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Electricity Consumption In Botswana: The Role Of Financial Development, Industrialisation And Urbanization

Author

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  • LIRA P. SEKANTSI

    (National Payment System Division,Central Bank of Lesotho, P.O. Box 1184, Maseru 100,Lesotho)

  • SAYED TIMUNO

    (Macroeconomic Management Programme,Macroeconomic and Financial Management Institute of Eastern and Southern Africa,P.O. Box A1419, Harare,Zimbabwe)

Abstract

Botswana’s electricity supply is overwhelmed by the growing energy demands with the peak electric power deficits being met through imports. This study seeks to understand the key drivers of this increasing electricity demand. Using the Autoregressive Distributed Lag (ARDL) bounds testing and Error Correction Model (ECM), it examines the role played by financial development, industrialisation and urbanization in Botswana’s energy (or more specifically electricity)-growth nexus between 1981 and 2011. The findings reveal that economic growth, financial development and industrialization positively affect electricity consumption in the short-run and long-run. However, urbanization increases electricity consumption only in the long-term. These finding not only support conservation hypothesis but also imply that policy-makers should take into account the increase in electricity demand arising from financial development, urbanization and industrialisation in energy (electricity) consumption planning in the economy to avoid energy crisis. In addition, policy-makers should search and invests in renewable energy sources such as solar to increase access to cheap energy source.

Suggested Citation

  • Lira P. Sekantsi & Sayed Timuno, 2017. "Electricity Consumption In Botswana: The Role Of Financial Development, Industrialisation And Urbanization," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 19, pages 75-102, June.
    • Handle: RePEc:aic:revebs:y:2017:j:19:sekantsil
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    Cited by:

    1. Maswabi, Mareledi Gina & Chun, Jungwoo & Chung, Suh-Yong, 2021. "Barriers to energy transition: A case of Botswana," Energy Policy, Elsevier, vol. 158(C).
    2. Oluwarotimi Ayokunnu Owolabi & Asa-Ruth Oboku Oku & Abidemi Alejo & Toun Ogunbiyi & Jeremiah Ifeanyi Ubah, 2021. "Access to Electricity, Information and Communications Technology (ICT), and Financial Development: Evidence From West Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 247-259.
    3. Asuamah Yeboah, Samuel, 2018. "Do government activities determine electricity consumption in Ghana? An empirical investigation," MPRA Paper 89408, University Library of Munich, Germany.
    4. Shantha Indrajith H. Liyanage & Fulu Godfrey Netswera & Abel Motsumi, 2021. "Insights from EU Policy Framework in Aligning Sustainable Finance for Sustainable Development in Africa and Asia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 459-470.
    5. Hlongwane, Nyiko Worship & Daw, Olebogeng David & Sithole, Mixo Sweetness, 2023. "Renewable electricity generation and government expenditure on economic growth of South Africa and Botswana," MPRA Paper 116497, University Library of Munich, Germany, revised 24 Feb 2023.

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    More about this item

    Keywords

    Cointegration; Financial Development; Electricity Consumption; Industrialisation; Urbanization; Botswana;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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