Performance of Water Utilities in Africa

A data envelopment analysis (DEA) showed that although there are some relatively efficient utilities in Africa, they make up a small minority of utilities. The majority of utilities register an efficiency of 0.30 (which is far below the highest score of 1), showing significant options for improvement. As the fixed cost component in water (and wastewater) service provision is very large, the design (but also environmental, water quality, public health, and other) standards under which water infrastructure is constructed will determine the cost of the services for decades to come. Hence, it is important to undertake a proper least-cost analysis when investment decisions are made to ensure that the benefits and costs of such investments are properly analyzed because the financial, organizational, and social implications of such investment decisions will be felt for many decades. DEA tests also show that governance may be a significant driver of water utility performance in Africa and that attention to improving governance may be key to improving performance in water utilities.