The Effect of Working Capital Management on the Performance of Water Service Providers in Kenya

Abstract

The research aims to study the effect of working capital management on the performance of Water Service Providers (WSPs) in Kenya. Poor performance and inability to meet short term obligations has led WSPs to make untimely payments to equipment suppliers. This affects their overall objective and mandate which is to effective supply of water and sanitation services to their consumers. The objective of the study was therefore to investigate the effect of working capital management on the performance of WSPs in Kenya. The study adopted an explanatory research design and a population of 65 Urban WSPs in Kenya. The study conducted a census on all the 65 WSPs and used secondary data spanning a 5 year period (2010 to 2014) from the Water Service Regulatory Board (WASREB) and Kenya National Audit Office (KENAO) reports. Based on the results the study therefore recommends that urban WSPs in Kenya should apply effective working capital management strategies to reduce account receivable days translating to more investments for efficient service delivery; effective liquidity management strategies to reduce current liabilities translating to more allocation of cash for operational and maintenance and finally effective payable management strategies that will increase ROA and effectively improved performance