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AfDB: The level of regulation of the African electricity sector is still low

13/11/2020
Source : Agence Ecofin
Categories: Economy/Forex

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The level of regulation of the African electricity sector is still low with a below-average performance according to an AfDB study . This is due to the lack of effectiveness of regulatory standards and institutions, due to lack of means, independence and predictability.

The  African Development Bank has just published the 3rd edition of the "African Electricity Sector Regulatory Index" (ERI). This study assessed the national electricity regulations of 36 countries based on the regulatory frameworks put in place (RGI), the exercise by the regulator of its attributions (RSI) and the effectiveness of the standards and institutions put in place (ROI).

According to the data collected, the average level of regulation of the electricity sector in Africa is low with an index of 0.486 out of a total of 1. This is mainly due to the low efficiency of the institutions set up which recorded a score of 0.393 against 0.688 for the implementation of the regulatory framework, and 0.545 for the activity of regulators.

the countries with the best performances were Uganda (0.801), Namibia (0.655) and Kenya (0.633). At the bottom of the pack are Chad (0.238) tied with the DRC and Gabon (0.250).

Countries such as Angola, Ethiopia, Niger and Zimbabwe moved up the rankings by gaining 24, 10, 9 and 15 places respectively. Rwanda and Senegal, on the other hand, fell by 6 and 4 places respectively due to the weakening of the effectiveness of their regulatory frameworks.

In general, only 22% of the countries evaluated have an ROI above 0.500.

To improve this performance, the AfDB recommends greater independence of regulators from governments, regulated sector actors, as well as the provision of financial autonomy to these institutions. In addition, the accountability mechanism for regulators needs to be improved and methods of changing electricity tariffs need to be more predictable.

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