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Electricity Sector Reform Performance in Sub-Saharan Africa: A Parametric Distance Function Approach

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  • Adwoa Asantewaa

    (World Bank Group, 1818 H Street NW, Washington, DC 20433, USA
    Business School, Durham University, Mill Hill Lane, Durham DH1 3LB, UK)

  • Tooraj Jamasb

    (Copenhagen School of Energy Infrastructure (CSEI), Department of Economics, Copenhagen Business School, Porcelænshaven 16A, 2000 Frederiksberg, Denmark)

  • Manuel Llorca

    (Copenhagen School of Energy Infrastructure (CSEI), Department of Economics, Copenhagen Business School, Porcelænshaven 16A, 2000 Frederiksberg, Denmark)

Abstract

Electricity sector reforms have transformed the structure and organization of the sector worldwide. While outcomes of reforms in developed and developing countries have been extensively examined, there is limited analysis of the reforms in sub-Saharan Africa (SSA). This paper analyses the performance of electricity sector reforms in 37 SSA countries between 2000 and 2017. We use a stochastic frontier analysis approach to estimate a multi-input multi-output distance function to assess the impact of reform steps and institutional features on indicators of investment and technical efficiency. Results indicate a positive correlation between reforms and installed generation capacity per capita, plant load factor, and technical network losses. The presence of an electricity law, sector regulator, vertical unbundling, and private participation in the management of assets were positively correlated with reform performance. Perceptions of non-violent institutional features such as corruption, regulatory quality and governance effectiveness do not seem to have had a significant effect, but perceptions of political stability, violence, and terrorism influenced reform outcomes. We conclude that a workable reform in SSA involves vertical unbundling with an electricity law, a regulator, and private ownership and management of assets where feasible. However, positive outcomes go hand in hand with higher technical network energy losses which indicates higher investment in the generation segment than in the network segment. Hence, emphasis should be placed on decoupling the energy losses from power generation.

Suggested Citation

  • Adwoa Asantewaa & Tooraj Jamasb & Manuel Llorca, 2022. "Electricity Sector Reform Performance in Sub-Saharan Africa: A Parametric Distance Function Approach," Energies, MDPI, vol. 15(6), pages 1-29, March.
  • Handle: RePEc:gam:jeners:v:15:y:2022:i:6:p:2047-:d:768764
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    More about this item

    Keywords

    electricity sector reform; sub-Saharan Africa; institutions; stochastic frontier analysis; distance function;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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