ENERGY ACCESS AND HOUSEHOLD INCOME IN SUBSAHARAN AFRICAN COUNTRIES

Musibau Ojo Adejumo; Ajide Bello Kazeem

doi:10.7251/ACE1730099A

Authors

Musibau Ojo Adejumo University of Lagos, Department of Economics https://orcid.org/0000-0002-0092-4794
Ajide Bello Kazeem University of Lagos, Department of Economics https://orcid.org/0000-0001-6363-9483

DOI:

https://doi.org/10.7251/ACE1730099A

Keywords:

energy access, per capita income, energy price, FDI and trade openness

Abstract

This study empirically examined the energy access and household income in Sub-Saharan African countries between 1990 and 2015. The study employed five variables: energy access, per capita income, energy price, FDI and trade openness, as well as panel unit root test using two criteria to test stationarity. Panel cointegration test was also conducted to test long-run cointegration between the variables employed. Panel granger causality test was employed to check the degree of causality between the dependent and explanatory variables and Auto Regressive Distributive Lag method of estimation was employed to check the long-run and short-run relationships between the variables. The results of the panel unit root test from the LLC and IPS methods show that the order of integrations is mixed with some of the variables being stationary at levels (household income, Foreign Direct Investment and Trade Openness) and first difference (Energy Access and Fuel Price) at the same time. The result of Pedroni cointegration test indicated the bivariate long-run cointegration equation between the variables employed except for EA and GDPPC. The panel granger causality test revealed that there is causality between these three variables (EA, GDPPC and FUELP) and the direction of causality only flows from these variables to energy access. The ARDL result revealed that all explanatory variables accounted for 60% variation of energy access in SSA. However, the study made the following policy implications: energy policy needs to be orientated in favor of expanding the supply of energy to reach an enhanced degree of sustainable economic growth and development, and governments in this region can subsidize energy products to increase its consumption and promote the welfare of their citizens.

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