113. The 2purpose 2of 2this 2study 2was 2to 2examine 2the 2effect 2of 2revenue 2collection 2strategies 2on 2the 2financial 2sustainability 2of 2Malindi 2Water 2and 2Sewerage 2Company 2Limited. 2The 2study 2was 2anchored 2on 2the 2following 2specific 2objectives: 2To 2examine 2the 2effect 2of 2revenue 2generation, 2financial 2planning, 2revenue 2diversification, 2and 2internal 2control 2on 2the 2financial 2sustainability 2of 2Malindi 2Water 2and 2Sewerage 2Company 2Limited. 2To 2underpin 2the 2study 2findings, 2the 2study 2relied 2on 2resource 2dependence 2theory, 2agency 2theory, 2modern 2portfolio 2and 2stewardship 2theory. 2Case 2study 2research 2design 2was 2adopted 2in 2this 2study. 2The 2study 2targeted 2126 2company 2employees 2out 2of 2which 2a 2sample 2size 2of 296 2will 2be 2drawn. 2The 2study 2used 2structured 2questionnaires 2to 2collect 2data 2from 2the 2employees. 2Further, 2a 2pilot 2study 2was 2conducted 2at 2Kilifi 2Mariakani 2Water 2and 2Sewerage 2Company 2to 2determine 2validity 2through 2Kaiser 2Meyer 2Olkin 2and 2Bartlett 2Test 2and 2reliability 2through 2Cronbach 2Alpha 2of 2the 2research 2instrument. 2The 2data 2was 2analysed 2using 2Statistical 2Package 2for 2the 2Social 2Sciences 2version 226, 2which 2applied 2both 2descriptive 2and 2inferential 2statistical 2approaches. 2Prior 2to 2performing 2inferential 2analysis, 2it 2was 2necessary 2to 2undertake 2diagnostic 2tests. 2Revenue 2generation 2strategies 2have 2a 2significant, 2albeit 2weak, 2positive 2effect 2on 2financial 2sustainability (r = .232, p = .033; regression coefficient β = .239, p < .001), the descriptive statistics suggest a general consensus on the importance of these strategies in Malindi water and Sewerage Company’s operations. Financial planning is positively correlated with financial sustainability, though the impact is relatively weak (r = .215, p = .048; β = .263, p = .005). The agreement on various aspects of financial planning underscores its role in enhancing financial sustainability. Revenue diversification shows a more substantial positive correlation with financial sustainability (r = .284, p = .008; β = .372, p < .001), highlighting its effectiveness in improving the company’s financial health. Despite a positive but not statistically significant correlation with financial sustainability in correlation analysis (r = .173, p = .113), regression analysis suggests that internal control has a significant impact (β = .244, p = .002). This implies that effective internal control contributes positively to the financial sustainability of the company. The research aimed to evaluate the impact of various revenue collection strategies- revenue generation, financial planning, revenue diversification, and internal control - on the financial sustainability of Malindi water and Sewerage Company. The findings from both descriptive and inferential statistical analyses offer a comprehensive understanding of how these factors interact and contribute to the overall financial health of the company. The strong agreement among participants on these aspects, combined with the moderate to substantial correlation and regression coefficients, points to the critical role of revenue diversification in securing Malindi water and Sewerage Company’s financial future. The recommendations are grounded in the understanding that a multifaceted approach is crucial for the long-term financial health and stability of the organization. It is imperative for Malindi water and Sewerage Company to prioritize revenue diversification. The study clearly indicates that revenue diversification has the most substantial impact on financial sustainability.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Award of Degree in Master of Business Administration (Finance) of Kenyatta University.
Supervisor
Kaplelach Samson