Energy consumption and economic growth: Evidence from 11 Sub-Sahara African countries

Abstract

The paper examines the causal relationship between energy consumption and economic growth for eleven countries in sub-Saharan Africa. Using the autoregressive distributed lag (ARDL) bounds test, the study finds that energy consumption is cointegrated with economic growth in Cameroon, Cote D'Ivoire, Gambia, Ghana, Senegal, Sudan and Zimbabwe. Moreover, this test suggests that energy consumption has a significant positive long run impact on economic growth in Ghana, Kenya, Senegal and Sudan. Granger causality test based on vector error correction model (VECM) shows bi-directional relationship between energy consumption and economic growth for Gambia, Ghana and Senegal. However, Granger causality test shows that economic growth Granger causes energy consumption in Sudan and Zimbabwe. The neutrality hypothesis is confirmed in respect of Cameroon and Cote D'Ivoire. The same result of no causality was found for Nigeria, Kenya and Togo. The result shows that each country should formulate appropriate energy conservation policies taking into cognizance of her peculiar condition.