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Does financial development improve access to electricity in sub-Saharan Africa?

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Abstract

This study examines the effect of financial development on access to electricity in a sample of 45 countries in sub-Saharan Africa from 1997 to 2018. Domestic credit to the private sector and the financial development index are considered proxies for financial development in previous literature to explain access to electricity through financial development in sub-Saharan African countries. We test this relationship using pooled ordinary least squares, fixed effects, and system generalised method of moments (GMM). The results showed that economic credit accelerates access to electricity in Africa. This result remains robust when considering different population levels. Rural populations also benefit from access to financial services. Additionally, considering the different indicators of financial development, we note that the results remain unchanged. We recommend that African countries accelerate financial inclusion to allow the population to benefit from better access to electricity.

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Data availability

The datasets use during and/or analysed during the current study came from many sources. For access to electricity (population), the source is IEA (2019). Africa energy outlook (2019) report, https://www.iea.org/reports/africa-energyoutlook-2019. Financial Development variables came form SAHAY, R., ČIHÁK, M., N’DIAYE, P., BARAJAS, A., BI, R., AYALA, D., GAO Y., KYOBE, A., NGUYEN, L., SABOROWSKI, Ch., SVIRYDZENKA, K. and S. REZA (2017). “Rethinking Financial Deepening: Stability and Growth in Emerging Markets”, IMF Staff Discussion Note SDN/15/08, Washington, DC: International Monetary Fund. https://www.imf.org/external/pubs/ft/sdn/2015/sdn1508.pdf. Macroeconomic variables were obtained from World Bank Database by https://databank.worldbank.org/source/world-development-indicators. Polity2 came from: https://competitivite.ferdi.fr/indicateurs/polity2-polity-iv

Notes

  1. From Monte Carlo simulations, Blundell and Bond (1998) show that system GMM is more efficient than the difference GMM.

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Acknowledgements

I thank the two anonymous referees who evaluated our article. Their comments helped improve the quality of this article. I also thank Mr. ATANGANA ZAMBO Charles Christian who showed me the in-depth estimation techniques and who contributed to increasing the empirical quality of this article. Finally, I would like to thank Professor ONGO NKOA Bruno for his careful reading of previous versions of this article and for his valuable advice.

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Authors and Affiliations

  1. University of N’Djamena, N’Djamena, Chad

    Thierry Mamadou Asngar

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For the article, I TMA, worked globally alone. I wrote Abstract, Introduction, Literature review, Methodology, and Data sections. For the empirical, I interpreted all the results alone; same for the robustness checks and the conclusion. For the regressions, I have been helped by Mr. ATANGANA ZAMBO Charles Christian.

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Correspondence to Thierry Mamadou Asngar.

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Hereby, I Thierry Mamadou Asngar, consciously assure that for the manuscript titled Does financial development improve access to electricity in sub-Saharan Africa? The following is fulfilled: (1) This material is the authors’ own original work, which has not been previously published elsewhere. (2) The paper is not currently being considered for publication elsewhere. (3) The paper reflects the authors' own research and analysis in a truthful and complete manner. (4) The paper properly credits the meaningful contributions of co-authors and co-researchers. (5) The results are appropriately placed in the context of prior and existing research. (6) All sources used are properly disclosed (correct citation). Literally copying of text must be indicated as such by using quotation marks and giving proper reference. (7) All authors have been personally and actively involved in substantial work leading to the paper and will take public responsibility for its content. The violation of the Ethical Statement rules may result in severe consequences. I agree with the above statements and declare that this submission follows the policies of Solid-State Ionics as outlined in the Guide for Authors and in the Ethical Statement.

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Title of product: Does financial development improve access to electricity in sub-Saharan Africa? Author: Thierry Mamadou Asngar. Affiliation: University of N’Djamena, Chad. Adresse: tmamad07@yahoo.fr. This is to state that I give my full permission for the publication, reproduction, broadcast and other use of photographs, recordings, and other audio-visual material of myself (including of my face) and textual material (case histories) in all editions of the above-named product and in any other publication (including books, journals, CD-ROMs, online and internet), as well as in any advertising or promotional material for such product or publications. I declare, in consequence of granting this permission, that I have no claim on the ground of breach of confidence or any other ground in any legal system against—(author’s/developer’s name)—and its agents, publishers, successors and assigns in respect of such use of the photograph(s) and textual material (case histories). I hereby agree to release and discharge any editors or other contributors and their agents, publishers, successors and assigns from any and all claims, demands or causes of action that I may now have or may hereafter have for libel, defamation, invasion of privacy, copyright or moral rights or violation of any other rights arising out of or relating to any use of my image or case history.

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Mamadou Asngar, T. Does financial development improve access to electricity in sub-Saharan Africa?. SN Bus Econ 2, 146 (2022). https://doi.org/10.1007/s43546-022-00324-0

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