IDEAS home Printed from https://ideas.repec.org/a/rnd/arjebs/v17y2025i1p96-107.html
   My bibliography  Save this article

Macro-Financial Determinants of Electricity Power Loss in Uganda

Author

Listed:
  • Alex Twinomuhwezi
  • Benjamin Musiita
  • Frederick Nsambu Kijjambu

Abstract

This study examined the macro-financial determinants of electricity power loss in Uganda, with objectives that looked at GDP per capita, inflation, lending rates, the real effective exchange rate, and energy investment in electricity power loss. This study adopted a time series quantitative methodology. The secondary data was collected from reliable sources such as the World Bank, the Bank of Uganda, and the Electricity Regulatory Authority, spanning 20 years. The research applied a VAR model to analyze the short-run dynamics of the variables under consideration. The data were first cleaned to handle heteroscedasticity issues and missing values. The study found some of Uganda's most significant determinants of electricity losses to be macro-financial factors such as inflation, GDP per capita differences, and energy investment. Inflation volatility increased power losses, as did differences in GDP per capita, while low investment in energy translated to inefficiency within the electricity sector. Lending rates inhibited the infrastructural development of energy and, hence, power distribution and transmission efficiency. Therefore, the study concludes that addressing these macro-financial factors- inflation control, efficient energy investment, and economic policies- minimizes losses of electricity power in Uganda. This study suggests focusing on inflation stabilization, attracting investment in the energy sector, controlling the lending rate, and upgrading energy infrastructure management for better efficiency in the overall Ugandan electricity system. In addition, addressing issues of exchange rates and modern energy distribution technologies is central to minimizing losses and promoting an efficient energy sector.

