DESCRIPTION OF THE PROJECT

1 Title: Benchmarking in the Electricity Sector and its Impact on Small, Micro and
Medium Enterprises (SMMEs): Comparative Study of Kenya And South Africa.
2 Research Problem to be investigated:
The current research wishes to critically examine the evolution and developments in
the electricity sectors of Kenya and South Africa, since 2000 and establish their
benchmarking practices and procedures. How have the companies in the two countries
benchmarked in order to improve customer satisfaction in their generation,
transmission and distribution of this public utility? How have the consumers,
particularly the SMMEs for the current study, perceived these practices and
procedures initiated and implemented by the electricity companies in Kenya and
South Africa?
Despite the importance of benchmarking and despite the fact that it has been adopted by
many public service organizations, there is still an element of customer dissatisfaction.
Braadbaart (2007: 667) notes that whereas, the public sector has wholeheartedly embraced
benchmarking, it is not obvious how benchmarking affects public sector organisations and
those that depend on them. This has featured in the electricity distribution networks of
Kenya and South Africa. In 2010, the National Energy Regulator of South Africa (NERSA)
granted state-owned utility ESKOM a nominal 24.8% tariff increase for the 2010/11
financial year, raising concerns among consumer protection bodies that this would fuel
inflation in Africa's biggest economy (Mail and Guardian Online, 2010). In 2010, the
KPLC was accused of being more interested in profit earning at the expense of providing
quality service to the consumers (African Centre for Open Governance- Africog, 2008). In
2008, Kenyan electricity consumers raised complaints about the hike in the cost of
electricity. In the same year, consumers complained about the company’s intention to
introduce the prepaid metre (African Centre for Open Governance- Africog, 2008). Thus
what benchmarking have the two countries adopted and do they need to be improved on?
3.1 Research Methodology:
The researcher will use a cross-sectional study design comparing Kenyan and South
African electricity service providers. In a cross-sectional research study, either the entire
population or a subset thereof is selected, and from these individuals, data are collected to
help answer research questions of interest (Olsen and George 2004: 7). The study will
assess the main benchmarking innovation initiatives related to the generation and
distribution of electricity in the two countries from 2000 to 2009 and to explore how these

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initiatives have impacted on the companies involved, on the concept of service quality from
the perspective of the SMMEs. The researcher will also compare the data and the
development in the procedures and practices of the two companies to establish if there is
any co-relation between the benchmarking strategies and the companies’ profitability
levels. A similar quantitative measure will be carried out using the profitability of the
SMMEs of the two countries.
3.2 Population of Study
The study focuses on the distributors and regulators in the electricity sector in Kenya
and South Africa these are the KenGen and KPLC and NERSA and ESKOM,
respectively and the SMMEs of Kenya and South Africa. The SMMEs selected must
have been in business since 2000 to date and who operate within the capital cities of
the two countries-Nairobi and Pretoria, respectively.
3.3 Data Collection
Open ended questionnaires will be the main instrument for data collection. Two sets
of questionnaires have been designed: one for the management and staff of the
generating-distributing companies and the regulators and a second for the participants
in the SMMEs. These will be administered to a stratified random sample of five
employees from the management to the other employees of the regulatory and
generation departments and another five in the distribution corporate departments of
each country. The resultant data will also be compared against additional published
regulator reports and internal company documentation of the same research period
(between 2000 and 2009). Due to the varied nature and sizes of the SMMEs, the
research aims at interviewing 200 respondents from this section of electricity
consumers in the capital cities of Nairobi, Kenya and Pretoria, South Africa.
3.4 Data Analysis
Data analysis will utilise analysis tools in the research Excel and SPSS to establish the
relationship (in terms standard deviations and correlation). The impact of
benchmarking practices and procedures on the SMMEs and on the electricity firms of
the two countries will be subjected to Analysis of Variance (ANOVA) tests that will
be used to establish whether the practices and procedures have had any significant on
their profitability. The variables are restricted to 2000-2009. Data colleted through
open-ended items in the questionnaire will be subjected to content analysis with the
aim of establishing the relationship of benchmarking and profitability. Furthermore a
more quantitative analysis involving Ordinary Least Squares (OLS) will be used to

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quantify the magnitude of the impact that the benchmarking has had on electricity
companies of the two countries.
4. Significance of the Study
The study will contribute to the understanding of qualitative benchmarking practices
and procedures that are currently used in today’s business environment and especially
so in organizations that are monopolistic in a globally competitive market and the
effects of this on the SMMEs. The electricity firms are regulated by government
owned agencies and the consumers have little choice to make from in as far as the
consumption of the commodity is concerned. The study will also generate a clear
vision on the relationship between the electricity firms and the SMMEs in term costs
and benefits accruing as a result of how this sector is served.

5. References
African Centre for Open Governance- Africog, (2008).
http://www.africog.org/reports/kplc.pdf.

Akintoye, I. R., (2008). Reducing Unemployment Through the Informal Sector: A

Case Study of Nigeria. European Journal of Economics, Finance and Administrative
Sciences. Iss. 11.pp 97-106

Andersen et al., (1999). Benchmarking Supply Chain Management: Finding Best

Practices", Journal of Business & Industrial Marketing, Vol. 14 Nos 5/6. Vol. 14 pp.
378-89.

Bhattacharyya, S. C., (2007). Energy Sector Management Issues: An Overview

International Journal of Energy Sector Management Vol. 1 No. 1. pp.13 - 33

Bitner M. J., and Brown M., (2008). The Service Imperative. Business Horizons 50th
Anniversary Issue, 2008

Blaauw, P. F., (2005). The Dynamics of the SMMEs in South Africa – A Case Study of
Day Labourers in Pretoria Paper presented for Conference of the Economic Society
of South Africa.

Bogetić, Z., and Fedderke, J.W., (2006). International Benchmarking of South

Africa's Infrastructure Performance. Journal of Development Perspectives. Vol. 2 No.
2, pp.429-44

Bozo, M. G., (2008). Energy Policies in Latin America and the Caribbean and the
Evolution of Sustainability. International Journal of Energy Sector Management Vol.
2 No. 1.

Braadbaart, O., (2007). Collaborative Benchmarking, Transparency and Performance

Evidence from The Netherlands Water Supply Industry Benchmarking: An
International Journal Vol. 14 No. 6. pp. 677-692(16).