Power Quality in Donor-Funded Infrastructure Projects

Governments and foreign aid institutions routinely finance large infrastructure construction projects in developing and emerging markets. In 2015, for example, the Government of Kenya launched the Last Mile Connectivity Project, designed to connect all Kenyan households to electricity by 2022 using financing from the World Bank (WB) and the African Development Bank (AfDB). To complete construction at the approximately 20,000 villages selected for the program, Kenya Power awarded dozens of private sector contracts to procure goods and services. However, distinct processes and regulations applied to villages where construction was financed by the WB and villages where construction was financed by the AfDB. We combined this natural variation with a randomized audit experiment to understand how procurement policies impacted the timing, cost, quantity, and quality of construction on the ground in a new research paper, titled “Donor contracting conditions and public procurement: Causal evidence from Kenyan electrification.”