Electricity Sector Reforms, Private Sector Participation and Electricity Sector Performance in Sub-Saharan Africa

Abstract

This chapter explores the impacts of the widespread electricity sector reforms in Sub-Saharan Africa (SSA). It carries out robust econometric analyses to ascertain the impacts of private sector participation (PSP), which is the most important and the most universally implemented tenet of the electricity sector reforms, on electricity sector performance in the region. To achieve this, the chapter used timeseries datasets covering the time period of 1990–2019, from 33 SSA countries where the reforms have been implemented. The findings of the study generally show positive and significant effects of PSP on the performance and efficiency of the electricity industry in SSA, albeit with small nominal impacts. The reasons for this non-optimal outcome were identified to be associated with weak institutional frameworks across the electricity sectors of the analyzed countries, which is manifest in the non-existence of truly independent electricity regulatory agencies and the hampered competition among players in the electricity markets. Following these findings, the study, informed by a review of related literature on the subject matter, suggests the implementation of more tailored reform alternatives that suit existing political, social, and institutional characteristics and conditions in SSA. More practically, it recommends the institution of hybrid electricity markets and complementary regulatory measures as reform process alternatives for improving reform outcomes in the region.