Improving the Water Services and Utilities Cost Efficiency in Sub-Saharan Africa

Very few studies have examined the cost efficiency of Sub-Saharan Africa (SSA) water utilities from a large spatiotemporal perspective. This paper fills this gap by providing a new analysis of the cost efficiency of public water utilities in SSA using Stochastic Frontier Analysis. This analysis is necessary to understand the economic conditions of water utilities in SSA, track utilities cost efficiency when comparing them with other benchmarked utilities with similar attributes, find the areas that need to be improved, and identify and propose appropriate policies and guidelines that could help these utilities. We found that the average efficiency score in our utility sample was approximately 79%, and the bottom 25 percentile was 65% or less. The levels of customer service and cost recovery ratios have not been optimal. SSA utilities still have considerable potential for cost savings from increasing output (water production or population served), but these cost savings will be much smaller when utilities have high levels of non-revenue water and high-density connections per kilometer of network. Moreover, these utilities must first increase the number of connections per kilometer of network and network length before increasing water production. Such an investment strategy could diminish the burden on existing infrastructure, with too many households per connection.