How efficient are African electricity companies? Evidence from the Southern African countries

Abstract

This paper is a first attempt at documenting efficiency levels in Africa's electricity firms, their evolution and the sources of this evolution. The analysis is based on a sample of 12 operators providing services in the 12 country members of the Southern Africa Power Pool. We focus on the changes in total factor productivity (TFP) of the largest operators in each country between 1998 and 2005. We then rely on a data envelopment analysis (DEA) decomposition to identify the sources of the changes in TFP. The results suggest fairly comparable levels of efficiency in the region and performance levels and evolution quite independent of the degree of vertical integration, the presence of a private actor or the main sources of energy supply. The analysis suggest that although the companies have not made significant improvements during the period of analysis in using their capital and human assets, they have done much better in adopting better technologies and better commercial practices. No clear correlation could be associated with the adoption of reforms during the last decade and data limitations impede a more refined assessment of the impact of reforms on efficiency at this stage.