Influence of Capital Structure on Sustainability of Community Water Projects

Abstract

The purpose of this study was to investigate the influence of capital structure on sustainability of community water projects. The objective of the study was to investigate influence of capital structure (equity financing-community’s contribution; debt financing; grant financing-donor funds; and water tariffs) on sustainability of community water projects. The study adopted a cross-sectional descriptive survey design and data was collected using questionnaires, interview schedules and observation schedules. Both descriptive and inferential statistics were used in analysis. The study established that, there was significant but moderately weak positive relationship between equity financing (community’s contributions) and level of sustainability of community water projects. In addition, there was a weak negative relationship between grant financing and level of sustainability of community water projects. Hence, increase in grants reduces the levels of sustainability of a community water project. None of the projects utilized any debt finance such as loans in their capital structure. Finally, there was a significant moderate positive relationship between water user fee and sustainability of community water projects.  The study recommends that, communities should give more of their own resources while donors should, either reduce or insist on refund for funds donated to improve sustainability of community water projects.

 Keywords: Sustainability, Community Water Projects, Capital Structure.