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Financial Inclusion and Energy Poverty in Sub-Saharan Africa: Does Institutional Quality Matter?

Author

Listed:
  • Barbara Deladem Mensah

    (Accra, Ghana)

  • Abdallah Abdul-Mumuni

    (Accra, Ghana)

  • Simplice A. Asongu

    (Johannesburg, South Africa)

  • Thomas Elorm Tagbotor

    (Accra, Ghana)

Abstract

Despite worldwide efforts to combat energy poverty (EP), many economies, notably emerging nations in Africa, continue to struggle. This research aims to explore the potential benefits of Financial Inclusion that could contribute to energy poverty alleviation in Sub-Saharan Africa (SSA) due to its prevalence in African economies. To fulfil the purpose of this research, secondary data were collected from the World Bank Databases for 24 African countries over the extended period from 2011 to 2020. The Dynamic System GMM approach was used for data analysis to unfold the nexus between financial inclusion, institutional quality and energy poverty. The study further employed the Driscoll-Kraay regression and the method of moments quantile regression (MMQR). Study results reveal that supply-side financial inclusion (SFI) and demand-side financial inclusion (DFI) drive energy poverty alleviation in SSA, especially for access to clean fuels and electricity. For the regional effect, SFI and DFI enhance energy poverty alleviation in the Eastern and South African regions. Moreover, the results indicate that the quality of the institutions was a factor that favoured the energy poverty alleviation, especially at higher quantiles. The significant role of institutional quality in the financial inclusion-energy poverty alleviation nexus was observed in the West African region. According to the results, quality institutions help financial inclusion reduce energy poverty in SSA. To foster sustainable energy development and investment in SSA, governments should strengthen regulatory frameworks, streamline bureaucratic processes, and promote transparency and accountability. This study contributes to financial inclusion literature relating to energy poverty alleviation and fulfils the research gap to some extent by examining the potential effect and role of institutional quality in shaping the relationship between financial inclusion and energy poverty in SSA.

Suggested Citation

  • Barbara Deladem Mensah & Abdallah Abdul-Mumuni & Simplice A. Asongu & Thomas Elorm Tagbotor, 2026. "Financial Inclusion and Energy Poverty in Sub-Saharan Africa: Does Institutional Quality Matter?," Working Papers of the African Governance and Development Institute. 26/058, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:26/058
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