AfDB launches first Electricity Regulation Index

In new report, Uganda and Namibia rank highest for electricity frameworks.

Uganda and Namibia have the best regulatory frameworks in the power sector, while Lesotho, Zimbabwe and Gambia have ranked the lowest out of 15 countries studied by the African Development Bank in its first Electricity Regulatory Index for Africa.

The report, released for the first time this year, looks at the both the development of regulatory frameworks and the impact of regulatory frameworks on the performance of the electricity sectors. The report notes key challenges, areas of improvement, funding processes, technical analysis and strategy. The countries studied in this edition of the report were Cameroon, CÔte d’Ivoire, Gambia, Ghana, Kenya, Lesotho, Malawi, Nigeria, Senegal, South Africa, Tanzania, Togo, Uganda, Zambia and Zimbabwe.

“African governments, with the support of development partners, including the African Development Bank, have made material progress in recent years in reforming and building capacity among policymakers and regulators in their respective electricity sectors,” said Amadou Hott, Vice President of the bank, in the report. “Although the establishment of electricity sector regulators in Africa has been associated with numerous challenges, progress has nevertheless been made. Over the last decade, over thirty African countries have established electricity sector regulators. Private sector participation and improvements in overall sector performance, however, are only likely to happen once electricity sector regulation is enhanced to facilitate additional necessary reforms.”

In efforts to improve the power sector, the index will be a means to identify the challenges, developmental areas, legal, policy and regulatory frameworks within power sectors of African countries.

“Although many sample countries had established the legal and institutional frameworks for electricity sector regulation, regulators are yet to build an adequate level of capacity and develop appropriate mechanisms to effectively carry out their mandates and make decisions under key aspects of regulatory substance,” the report states.

Initially, the AfDB sent surveys to 25 regulatory institutions and utilities in Africa, but only 15 countries answered the survey and participated in the study.

“The main goal with the ERI is to incite key stakeholders in the African power sector to address regulatory performance and the gaps identified in the study,” said Vice President of Power, Energy Climate and Green Growth Complext, Amadou Hott at the African Development Bank.

In compiling this comparative study, the AfDB hopes the assessment will promote further private sector participation to improve performance and national regulatory environments.

The regulatory system has a key role in attracting private investment into the energy and power sectors; and security, transparency and good governance are crucial in further developing the sector. The implementation of sound regulatory systems across the continent will ensure that Africa is equipped to build investor confidence in its environment and allow financial institutions to mobilize the financing needed to deliver universal electricity access.