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Power supply and manufacturing growth: Evidence from Cameroon

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  • Amadu, Ismaila
  • Samuel, Fambon

Abstract

Inadequate and unstable power supply constitute a major constraint to industrial production in Cameroon. This paper evaluates the long-term impact of power deficits on the country's manufacturing growth, using a Fully Modified Ordinary Least Square Method, and selected data from 2016 World Development Indicators, covering the period 1977–2014. For each variable used in the estimations, only data for Cameroon was retrieved for the period under study. The findings reveal that there is a strong and positive correlation of 0.904256/1 between power supply and manufacturing growth in the long-term. Moreover, a percentage decrease in electricity supply reduces annual manufacturing growth and gross capital formation by 0.07% and 0.28% respectively. Furthermore, Foreign Direct Investment inflows augment manufacturing value added by 0.39% yearly. It is recommended that: first, the government of Cameroon should increase its investments in the energy sector to boost power supply by 10% annually, in order to raise manufacturing growth by 0.7% in a year and 7% in a decade. Secondly, incentives to encourage private investments in the energy sector should be put in place to spur power production and supply. Overall, the findings imply that power supply must remain at the epicenter of economic and industrial policies in Cameroon.

Suggested Citation

  • Amadu, Ismaila & Samuel, Fambon, 2020. "Power supply and manufacturing growth: Evidence from Cameroon," Energy Policy, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520306339
    DOI: 10.1016/j.enpol.2020.111922
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    References listed on IDEAS

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