Infrastructure -- Introducing a pilot indicator
Doing Business builds indicators of government regulation affecting businesses across 181 countries. The project currently covers 10 areas of regulation -- from starting to closing a business. The sets of indicators have been expanded over time and the team continues to develop new indicators of regulations that help or hinder businesses to invest, create jobs, and grow. This year, Doing Business will launch a new indicator on getting an electricity connection.
According to data from the World Bank Enterprise Surveys, private businesses in low and lower middle income countries worldwide lose on average 5.2 percent of their sales due to electrical outages. Even in high income and upper middle income countries, the average loss in sales is still 2.7 percent.
Managers interviewed in 111 countries in the context of the Enterprise Surveys consider electricity (together with corruption) the second biggest constraint to their business (tax rates are considered the most important constraint). In South Asia and Sub-Saharan Africa, it is even considered the most important of all business constraints.
A fundamental premise of Doing Business is that economic activity requires good rules. The objective: Regulations designed to be efficient, to be accessible to all who need to use them and to be simple in their implementation. By applying the Doing Business methodology to the question of electricity provision, Doing Business aims to complement existing data sets on electricity that focus largely on the overall capacity of electricity systems, prices and the quality of electricity. The new data take the perspective of the entrepreneur and put the emphasis on the transaction costs associated with obtaining a new electricity connection.
"Getting Electricity" – What is it about?
The new pilot indicator tracks all of the procedures, time and cost required for a business to obtain an electricity connection for a newly constructed building. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. In this pilot effort, data will only be available for a subset of economies. The indicator will not be included in the aggregate Doing Business 2010 rankings.
To make the data comparable across economies, respondents have been presented with a standardized case study. Data have been collected from utilities directly and from private professionals such as electricians, electrical engineers, construction companies, technical bodies, and in some cases from regulatory agencies.
By measuring the procedures, time and cost associated with obtaining a new electricity connection, "Getting electricity" offers interesting insights on a number of issues:
- The regulations surrounding electricity connections, reflected in the kind of procedures a business has to follow.
- The time that it takes a utility to turn around a typical service request for a new connection.
- The costs to the business associated with obtaining a new electricity connection.