Suggested Citation

  • Alex Twinomuhwezi & Benjamin Musiita & Frederick Nsambu Kijjambu, 2025. "Macro-Financial Determinants of Electricity Power Loss in Uganda," Journal of Economics and Behavioral Studies, AMH International, vol. 17(1), pages 96-107.
    • Handle: RePEc:rnd:arjebs:v:17:y:2025:i:1:p:96-107
    DOI: 10.22610/jebs.v17i1(J).4458
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/4458/2953
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/4458
    Download Restriction: no
    File URL: https://libkey.io/10.22610/jebs.v17i1(J).4458?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Vignesh Sridharan & Oliver Broad & Abhishek Shivakumar & Mark Howells & Brent Boehlert & David G. Groves & H-Holger Rogner & Constantinos Taliotis & James E. Neumann & Kenneth M. Strzepek & Robert Lem, 2019. "Resilience of the Eastern African electricity sector to climate driven changes in hydropower generation," Nature Communications, Nature, vol. 10(1), pages 1-9, December.
    2. Olivares, Kin G. & Challu, Cristian & Marcjasz, Grzegorz & Weron, Rafał & Dubrawski, Artur, 2023. "Neural basis expansion analysis with exogenous variables: Forecasting electricity prices with NBEATSx," International Journal of Forecasting, Elsevier, vol. 39(2), pages 884-900.
    3. Nikhil Patel & Zhi Wang & Shang‐Jin Wei, 2019. "Global Value Chains and Effective Exchange Rates at the Country‐Sector Level," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(S1), pages 7-42, December.
    4. Tatyana Deryugina & Alexander MacKay & Julian Reif, 2020. "The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation," American Economic Journal: Applied Economics, American Economic Association, vol. 12(1), pages 86-114, January.
    5. Probst, Benedict & Westermann, Lotte & Anadón, Laura Díaz & Kontoleon, Andreas, 2021. "Leveraging private investment to expand renewable power generation: Evidence on financial additionality and productivity gains from Uganda," World Development, Elsevier, vol. 140(C).
    6. Abdul Rahim Ridzuan & Mahirah Kamaluddin & Nor Asmat Ismail & Mohamad Idham Md Razak & Nazatul Faizah Haron, 2020. "Macroeconomic Indicators for Electrical Consumption Demand Model in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 16-22.
    7. Werner Roeger & Paul J. J. Welfens, 2022. "Gas price caps and electricity production effects in the context of the Russo-Ukrainian War: modeling and new policy reforms," International Economics and Economic Policy, Springer, vol. 19(4), pages 645-673, October.
    8. Grażyna Szustak & Piotr Dąbrowski & Witold Gradoń & Łukasz Szewczyk, 2021. "The Relationship between Energy Production and GDP: Evidence from Selected European Economies," Energies, MDPI, vol. 15(1), pages 1-11, December.
    9. Chen, Hao & Jin, Lu & Wang, Mingming & Guo, Lin & Wu, Jingwen, 2023. "How will power outages affect the national economic growth: Evidence from 152 countries," Energy Economics, Elsevier, vol. 126(C).
    10. Sam, Chung Yan & McNown, Robert & Goh, Soo Khoon, 2019. "An augmented autoregressive distributed lag bounds test for cointegration," Economic Modelling, Elsevier, vol. 80(C), pages 130-141.
    11. Sandra Eickmeier & Boris Hofmann, 2022. "What drives inflation? Disentangling demand and supply factors," BIS Working Papers 1047, Bank for International Settlements.
    12. Ioannis Dokas & Minas Panagiotidis & Stephanos Papadamou & Eleftherios Spyromitros, 2022. "The Determinants of Energy and Electricity Consumption in Developed and Developing Countries: International Evidence," Energies, MDPI, vol. 15(7), pages 1-30, March.
    13. Bigerna, Simona & Wen, Xingang & Hagspiel, Verena & Kort, Peter M., 2019. "Green electricity investments: Environmental target and the optimal subsidy," European Journal of Operational Research, Elsevier, vol. 279(2), pages 635-644.
    14. Murshed, Muntasir & Ozturk, Ilhan, 2023. "Rethinking energy poverty reduction through improving electricity accessibility: A regional analysis on selected African nations," Energy, Elsevier, vol. 267(C).
    15. Özdemir, Özge & Hobbs, Benjamin F. & van Hout, Marit & Koutstaal, Paul R., 2020. "Capacity vs energy subsidies for promoting renewable investment: Benefits and costs for the EU power market," Energy Policy, Elsevier, vol. 137(C).
    16. Kumar, Satish, 2019. "Asymmetric impact of oil prices on exchange rate and stock prices," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 41-51.
    17. Abdallah, Chadi & Kpodar, Kangni, 2023. "How large and persistent is the response of inflation to changes in retail energy prices?," Journal of International Money and Finance, Elsevier, vol. 132(C).
    18. Mihaela Simionescu & Yuriy Bilan & Emília Krajňáková & Dalia Streimikiene & Stanisław Gędek, 2019. "Renewable Energy in the Electricity Sector and GDP per Capita in the European Union," Energies, MDPI, vol. 12(13), pages 1-15, June.
    19. Trotter, Philipp A. & Cooper, Nathanial J. & Wilson, Peter R., 2019. "A multi-criteria, long-term energy planning optimisation model with integrated on-grid and off-grid electrification – The case of Uganda," Applied Energy, Elsevier, vol. 243(C), pages 288-312.
    20. Rabson Magweva & Mabutho Sibanda & Mariam Camarero, 2020. "Inflation and infrastructure sector returns in emerging markets—panel ARDL approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1730078-173, January.
    21. Wabukala, Benard M. & Mukisa, Nicholas & Watundu, Susan & Bergland, Olvar & Rudaheranwa, Nichodemus & Adaramola, Muyiwa S., 2023. "Impact of household electricity theft and unaffordability on electricity security: A case of Uganda," Energy Policy, Elsevier, vol. 173(C).
    22. Ondřej Bednář & Andrea Čečrdlová & Božena Kadeřábková & Pavel Řežábek, 2022. "Energy Prices Impact on Inflationary Spiral," Energies, MDPI, vol. 15(9), pages 1-25, May.
    23. Hassan, Muhammed A. & Bailek, Nadjem & Bouchouicha, Kada & Nwokolo, Samuel Chukwujindu, 2021. "Ultra-short-term exogenous forecasting of photovoltaic power production using genetically optimized non-linear auto-regressive recurrent neural networks," Renewable Energy, Elsevier, vol. 171(C), pages 191-209.
    24. Cristiana Tudor & Robert Sova, 2021. "On the Impact of GDP per Capita, Carbon Intensity and Innovation for Renewable Energy Consumption: Worldwide Evidence," Energies, MDPI, vol. 14(19), pages 1-25, October.
    25. Si, Deng-Kui & Li, Xiao-Lin & Huang, Shoujun, 2021. "Financial deregulation and operational risks of energy enterprise: The shock of liberalization of bank lending rate in China," Energy Economics, Elsevier, vol. 93(C).
    26. Beckmann, Joscha & Czudaj, Robert L. & Arora, Vipin, 2020. "The relationship between oil prices and exchange rates: Revisiting theory and evidence," Energy Economics, Elsevier, vol. 88(C).
    27. Atangana, Abdon & Doungmo Goufo, Emile Franc, 2022. "Modern and generalized analysis of exogenous growth models," Chaos, Solitons & Fractals, Elsevier, vol. 163(C).
    28. Adam Hale Shapiro, 2022. "How Much Do Supply and Demand Drive Inflation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2022(15), pages 1-06, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wei Wang & Kehui Wei & Oleksandr Kubatko & Vladyslav Piven & Yulija Chortok & Oleksandr Derykolenko, 2023. "Economic Growth and Sustainable Transition: Investigating Classical and Novel Factors in Developed Countries," Sustainability, MDPI, vol. 15(16), pages 1-15, August.
    2. Hlongwane, Nyiko Worship, 2022. "The relationship between oil prices and exchange rates in South Africa," MPRA Paper 113209, University Library of Munich, Germany.
    3. Davood Pirayesh Neghab & Mucahit Cevik & M. I. M. Wahab, 2023. "Explaining Exchange Rate Forecasts with Macroeconomic Fundamentals Using Interpretive Machine Learning," Papers 2303.16149, arXiv.org.
    4. Bigerna, Simona & Hagspiel, Verena & Kort, Peter M. & Wen, Xingang, 2023. "How damaging are environmental policy targets in terms of welfare?," European Journal of Operational Research, Elsevier, vol. 311(1), pages 354-372.
    5. Witold Orzeszko, 2021. "Nonlinear Causality between Crude Oil Prices and Exchange Rates: Evidence and Forecasting," Energies, MDPI, vol. 14(19), pages 1-16, September.
    6. Lin, Boqiang & Li, Minyang, 2022. "Understanding the investment of renewable energy firms in the face of economic policy uncertainty – Micro-evidence from listed companies in China," China Economic Review, Elsevier, vol. 75(C).
    7. Emmanuel Uche & Lionel Effiom, 2021. "Oil price, exchange rate and stock price in Nigeria: Fresh insights based on quantile ARDL model," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2021(1), pages 59-79.
    8. Davood Pirayesh Neghab & Mucahit Cevik & M. I. M. Wahab & Ayse Basar, 2025. "Explaining Exchange Rate Forecasts with Macroeconomic Fundamentals Using Interpretive Machine Learning," Computational Economics, Springer;Society for Computational Economics, vol. 65(4), pages 1857-1899, April.
    9. Jean-Guillaume Sahuc & Grégory Levieuge & José Garcia-Revelo, 2024. "Revisiting 15 Years of Unusual Transatlantic Monetary Policies," Working Papers hal-04563708, HAL.
    10. Lilian Muchimba & Mimoza Shabani & Alexis Stenfors & Jan Toporowski, 2024. "Decomposing the Rate of Inflation: Price-Setting and Monetary Policy," Working Papers in Economics & Finance 2024-04, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
    11. Puranasamriddhi, A. & Trotter, P.A. & Parikh, P. & Batidzirai, B. & Brophy, A., 2025. "Which context matters for capturing energy needs? A multi-level analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 207(C).
    12. Yue Liu & Pierre Failler & Jiaying Peng & Yuhang Zheng, 2020. "Time-Varying Relationship between Crude Oil Price and Exchange Rate in the Context of Structural Breaks," Energies, MDPI, vol. 13(9), pages 1-17, May.
    13. Vincenzo Candila & Denis Maximov & Alexey Mikhaylov & Nikita Moiseev & Tomonobu Senjyu & Nicole Tryndina, 2021. "On the Relationship between Oil and Exchange Rates of Oil-Exporting and Oil-Importing Countries: From the Great Recession Period to the COVID-19 Era," Energies, MDPI, vol. 14(23), pages 1-18, December.
    14. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Rasoulinezhad, Ehsan & Rimaud, Cedric, 2021. "Power purchase agreements with incremental tariffs in local currency: An innovative green finance tool," Global Finance Journal, Elsevier, vol. 50(C).
    15. Liang, Enshuo & Zhang, Lei & Gao, Yuan & Fan, Wei, 2024. "The efficiency of natural resources in research and development: Developed economies’ mineral resources perspective," Resources Policy, Elsevier, vol. 95(C).
    16. Karasoy, Alper, 2022. "Is innovative technology a solution to Japan's long-run energy insecurity? Dynamic evidence from the linear and nonlinear methods," Technology in Society, Elsevier, vol. 70(C).
    17. Libo Zhang & Qian Du & Dequn Zhou, 2021. "Grid Parity Analysis of China’s Centralized Photovoltaic Generation under Multiple Uncertainties," Energies, MDPI, vol. 14(7), pages 1-19, March.
    18. Hindriks, Jean & Serse, Valerio, 2022. "The incidence of VAT reforms in electricity markets: Evidence from Belgium," International Journal of Industrial Organization, Elsevier, vol. 80(C).
    19. Julian di Giovanni & Şebnem Kalemli-Özcan & Alvaro Silva & Muhammed A Yildirim, "undated". "Pandemic-era Inflation Drivers and Global Spillovers," RBA Annual Conference Papers acp2023-01, Reserve Bank of Australia, revised Nov 2023.
    20. Yingce Yang & Junjie Guo & Ruihong He, 2023. "The Asymmetric Impact of the Oil Price and Disaggregate Shocks on Economic Policy Uncertainty: Evidence From China," SAGE Open, , vol. 13(2), pages 21582440231, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnd:arjebs:v:17:y:2025:i:1:p:96-107. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/jebs .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.