CHAPTER 2. Making Regulation Work for Services in Africa
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Box 2 (continued) 4. 5. 6.
Participation Transparency Predictability
The first three aspects relate to the formal legal requirements of regulation and the other criteria relate more closely to informal aspects of regulatory accountability. Whatever the institutional arrangements, the acceptability of a utility regulatory system will depend on all parties (e.g. consumers and private and public sector service providers) understanding the rules of the game (i.e. the principles underpinning utility regulation). This requires regulators to observe the spirit as well as the letter of legislation. It also requires regulators to justify and publicize the reasons for their decisions and approaches and any changes in methodology or procedures.
Africa ranks low in regulatory independence Most African States rank low in regulatory independence across all sectors and standard international models of infrastructure regulation are not regularly employed in Africa (Gassner and Pushak, 2014, and Wren-Lewis, 2014). Most African regulatory bodies are at an early stage of development, have modest budgets (ranging from less than $300,000 to about $3,000,000 for electricity) and often lack qualified staff members (Vagliasindi and Nellis, 2009, and UNCTAD, 2014b). Staffing levels also vary widely, from one or two to over 30 staff members (UNCTAD, 2014c). This reinforces the need for independent regulatory authorities that are autonomous but also have some political backing to fulfil their roles. In some instances, national bodies need to be bolstered through partnerships and collaboration with regional and pan-territorial regulatory bodies, as they emerge. This could help national bodies, as they may use regional regulatory bodies as a counterweight to domestic political pressures on regulatory governance. There may also be a need to separate supervisory functions (e.g. with regard to competition) from regulatory functions (e.g. price and universal service regulation) to ensure that there is no conflict of interest. The most prevalent forms of private investment in Africa’s infrastructure services sector are in telecommunications — a fast growing sector with relatively high returns on investment — and accounted for 74 per cent of private investment in infrastructure during the period 1990–2013 (African Development Bank, 2014). Table 8 shows the significant differences in the level and form of private participation in infrastructure services in Africa. In the energy sector (primarily electricity, as it accounts for 96 per cent of projects in the sector), the majority of private investment was in greenfield projects. During the period, independent power producers implemented build–own–operate and build–operate–transfer