Scandinavian Working Papers in Economics
Working Papers,
Copenhagen Business School, Department of Economics
No 5-2020: Political Economy of Reform and Regulation in the Electricity Sector of Sub-Saharan Africa
Mahmud I. Imam, Tooraj Jamasb () and Manuel Llorca ()
Additional contact information
Mahmud I. Imam: Durham University Business School, Durham University, UK
Tooraj Jamasb: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark
Manuel Llorca: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark
Abstract: As part of electricity sector reforms, Sub-Saharan African countries have established independent regulatory agencies to signal legal and political commitment to end selfregulation and provision of service by the state. The reforms aimed to encourage private investments, improve efficiency, and extend the service to the millions who lacked the service. However, after nearly two and half decades of reforms, these expectations have not been met and the electricity sectors of these countries remain undeveloped. There are anecdotes that these outcomes are due to poor design, non-credible, unpredictable regulations, and political interference. This paper studies the performance of the reforms in the context of government political ideology. We use a dynamic panel estimator and data from 45 Sub-Saharan African countries to investigate ideological differences in the effect of independent sector regulation on access to electricity and installed capacity. We find negative impact from independent regulation on installed capacity in countries with leftwing governments while we find a positive effect in countries with right-wing governments. Moreover, we find negative impact on electricity access in countries with left-wing governments. These results have interesting policy implications for attracting private sector participation to increase generation capacity and access rates especially in countries with left-wing governments.
Keywords: independent regulation; electricity sector reform; government ideology; dynamic GMM; Sub-Saharan Africa
JEL-codes: D73; L51; L94; O55; P16; Q48
35 pages, February 1, 2020
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