Inefficiencies are divided between distribution losses and revenue undercollection. Average distribution losses stand at 35 percent, far above the world norm of 20 percent, with all countries affected to some degree. Average collection ratios at 90 percent still fall short of best practice. In the worst cases—such as the Democratic Republic of Congo, Ghana, and Zambia—these combined inefficiencies can create an economic burden of 0.7 to 1.0 percent of GDP (see figure).
An additional burden comes from overemployment. African utilities report an average of five employees per 1,000 connections, more than twice the developing-country benchmark. Utilities with high levels of operating efficiency tend to be more solvent and are able to expand connections to new customers twice as fast as those that do not.
There is mixed evidence as to whether the institutional reforms of recent years have significantly improved operational efficiency. Overall, private sector contracts have led to noticeable improvements in some aspects of efficiency and have accounted for almost 20 percent of the increase of household connections in the region—twice the amount that would be expected given their market share of only 9 percent. However, introducing reform is easier said than done. The rate of cancellation of private sector contracts in Africa, at 29 percent, has been much higher than elsewhere.
TThe economic burden of water utility inefficiencies can reach 1 percent of GDP