ACCESS TO ELECTRICITY AND ECONOMIC GROWTH IN SUB-SAHARAN AFRICA: IS THERE AN ENERGY-GROWTH NEXUS?

Abstract

According to the World Bank, there are 600 million people who do not have access to stable electricity supply in sub-Saharan Africa. Stable electricity is important to increase the productivity of artisans, and other micro, small and medium enterprises, improve yields and storage capacities of producers and farmers which results in economic growth, and generally improve the well-being of the people in the society. This study attempts to find out the type of relationship which exist between access to electricity and economic growth in sub-Saharan Africa using panel data from thirty (30) countries covering the period 1997 to 2017. As a preliminary check, panel unit roots test was conducted to confirm the stability of the series so as to avoid spurious results.  The results confirm that all the variables are stationary at order I(1) while panel co-integration tests suggest the existence of long-run relationships among the variables. The regression results of the random effects model and the Fully Modified Ordinary Least Squares (FMOLS) indicate a negative and significant relationship between access to electricity and economic growth while the other control variables used in the study except the GFCF/GDP variable were significant and correctly signed in accordance with a priori expectation. It is recommended that the governments of sub-Saharan African countries should formulate and implement appropriate policies that would increase electricity generation in their countries in order to propel economic growth and improve the standard of living of their citizens while international development agencies and the World Bank should direct their interventions to the provision of stable electricity supply in the sub-region.