Attracting Private Solutions and Participation in the Power Sector in Sub-Saharan Africa -- Findings from a Survey of Investors and Financiers

Benedict Sebastian Probst, Richard Holcroft, Joern Thorsten Huenteler, Ani Balabanyan, Andrew Tipping and Peter Robinson

No 9299, Policy Research Working Paper Series from The World Bank

Abstract: This paper develops a classification of investor risks and surveys 51 private investors and financiers in the power sector in Sub-Saharan Africa. The paper aims for a better understanding of what can be done to attract private solutions to fill the investment gap. It finds that the average investor assigns more weight to power sector policy and regulatory framework risks than to the wider sector and country context risks. And, despite many challenges, investors perceive three segments as ready for private solutions in Sub-Saharan Africa: power generation, off-grid electrification, and mini-grids. Investors see lower readiness in distribution, transmission, and retail. The paper finds that the average investor is forward-looking, as neither the track record of the power sector nor the firm’s personal track record is as important as the growth potential in the market. The paper uses the findings to reality-check data-based measures of regulatory readiness, namely the Regulatory Indicators for Sustainable Energy and Power Sector Reform Index and analyzes which elements correlate best with investor sentiment to optimize and streamline these indexes accordingly. The results provide important lessons for governments and development partners to devise appropriate de-risking instruments tailored to the risks that matter most to investors.

Keywords: Energy and Mining; Energy and Environment; Energy Demand; Energy Policies&Economics; Renewable Energy; Rural and Renewable Energy; Energy Sector Regulation; Business Environment (search for similar items in EconPapers)
Date: 2020-06-24
New Economics Papers: this item is included in nep-afr and nep-ene
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