A Review of Impacts of Electricity Tariff Reform in Africa

Abstract

Financially unviable power sectors require African governments to subsidise a large share of electricity generation and distribution costs. Meanwhile, electricity subsidies and pricing regimes are often poorly targeted and regressive. As a consequence, African countries have low rates of grid electrification and high consumer prices relative to other countries in the Global South. Reducing costly energy subsidies, expanding grid access, and increasing affordability represent key but often conflicting priorities for decision-makers undertaking electricity tariff reforms. Such reforms have implications for end-users and providers of electricity. This review assesses the scientific literature on the impacts of electricity tariff reform in Africa. We identified and screened over 6,000 papers from our search procedure, yielding 82 relevant papers for review. We organise our results according to three modalities of reform: bill payment method; tariff structure; and tariff rate. The results are disaggregated by sector where appropriate, summarising impacts on households, firms and industries, utilities and governments, and national economies. Such a framework allows for a 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.

Keywords: Electricity price, electricity subsidy, Electricity demand, systematic review, Africa