Effect of Financial Development on Energy Diversification in Sub-Saharan Africa

Abstract

The objective of this paper is to analyse the effect of financial development on energy diversification in 20 sub-Saharan African countries between 2000 and 2015. Our specificity is the calculation of the energy diversification index using the Shannon Wiener index (Stirling 1998-2000) and the estimation using the generalized moments method (GMM) on a dynamic panel. The results show that financial development positively and significantly affects the diversification of energy sources. Thus, these countries need to improve their financial systems to promote energy sources diversification to improve access to energy and improve the process of financing energy projects as a response to poverty reduction.