Determinants of energy consumption: The case of African oil exporting countries

Abstract

Persistent energy consumption issues are ascribed to the failure of energy planners to understand the various macroeconomic factors that influence energy consumption. Therefore, we investigated the factors influencing energy consumption in six net African oil-exporting countries (AOECs) between 1980 and 2018. Our contribution to the literature is the use of estimators; cross-sectional autoregressive distributed lag (CS-ARDL) and cross-sectional distributed lag (CS-DL) modelling approaches, which take into account the time dynamics, the heterogeneity of different countries and cross-sectional dependence, to explore the relationship between energy consumption and its major determinants, such as openness, economic structure and per capita income. The results revealed that per capita income did not impact significantly on energy consumption in AOECs during the period under study, while trade openness had a positive and significant effect on it. The third variable of interest, namely economic structure, had a negative and significant effect on energy consumption. These results led to various recommendation for policymakers and future research in the concluding section.

Keywords:

• trade openness
• economic structure
• per capita income
• energy consumption
• cross-sectional autoregressive distributed lag
• cross-sectional distributed lag

JEL Classification:

• F10
• H10
• H24
• Q40

PUBLIC INTEREST STATEMENT

The failure of the governments of African oil-exporting countries (AOECs) to improve energy consumption, which would lead to sustainable economic growth has been of major interest to scholars. Often, the inability of policymakers in these economies to obtain favourable results has been attributed to conflicting policy implementation and factors influencing energy consumption in the long run. To provide a better understanding of how energy consumption parameters drive sustainable economic growth of AOECs, the study investigated the factors determining energy consumption in these economies. We used both cross-sectional autoregressive distributed lag and cross-sectional distributed lag modelling approaches, which account for time dynamics, cross-sectional heterogeneity and cross-sectional dependence. The empirical findings showed that per capita income did not impact energy consumption significantly, while trade openness had a positive and significant effect. In addition, the study confirmed that economic structure tended to hinder energy consumption significantly. Thus, the study aimed to contribute to knowledge on the determinants of energy consumption in AOECs.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1. In Africa, most of the renewable energy consumed is through traditional procedures which is being replaced by modern fossil fuel-based energy.

2. Note that several variables such as energy price, urbanisation, capital and labour were considered in our model. However, we retained the most significant variables in the model based on tests conducted. The results of other tests are available upon request.

3. This will happen if the unobserved common factors are undeniably correlated with the regressors

4. This could stand as a test for the presence of cointegration where a significant speed of adjustment contributes to cointegration between the sample variables of interest in the model.

5. Pros and cons of the ARDL, the CS-ARDL and the CS-DL can be retrieved from Chudik and Pesaran (2013).

6. Not with standing the contradictory results on the order of integration, we ran the Westerlund’s (2007) test. The result however showed that there were at least 2 cointegrating equations, indicating that there is long-run relationship between LNEC, LNPERINC, OPEN, and ES. Therefore, the null hypothesis of no cointegration was rejected. We will provide the results upon request.

Additional information

Funding

This work was supported by the University of KwaZulu-Natal.

Notes on contributors

Akindele John Ogunsola

Akindele John Ogunsola is currently a PhD candidate in the School of Accounting, Economics and Finance (SAEF), College of Law and Management Studies, the University of KwaZulu-Natal, Durban, South Africa. In addition, he has served as a research assistant at the Macroeconomics Research Unit in the SAEF. He started his lecturing career in the Department of Economics, Faculty of the Social Sciences, Ekiti State University, Nigeria, as an assistant lecturer in 2016 and rose to the position of Lecturer II in 2019. He has published articles in well-recognised journals and presented his research at both local and international conferences.

Christian Kakese Tipoy

Christian Kakese Tipoy is a Senior Lecturer in the School of Accounting, Economics and Finance, College of Law and Management Studies at University of KwaZulu-Natal, South Africa. He holds a PhD degree from University of Pretoria, South Africa. He is a reviewer to many notable journals and an assessor to many universities around the world. He has also published several articles in many recognized journals.