The Political Economy of Aid for Power Sector Reform

Recent literature on the effectiveness of donor programmes points to the importance of understanding the political context within which reforms are taking place. A body of evidence is now emerging suggesting that programmes that are more flexible and iterative are often more successful in achieving their objectives than programmes that adopt a more rigid, linear approach to reform and recent experiments with projects that “think and work politically” appear to show promising results.The characteristics of the power sector makes reform intensely political in almost all countries and donor projects have sometimes failed because of an inability to navigate the local politics of reform. This paper reviews what is known about how donors have taken politics into account in designing and implementing power sector reform programmes in Sub-Saharan Africa and South Asia. It illustrates the challenges which donors have faced with reference to case studies of donor attempts to support power sector reform in Tanzania and in the Indian state of Orissa. The paper draws on documentary evidence from the major donors to the sector in each country as well as a set of qualitative interviews with experienced project supervisors. It concludes with a set of recommendations for further research designed to provide insights on how best to design and implement power sector reform programmes given the political context in which they are working