ELECTRICITY CONSUMPTION, GOVERNMENT SPENDING AND ECONOMIC GROWTH IN SUB-SAHARAN AFRICA

Abstract

Using panel data from 12 countries from 2000 to 2023, the study looks at how government spending and energy usage affect economic development in sub-Saharan Africa. In sub-Saharan Africa, millions of people lack access to a reliable electrical supply, according to the World Bank. The productivity of craftsmen and other micro, small, and medium-sized businesses, the yields and storage capacity of farmers and producers, which lead to economic growth, and the general well-being of the populace all depend on stable energy. To prevent erroneous findings, a panel unit roots test was performed as a first check to verify the series' stability. Panel co-integration tests indicate the presence of long-term correlations among the variables, whereas the findings reveal that all variables except electricity consumption are stationary at order I(0). The Autoregressive Distributed Lag (ARDL) approach is used in this work. The study's main conclusions are that government spending has a positive but negligible effect on economic growth over the long term, while electricity consumption has a negative effect. Gross fixed capital formation, on the other hand, has a significant effect on economic growth over the long term. Since most economic production activities rely on electricity, it is advised that governments in sub-Saharan African nations enhance their electricity supply. Increasing the amount of electricity produced will contribute to job creation and increase aggregate output, both of which will spur economic growth. If more public funds are released for development by combating corruption in the nation, government expenditure will have a greater influence on economic performance. Therefore, the nation should take a direct approach to combating corruption. It should go beyond government employees and political office holders who preach that corruption is not tolerated or that certain corruption-related situations are given preferential attention.