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Are growth effects of foreign capital significant for increasing access to electricity in Africa?

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  • Mbiankeu Nguea, Stéphane
  • Kaguendo, Ulrich Vianney Elisée
  • Noumba, Issidor

Abstract

Sub-Saharan Africa's electrification rate of 45% in 2018 remains extremely low compared with other developing regions. This study investigates if foreign capital could significantly contribute to enhancing the electricity access rate in Africa, a subject so far neglected in the literature. Specifically, it seeks to know whether increasing FDI, remittances and foreign aid matter for access to electricity in Africa. We utilize a dynamic panel System-Generalized Method of Moments (Sys-GMM) estimator to analyse data collected on a panel of 36 African countries over 2000–2017. The empirical findings show that FDI and remittances are positively and significantly related to increasing access to electricity. Moreover, our results show that foreign aid reduces the electricity access. We finally find that remittances reduce urban-rural disparities in access to electricity, while FDI and foreign aid increase disparities. These results remain consistent when we perform sub-regional analyses, suggesting that African countries should rely more on remittances and FDI to promote universal access to electricity.

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  • Mbiankeu Nguea, Stéphane & Kaguendo, Ulrich Vianney Elisée & Noumba, Issidor, 2022. "Are growth effects of foreign capital significant for increasing access to electricity in Africa?," Energy Policy, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:enepol:v:168:y:2022:i:c:s0301421522003548
    DOI: 10.1016/j.enpol.2022.113129
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    3. Aluko, Olufemi Adewale & Opoku, Eric Evans Osei & Ibrahim, Muazu & Kufuor, Nana Kwabena, 2023. "Put on the light! Foreign direct investment, governance and access to electricity," Energy Economics, Elsevier, vol. 119(C).
    4. Djeunankan, Ronald & Njangang, Henri & Tadadjeu, Sosson & Kamguia, Brice, 2023. "Remittances and energy poverty: Fresh evidence from developing countries," Utilities Policy, Elsevier, vol. 81(C).
    5. Moteng, Ghislain & Raghutla, Chandrashekar & Njangang, Henri & Nembot, Luc Ndeffo, 2023. "International sanctions and energy poverty in target developing countries," Energy Policy, Elsevier, vol. 179(C).
    6. Stéphane Mbiankeu Nguea & Hervé Kaffo Fotio & Louise Angèle Baida, 2022. "Investigating the effects of globalization on economic sophistication in selected African countries," African Development Review, African Development Bank, vol. 34(3), pages 324-338, September.

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    More about this item

    Keywords

    FDI; Remittances; Foreign aid; Access to electricity; System GMM; Africa;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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