Implications of shocks in energy consumption for energy policy in sub-Saharan Africa

Abstract

Sub-Saharan Africa has the lowest energy consumption per capita in the world, and this has undermined socioeconomic development in the region. The stationarity of energy consumption in the region has important implications for energy policy, forecasting and macroeconomic developments. This paper investigates the stationarity properties of energy consumption in 48 sub-Saharan Africa countries using the Augment Dickey–Fuller, Zivot–Andrews, Clemente–Montanes–Reyes and Lee–Strazicich LM tests. Using the Lee-Strazicich LM test as a benchmark, the study shows that energy consumption is stationary in 41 countries. This implies that energy policy makers should not be concerned about shocks in energy consumption in these countries because the shocks will be temporary and not transmitted to the macroeconomy. Also, energy policies will not have long-term effects. Policies that exert one-time temporary shocks on energy consumption would be more effective in these countries.