Policy coherence versus regulatory governance. Electricity reforms in Algeria and Morocco

Abstract

The diffusion of independent regulatory agencies (IRAs) in utilities sectors in developing countries is underpinned by the idea that IRAs are highly effective institutional devices to signal policy credibility to private investors. But is it really so? Institutional economists tend to confirm the effectiveness of IRAs, while also highlighting the many factors that condition its positive impact on investments. Acknowledging the importance of interaction effects, this paper proposes to shift the level of analysis, moving away from IRAs to look at the overall complementarity between policy objectives, instruments, and the wider political context. In sum, it argues that IRAs are, as such, irrelevant. What matters instead is policy coherence. A comparison between two case studies on electricity policy reforms in Algeria and Morocco lends credit to the policy coherence approach. It shows that policy incoherence may deprive IRAs from any impact on sectoral evolution and that there are effective alternatives to IRA to signal policy credibility and attract investors. The paper concludes by suggesting practitioners to relax the focus on preconceived policy solutions, to be open to alternative policy approaches and to focus on helping developing countries designing coherent policies.

Greening energy governance through agencification in the Global South: Drivers and implications

“…Although limited by the regional (and temporal) scope of the analysis, our findings suggest that green agencification can help developing countries overcome certain policy and regulatory barriers, catalyze investments and foster the implementation of renewable projects. These results call for a wider understanding of the different institutional paths that can increase policy effectiveness in the Global South in the area of renewables, beyond the traditional focus on market-oriented reforms and regulatory policy (on this point, see also Mathieu, 2022). The donor community, however, should be more concerned about the scarce "democratic" effects of green agencification, especially when REAs are involved in developing large-scale projects steered by the ruling elite.…”

“…In the realm of renewables, there is no standard policy model suggesting a particular design for REAs. Conversely, research has highlighted that in some cases, for developing countries, close links between a REA and the executive can be instrumental for attracting investments (Mathieu, 2022). These links can assure investors of the commitment of the ruling elite to the effective implementation of renewable energy policy.…”

Reaching Universal Coverage of Water and Sanitation Services: Is Regionalization a Sustainable Path for Developing Countries?

“…The limited access to adequate WSSs is due in part to the poor governance regime stemming from a misalignment in public policies, institutions, and regulations (PIRs), which does not allow for sufficient complementarity between policy objectives, instruments, and the wider political context, i.e., it does not foster a coherent policy environment and, thus, compromises policy effectiveness [5]. This situation does not create a favorable operating environment or help establish adequate incentives to achieve the SDGs [6].…”