ENERGY ACCESS AND HOUSEHOLD INCOME IN SUBSAHARAN AFRICAN COUNTRIES

Abstract

This study empirically examined the energy access andhousehold income in Sub-Saharan African countries between1990 and 2015. The study employed five variables:energy access, per capita income, energy price, FDI andtrade openness, as well as panel unit root test using twocriteria to test stationarity. Panel cointegration test wasalso conducted to test long-run cointegration between thevariables employed. Panel granger causality test was employedto check the degree of causality between the dependentand explanatory variables and Auto RegressiveDistributive Lag method of estimation was employed tocheck the long-run and short-run relationships between thevariables. The results of the panel unit root test from theLLC and IPS methods show that the order of integrationsis mixed with some of the variables being stationary atlevels (household income, Foreign Direct Investment andTrade Openness) and first difference (Energy Access andFuel Price) at the same time. The result of Pedroni cointegrationtest indicated the bivariate long-run cointegrationequation between the variables employed except forEA and GDPPC. The panel granger causality test revealedthat there is causality between these three variables (EA,GDPPC and FUELP) and the direction of causality onlyflows from these variables to energy access. The ARDLresult revealed that all explanatory variables accountedfor 60% variation of energy access in SSA. However,the study made the following policy implications: energypolicy needs to be orientated in favor of expanding thesupply of energy to reach an enhanced degree of sustainableeconomic growth and development, and governmentsin this region can subsidize energy products to increaseits consumption and promote the welfare of their citizens.