REPORTS

This report presents the results of the second edition of the Electricity Regulatory Index (ERI) for Africa, covering thirty-four countries. The first edition was published in 2018, covering fifteen countries. The ERI measures the level of development of the regulatory framework for the electricity sector in African countries – rather than the level of development of the electricity sector itself. It is prepared for two main objectives:

• to diagnose and identify key gaps in electricity sector regulations; and
• to help regulators benchmark their own performance and progress against African peers and international best practices.

The ERI is made up of three pillars, or sub-indices.

• The Regulatory Governance Index assesses how well the regulatory framework supports electricity sector reform, promotes efficiency and meets desired economic, financial, environmental and social objectives. It is concerned with the existence and content of electricity regulations.
• The Regulatory Substance Index, assesses how well the regulatory framework is implemented in practice.
• The Regulatory Outcome Index assesses the outcomes of regulatory processes from the point of view of regulated entities and power consumers, providing insights into how the actions of regulators have affected the performance of the sector.

ERI Survey

The information and data used to calculate ERI scores for each participating country were collected through bespoke surveys distributed to their electricity sector regulators, power utility companies, and power consumers or end-users. Given the difficulties of surveying large populations of power consumers, this group has been represented in this study by national chambers of commerce, manufacturers’ associations or equivalent organizations.

The methodology for this year’s ERI has been further developed. Various indicators have been improved and the survey questions broadened to improve the quality of responses and to incorporate the perspectives of end-users. The questionnaire was also further refined to provide more nuanced insights into the effectiveness of electricity sector regulation and to better isolate and identify regulatory gaps.

Findings

Across the thirty-four participating African countries, almost all have established the necessary legislative frameworks for their electricity sectors that either envisage or call for the establishment of independent regulators. However, many countries in the sample nevertheless still fall short on critical aspects of electricity sector legislation and good governance. Most are yet to put in place measures to ensure the independence of their electricity regulators, both from political influence and from the entities that they are required to oversee. Appropriate mechanisms to prevent or mitigate conflicts of interest at the executive levels of electricity sector regulators are also lacking across most of the participating countries.

There are many shortcomings in the implementation of electricity sector regulations. The ERI results demonstrate the need to build up the institutional capacity of regulators so that they can better carry out their mandates. Only five of thirty-four regulators surveyed in this year’s ERI have carried out comprehensive analyses of the commercial quality of service of the utilities they are regulating. This seriously impedes their ability to regulate effectively. Just eight regulators, or 24% of the sample, have developed quality of service regulations that include provisions for monitoring the financial, commercial and technical performance of regulated utilities, as well as their progress on connecting new customers and expanding access. Finally, only twelve regulators independently evaluate customer satisfaction with regulated utilities. The above results demonstrate most of the regulators in the sampled countries lack the tools, information and data to properly oversee the entities they are supposed to regulate.  

ERI results also show that most regulators in the sample are having a limited effect on the performance of their respective electricity sectors, especially from the perspective of consumers/end-users. Billing complaints in twelve of the thirty-four sampled countries take more than ten days to process. Organizations representing consumers/end-users in half of the sampled countries report that it takes more than 30 days to connect consumers in urban areas. These results clearly demonstrate that regulators still have some way to go in promoting and instituting best practice commercial and technical service standards amongst regulated utilities.

Country rankings

We ranked the 34 participating countries into four performance ‘bands’, reflecting how well developed their electricity regulatory frameworks are and how well they align with international best practice.

Across the board, the average ERI score for 2019 is 0.572. This reflects the fact that all the participating countries have instituted or are in the process of implementing frameworks for regulating their respective electricity sectors, but with regulatory outcomes that are lagging behind the legislation due to weaknesses in regulatory processes and capacities. Uganda obtained the highest ERI score in our 2019 sample with a score of 0.748, while Liberia received the lowest score at 0.267.

None of the countries in this year’s ERI were able to achieve an overall score above 0.800, in the green band. This shows the need for more consistent application and implementation of regulations and improved institutional capacity to support sector performance, in order to drive improvements in electricity access and the quality of supply.

Download the ENGLISH and FRENCH versions of the report below: