The impact of renewable energy consumption on inclusive growth: panel data analysis in 44 African countries

Energy needs are growing in Africa. The continent is rich in renewable energy resources, and the majority of countries are willing to change their energy regime by moving to the development and increased use of renewable energy. Increasing the share of renewable energy in the total energy mix is one way to improve the quality of economic growth. However, although economic growth has improved in Africa, it has not necessarily translated into sustained poverty reduction and equitable sharing. It is therefore important that the benefits of modern and renewable energy are captured by all. In that perspective, this research aims to explore the potential impact of renewable energy consumption on inclusive growth in 44 African countries. To do this, a dynamic panel data model is estimated with the System Generalized Method of Moments for a period covering 1991–2015. Focusing on inclusive growth that increases the size of the economy and creates employment opportunities for different segments of society, the main finding of the study is that renewable energy consumption has a significant positive impact on inclusive growth in Africa, particularly in African countries experiencing low levels of inclusive growth. Thus, if African countries succeed in making the transition to renewable energy effective, then incredible gains in inclusive growth could be captured, especially in countries with low levels of inclusive growth.