What's new in the drivers of electricity access in sub-Saharan Africa?

Abstract

This study examines the drivers of electricity access in sub-Saharan Africa in 48 chosen countries from 1995 to 2019, accounting for endogeneity of variables using a new novel xtdpdgmm command that implements two-step system GMM (Generalized Method of Moment) estimators. The findings show that in sub-Saharan Africa, domestic credit to the private sector and the food production index are the two most important factors influencing access to electricity. Domestic credits to the private sector and food production are statistically significant and have a positive impact on increasing regional electricity access. Thus, having access to credit from financial institutions is crucial for many households in order to have access to electricity. The result reveals that agricultural productivity improves food security by increasing access to electricity. Our study recommends that governments in sub-Saharan Africa should boost agricultural production and provide a favorable environment for the banking sector and other microcredit institutions to finance electrification initiatives. In order to improve the region's access to electricity, financial institutions, governments, and donor funding should be encouraged to finance small-scale renewable energy projects. Thus, to lower the cost of electrification in sub-Saharan Africa, increasing off-grid financing should be prioritized. These findings have significant implications for sub-Saharan Africa and other developing countries.