Has mining agglomeration affected energy productivity in Africa?

Abstract

Given the rising resource exploration and mining openings, energy demand improvement is crucial for African sustainable development as it forms an integral part of public revenue. However, mining agglomeration benefits on energy productivity have been recognized in prior studies, yet empirical insights on Africa's mining sector remain unknown. This paper evaluates the impact of mining agglomeration on energy productivity in Africa using country-level data on 21 economies from 2009 to 2017. The study applied panel fixed effect model, and panel threshold fixed effect technique to estimate linear and nonlinear effects. Energy productivity is computed using Shephard energy distance function (SEDF). The findings suggest that mining agglomeration directly enhances energy productivity. Also, a nonlinear relationship exists between mining agglomeration and energy productivity. In particular, the positive impact of mining agglomeration only exists at a certain level of economic development. Further, on average, total Africa's mining energy productivity improved over the sample period, but performance differs among economic regions. The study findings support the view that policymakers should re-enforce, upgrade, and adopt innovative cluster development strategies and investor-friendly elements in regional mining codes.