RISK MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF DONOR-FUNDED WATER, SANITATION AND HYGIENE PROJECTS IN SAMBURU COUNTY, KENYA
Malkilina Nyandieka - MBA Candidate (Project Management and Finance), Department of Commerce, School of Business and Economics, Daystar University, Kenya
Charles Katua Kithandi, MBA, MSc, CPA(K) - Lecturer, Department of Commerce, School of Business and Economics, Daystar University, Kenya
Dr. Patricia Chemutai, PhD - Lecturer, Department of Commerce, School of Business and Economics, Daystar University, Kenya
ABSTRACT
Donor-funded Water, Sanitation and Hygiene (WASH) projects are central to improving access to safe water and sanitation in Kenya's arid and semi-arid counties, yet donor-funded projects continue to experience budget overruns, delayed implementation, weak fund absorption, procurement irregularities and accountability concerns. This study examined the effect of risk identification, risk assessment, risk mitigation and risk monitoring on the financial performance of donor-funded WASH projects in Samburu County, Kenya, and the moderating effect of donor regulation on this relationship. The study was anchored on Risk Management Theory and supported by Agency Theory and Institutional Theory. A positivist philosophy and descriptive and explanatory research designs were adopted. A census of 156 project managers, finance officers, procurement officers, monitoring and evaluation officers and field coordinators in 20 donor-funded WASH projects was undertaken, and 120 usable questionnaires were returned, a response rate of 77%. The instrument was pretested on 16 staff of WASH projects in Isiolo County and showed acceptable validity and reliability (KMO = 0.845; α = 0.81 to 0.92). Data were analyzed using descriptive statistics, Pearson correlation, simple linear regression and hierarchical moderated regression in SPSS Version 29. Risk identification (β = 0.447), risk assessment (β = 0.574), risk mitigation (β = 0.535) and risk monitoring (β = 0.525) each had a positive and significant effect on financial performance (p < .001), and together, as a composite index, explained 41.5% of its variance (β = 0.644, p < .001). Adding donor regulation increased the explained variance to 48.9%, and the interaction between risk management practices and donor regulation was negative and significant (B = −0.093, p < .001), raising the explained variance to 54.3%. All six null hypotheses were rejected. The study concludes that risk management practices improve the financial performance of donor-funded WASH projects, while increasingly stringent donor requirements weaken this contribution. It recommends integrated risk management throughout the project lifecycle and proportionate, risk-based donor oversight.