Electricity Sector Performance in East Africa: A Total Factor Productivity Change Approach.

The total factor productivity change (TFPC) and its components has been studied, particularly through entities that use several inputs to produce several outputs. In the electricity sector, the performance improvement can be analyzed in each component such as generation, transmission or distribution. However, few studies compare performance at the industry level. This study analyses the TFPC in the East African electricity sector and its determinants. Using the Malmquist Productivity Index, the study is based on a dataset collected in Burundi, Ethiopia, Kenya, Rwanda, Tanzania and Uganda for the period 2008 to 2017. The dataset comprises three inputs and two outputs. The descriptive analysis shows a higher trend in installed capacity, high voltage transmission lines and electricity delivered for Ethiopia. In addition, the trend in the number of customers is increasing in Rwanda and Kenya, indicating a high growth in access to electricity relative to the other countries. Uganda, on the other hand, performs much better in terms of minimizing electricity losses. Partial factor productivity measured in terms of customers is higher for Rwanda, while that in terms of electricity delivered is higher for Kenya. The comparison of TFPC over time shows on average four countries that have improved their performance, namely Rwanda, Uganda, Kenya and Tanzania, the latter being linked to both efficiency and technology change. However, a decline in performance is observed for Burundi and Ethiopia. Countries that have improved their performance are those that have attracted the private sector into the generation and/or distribution sectors. For Burundi and Ethiopia, both countries have been unable to catch up the efficiency frontier despite their improved technology. Increasing private sector participation in any segment of the electricity sector would improve performance.