One of the services that have been poorly provided in the urban areas in Kenya is water and sanitation. There are many reasons, which can be attributed to poor provision of water and sanitation as undertaken by the local authorities in Kenya.

The path to remedy the poor provision of water and sanitation has been charted in privatisation in the form of commercialisation. Commercialisation in Kenya was first implemented on an experimental basis in three urban areas: Nyeri, Eldoret and Nakuru. This involved formation of a publicly owned water company as an agent of the local authority. The companies formed as a result were set up and operated according to the provisions of the Companies Act chapter 486 of the Laws of Kenya. This paper looks at the genesis of privatisation of water services based on the contributions of GTZ, UWASAM and KFW to an experiment in formulating and implementing privatisation in the three urban areas. The outcome of the experiment is then compared to the current on-going exercise of water privatisation by local authorities.

Privatisation of water and sanitation services is expected to solve the problem of poor and inadequate service provision that hitherto characterised urban areas. It would do this by achieving its goals of decentralisation and economic viability. However, the outcome of the experiment indicated that privatisation failed to achieve these two fundamental goals. For that matter, privatisation failed to meet its intended objectives of solving the woes of service provision in urban areas.

A close examination of the current privatisation indicates that the operation has again failed to achieve its fundamental goals of decentralisation and economic viability. The failure of the current exercise in meeting the objectives of ridding the urban areas of water woes can therefore be predicted on this basis.

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