Managing urban water services through segmentation, service and price differentiation: findings from sub-Saharan Africa

Water is life and its provision is vital not only for purposes of sustaining life but alsofor convenience, health, sanitation and economic well being. The United Nationsestimates that over one billion people living in developing countries lack access tosafe water, with a substantialp roportion of thesel iving in Africa. As a consequenceo furbanisation and rapid growth of cities, urban water utilities in developing countriesface an enormous challenge in meeting the water requirements of urban dwellers. Thechallenge is even greater when the prevailing poverty, high levels of debt anddeclining funding (in form of official developmenta ssistance)a re taken into account.In particular, Sub-Saharan Africa is facing low levels of water services and watersupply coverage.Under thesec ircumstancesa, key objective for water utilities in Sub-SaharanA frica isto provide services to the growing urban population, including the poor, in afinancially sustainable manner. To achieve this objective, utility managers needinnovative methods of financing and managing urban water services. A systematicapproach consisting of market segmentation, service and price differentiation isproposed as a suitable method of managing urban water services in Sub-SaharanAfrica. This approach is the subject under investigation in the research, which isreported in this thesis.Using primarily the case study research methodology but also incorporating surveys,interviews and f6cus group discussions within the case study, research was carried outto investigate the use of a systematic approach consisting of segmentation, service andprice differentiation for managing urban water services in the context of Sub-SaharanAfrica. The detailed field research was carried out in Kenya and South Africa, andtwo case studies were prepared.Among the key findings was that this approach offers a framework for water utilitiesto structure their service delivery with appropriate pricing and serve more customers(including people living in informal settlements) at affordable cost, while achievingfinancial sustainability. The finding leads to the conclusion that segmentation, serviceand price differentiation is a suitable methodology that utilities can use to improveurban water servicesi n Sub-SaharanA frica.