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Electricity crisis and the effect of CO2 emissions on infrastructure-growth nexus in Sub Saharan Africa

Sub Saharan Africa (SSA) has the greatest proportion of its population without access to electricity, especially those in rural communities. Efficiency of the power sector is another obstacle, characterised by rise in the ratio of electricity transmission and distribution (RETDL) and high levels of electricity-related CO2 emissions. We analyse the extent of electricity shortage, efficiency, key sources and opportunities for SSA in comparison with other regions. Two Stage Least Squares (2SLS) is used to examine the economic growth effects of electricity consumption (stock) and RETDL (quality), and how electricity-related CO2 emissions alter the growth contributions of both electricity consumption and RETDL. Our analysis indicate that SSA is mainly coal energy driven and coal has been the major cause of high levels of electricity-related CO2 emissions. The percentage of electricity from renewable sources (excluding hydro) is very low in SSA. However, the region presents a great opportunity from its abundant renewable resources that can be exploited. Furthermore, electricity consumption has a positive impact on economic growth whereas the RETDL exerts a negative pressure on growth. High levels of electricity-related CO2 emissions lower the growth contributions of electricity consumption and exacerbates the negative growth impact of electricity quality. Policy implications are discussed.

Working paper 731
1 February 2018
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