The relationship between electricity consumption and economic growth in Botswana

Abstract

Concerted effort to diversify Botswana economy, in recent years, has seen increased activity of major sectors, which includes higher reliance on electricity. The demand and consumption of electricity within the Botswana economy increased substantially from the 1980’s. However there have been shortfalls in the country’s electricity generation capacity causing increased reliance on imports from neighbouring countries especially South Africa. Given the importance of electricity in Botswana, this study examined the relationship between electricity and economic growth, employing bounds testing approach to co-integration. Results obtained confirmed the importance of electricity for Botswana’s economic growth. The result also passed a battery of diagnostic tests. This study recommends the need for energy policy reforms that will enable increased electricity production capacity.