Kenya is under immense pressure from the World Bank to increase conservative levies and regulatory charges for water companies.
This would lead to an increase in water bills for consumers who access water from several government entities such as the Nairobi City Water and Sewerage Company (NCWSC) due to cost-push inflation.
Cost-push inflation occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials. Consumers will shoulder the burden as water service providers pass the extra costs to homes, offices and businesses.
The World Bank listed the demand as part of its regulations in awarding Kenya a Ksh80 billion loan. The facility wants Kenyan water service providers to cover 70 percent of the Water Resource Authority’s (WRA) budget up from 30 percent.
"To enhance access to water and sanitation services, and improve the management and conservation of water resources… implements new water abstraction charges and water conservation levies.
"The current water abstraction charges do not provide adequate economic incentives for water conservation, nor generate enough financial resources to enable WRA to perform its regulatory functions," World Bank stated.
Consumers currently pay approximately Ksh93 per cubic metre or 1,000 litres for government water. In Nairobi, the Nairobi Metropolitan Service has drilled boreholes and offers free water in a number of estates.
The number of private developers and landlords drilling their own boreholes has also increased.
World Bank terms come at a time when Kenyans have been subjected to new taxes in airtime, loans and liquefied petroleum gas (LPG).
Kenya is also under pressure from the International Monetary Fund (IMF) to cut its ballooning wage bill, retrench civil servants and reveal the identity of secret investors who benefit from government tenders. The IMF offered Kenya a Ksh255 billion loan dispatched in four quarters.
“It is good that the government is constructing roads and infrastructure, but this is coming at a cost for taxpayers who would repay through taxes and tolls on certain roads.
"The budget allocated to development is highly inflated. With the elections coming in 2022, Kenyans should brace for a tough time,” Nicholas Gachara - Somakazi CEO and a financial expert warned.
