ICT and energy consumption in Sub-Saharan Africa: Effects and transmission channels

Abstract

This paper contributes to the literature on the relationship between information and communication technologies (ICTs) and energy consumption. Despite increasing attention on the subject, existing studies have not yet investigated the channels through which ICTs affect energy demand. We use a stochastic impact model extended to the population, wealth, and technology regression model to estimate both the effect and transmission of ICTs on energy demand in 24 sub-Saharan African countries from 1995 to 2018. Empirical results show that ICT use, measured by mobile and fixed-line telephone penetration, significantly reduces energy consumption. In addition, the mediation analysis reveals that ICTs not only have a direct negative effect on energy consumption but also an indirect negative effect through its impact on GDP per capita and industrial sector development, and a mixed indirect effect through financial development. However, the total effect is negative and indicates that ICTs are reducing energy consumption in sub-Saharan Africa (SSA). To accentuate the negative effects of ICTs on energy consumption, governments should design policies to improve access to credit for the private sector, reduce income inequalities among populations, promote the use of industrial development, and provide financial incentives for the development of green technologies.