A Review of Impacts of Electricity Tariff Reform in Africa
This review facilitates comparison across countries and sectors, shedding light on the successes and shortcomings of various tariff reform efforts on the continent.
Abstract
African power sectors are plagued with financial unsustainability, low rates of grid connection, and high consumer prices relative to other regions in the Global South. Reforms to electricity tariffs are a tool for decision makers to reduce costly energy subsidies, expand grid access, improve service quality, and increase affordability. This review examines 82 papers in the academic literature on the impacts of electricity tariff reform in Africa. We organize our results according to three modalities of reform: bill payment method; tariff structure; and tariff rate. Evidence on the impacts of payment reform indicates that prepaid meters may encourage residential electricity conservation and limit arrears. Increasing block tariff structures are highly regressive and poorly target consumers, and there is limited evidence on the cost or grid access implications of volume differentiated tariffs or subsidies for connection costs. Lastly, we find that demand for electricity is price inelastic across all sectors, and that tariff increases should be accompanied by protections for low-income consumers. Our analysis facilitates comparison across countries and sectors, shedding light on the successes and shortcomings of various tariff reform efforts on the continent. The review concludes with recommendations for future research and lessons for policy makers.
Authors
Thomas W. Klug
Sanford School of Public Policy, Duke University
Adebe D. Beyene
Environment and Climate Research Center, Policy Studies Institute
Tensay H. Meles
School of Economics, University College Dublin
Sied Hassen
Environment and Climate Research Center, Policy Studies Institute
Michael Hou
Sanford School of Public Policy, Duke University
Benjamin Klooss
Oxford Policy Management
Alemu Mekonnen
Department of Eonomics, Addis Ababa University
Marc Jeuland
Sanford School of Public Policy, Duke University
