Assessing the Nexus among Energy Consumption, Foreign Direct Investment and Economic Growth in Sub-Saharan Africa

Abstract

This study examines the dynamic relationship among energy consumption, foreign direct investment, and economic growth in Sub-Sahara Africa. Beyond assessing the tripartite causal relationship, the study investigates the extent of impacts among energy consumption, foreign direct investment, and economic growth using the Generalised Method of Moments. The study utilises data from 42 Sub-Saharan African countries spanning 1991 to 2018. Findings from the study show that a percentage increase in energy consumption engenders economic growth by 1.3 percent. Conversely, economic growth increases energy consumption by 0.004 percent. Also, there is a significant one-way causality running from foreign direct investment (FDI) to economic growth. The link between energy consumption and FDI were not statistically significant in both directions. The study advocates that government in Sub-Saharan Africa should ensure more energy access to enhance economic growth.