EFFICIENCY OF THE ELECTRICITY SECTOR IN EAST AFRICA AND ITS DETERMINANTS

The paper aims to benchmark the performance of the electricity sector in East Africa, in terms of access to electricity and service quality. It estimates and compares the technical efficiency scores (TES) of six countries over ten years, using Data Envelopment Analysis with two outputs and three inputs. It also investigates the effect of environmental variables using the Tobit regression method. To evaluate the complex regional electricity sector regarding the main missions, such as power plants, transmission, and distribution systems, data are aggregated at the country level, where each country is considered as a Decision-Making Unit. Furthermore, the electricity sector is benchmarked using three models: generation, transmission, and a consolidated model for distribution. The Kruskal-Wallis rank test is used to test the difference of the TES within the three models. The results show that there is no significant difference between the TES obtained from the three models. TES is higher than 90% in two countries for the three models, and below 80% in three countries for the generation model. Countries with high TES are those with a high trend in customers and electricity access. TES increases with the quality of service in terms of loss reduction, and with the electricity consumption per capita. Countries that improved the high performance are those with the high trend in customers and loss reduction. The study recommends increasing the quality of service through electricity loss reduction, and access to electricity by increasing the consumption per capita. This study contributes to the existing literature by benchmarking the electricity sector in East Africa. It addresses the complex structure of the electricity companies in East Africa, by estimating the performance of each activity.