Sector Organization, Governance, and the Inefficiency of African Water Utilities

Abstract

The paper analyzes the determinants of the efficiency levels reached by twenty-one African water utilities. Efficiency is assessed through the estimation of a production frontier for the sector in Africa. The efficiency estimates confirm much of the common perceptions from partial productivity indicators. They point to a great heterogeneity in the African water utilities' performances, the predominance of constant returns to scale and the great rate of technological progress. Moreover, the paper shows that the institutional capacity of the country as well as governance are significant driving factors in the performance of each firm. Keywords: Water utilities, unbalanced panel data, efficiency analysis, stochastic frontier models.

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