IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 4 2024
DOI: 10.56201/ijefm.v9.no4.2024.pg21.40

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Energy Consumption, Financial Development and Economic Growth in Sub-Saharan African Countries

Ezebunwa Justice Ndukwu Ph.D and Kingsley Nnana Odungweru Ph.D

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Abstract

This manuscript investigates the impact of energy consumption, financial development and economic growth in Sub-Saharan Africa from 2011 to 2022. The empirical paper employed a seven (7) Sub-Saharan Africa nations. The study considers panel data set for Real Gross Domestic Product (RGDP) and few economic variables that are theoretically expected to determine the economic growth in Sub Saharan Africa. The data used in the study were generated from World Bank indicators, while the data analysis was expedited by econometric views (E-views) statistical software 12. The variables for the study were subjected to stationary test using Im, Pesara n & Shin Test and Levin, Lin & Chu display that all variables were integrated at order zero I(0) and order one 1(1). The panel data were subjected to a colleration matrix in order to check for multicollinearity among the variables Therefore, the result finds absence of multicollinearity. The Hausman test were conducted to determine whether either fixed or random effect model is suitable for the study. While the two-system Generalized Method of moment (GMM) approach were also employed to test the hypotheses and the presence of a long-run co-integration connection was indicated. The finding reveals that energy consumption and Domestic Credit to Private Sector have a positive and significant effect on Real Gross Domestic Product of sub-Saharan Africa. While, electricity consumption and money supply have a joint negative and significant effect on Real Gross Domestic Product of sub-Saharan Africa. Based on the finding, the study concludes that energy consumption and financial development play a significant role in enhancing economic growth of sub-Saharan Africa. The paper highlights the need for sustainable population policies and energy strategies in Sub-Saharan Africa. It emphasizes the importance of investing in renewable and efficient energy sources to promote economic growth while minimizing environmental costs

keywords:

Sub-Saharan Africa, Energy Consumption, Financial Development and Economic Growth

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