Linking energy poverty and industrialization: Empirical evidence from African countries

Abstract

In the belief that no country in the world can develop without a strong industrial sector, African leaders have consistently stressed the importance of industrialization for sustainable development. Despite the benefits of industrialization, Africa remains the least industrialized region in the world. Moreover, this is the region where the problem of energy poverty is most acute, with the lowest levels of access to and consumption of electricity. Thus, this study analyzes the effect of energy poverty on industrialization in a sample of 44 African countries. Using the two-step system Generalized Method of Moments, empirical results resilient to a set of robustness checks consistently show that reducing energy poverty is a necessary condition for the industrialization of African countries. Through a mediation analysis, this study identifies human capital and income as some channels through which the reduction of energy poverty favors the industrialization of African countries. The conclusions of this study have the main implication of inviting African decision-makers to improve the effectiveness of the various national and sub-regional initiatives aimed at guaranteeing access to clean, reliable, and modern energy for all in order to foster the industrialization of African economies.