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Economic Development in Africa Report 2015
contracts. In contrast, in the water and sewage sector, most private investment projects involved management and lease contracts, but accounted for only 15 per cent of the total amount invested. These differences reflect both the technological characteristics of each sector and the respective market structures. For countries seeking to introduce greater competition into infrastructure services markets, these factors are important in developing a regulatory regime appropriate to the structural characteristics of a given infrastructure services sector (Brown et al., 2006). In Africa, there has been a relatively high frequency of discontinuation of private sector involvement in the provision of infrastructure services (particularly water). According to one study, 25 per cent of water contracts and 15 per cent of electricity contracts were cancelled during the period 1990–2009, even when performance was judged to have improved (African Development Bank, 2014). In general, there is little empirical consensus on the impact of privatization in developing countries, especially in terms of the relative performance of the private and public sector in infrastructure services provision (Estache and Wodon, 2014; Vagliasindi and Nellis, 2009; and Zhang, 2006). Although most studies suggest that competition is generally more important than ownership, other factors should also be taken into account in explaining performance improvements in developing countries, such as the quality of institutions and regulation, the existence of well-developed capital markets and private property rights (Pollitt, 1997; Stern and Davis, 1998; and Hare and Davis, 2006). However, the type of infrastructure matters; telecommunications and the majority of energy supply (e.g. generation and distribution) are more amenable to privatization with the introduction of competition than a market for water services, which is usually cost inefficient in most developing countries (UNCTAD, 2014b; and UNCTAD, 2014c). Given the scale of investment in fixed assets or network assets required to supply water, competition is often infeasible (although there is a vibrant water market in a few countries, such as Nigeria) and the costs are high in developing countries. The Africa Infrastructure Country Diagnostic study collected data measuring institutional reforms in infrastructure undertaken by African countries, utilizing an institutional scorecard comprised of the following three broad areas: reform (sectoral legislation, restructuring of enterprises and private sector participation); regulation (transparent and independent regulatory bodies and tools); and governance (internal management in infrastructure enterprises, such as shareholder relations). Each indicator serves as a basis for measuring the (aggregate and disaggregate)