Improving customer repayments practices for water and sewer services in Kenyan informal settlements

2.5 billion people in the developing world have no access to improved sanitation, and over a billion of them still practice open defecation.  Rapid urbanisation has resulted in an increase of 183 million urban residents without access to improved sanitation. The inability of the utilities to deliver adequate sanitation services has disproportionately hurt poor urban residents, especially those living in informal settlements in urban areas.

This study will investigate the demand for household connection to municipal sewage systems in informal slums in Nairobi Kenya. Governments are investing in expensive sewerage systems to bring sanitation services to the household door. The cost-effectiveness of these investments depends on the number of households that connect the sanitation systems. However, there are large fixed costs to connect to sewage systems including the utility investment in household sanitation facilities and pipes to connect the house to the network. Given these high costs, it is unclear to what degree low income slum households will benefit from this investment.

A randomised control trial will be employed to estimate price elasticity of the demand for connections and the extent to which price elasticities depend on information about the relationship between sanitation and health. Partnering with Nairobi Water and the Water and Sanitation Program of the World Bank, two cross-cutting interventions in Soweto, Kayole, will be implemented: a targeted hygiene campaign and varying subsidy levels designed to promote the take-up of household connections to the sewage system. The study will also continue to track compounds connected to the sewer system with the objective of testing approaches to learn how to increase customer repayment of water and sewer services and loans

The overall objective of this research is to study the demand for sanitation in informal urban slums and subsequent sewer loan/service repayment behaviour. The lessons from this evaluation will inform the Government of Kenya on how to successfully scale up the delivery of sanitation services. Other developing countries will also benefit from understanding the main factors that constrain sanitation demand and repayment behaviour, and thus may replicate the approach to effectively increase sanitation coverage among the urban poor and how to effectively and sustainably upgrade slum areas. The results from this study are expected to inform pricing, subsidy, enforcement and information campaign policies aimed at cost-effectively maximising connections to sewage systems and improving the living of poor residents.