Put on the light! Foreign direct investment, governance and access to electricity

TY - JOUR

T1 - Put on the light! Foreign direct investment, governance and access to electricity

AU - Aluko, Olufemi Adewale

AU - Opoku, Eric Evans Osei

AU - Ibrahim, Muazu

AU - Kufuor, Nana Kwabena

N1 - Publisher Copyright: © 2023 Elsevier B.V.

PY - 2023/3

Y1 - 2023/3

N2 - Despite efforts and commitments to achieve universal coverage of electricity, overall access in Africa is below expectation, making the attainment of the United Nations' Sustainable Energy for All Initiative almost a mirage for this region. The inability to mobilize adequate domestic financial resources and a seeming lack of political will (reflected in governance) have been highlighted as two of the major bottlenecks in the development of electricity infrastructure in African regio. Regarding inadequate financial resources, we argue that inflows of foreign direct investment (FDI) and the influx of multinational enterprises can help a great deal. To this end, we investigate the impact of FDI on access to electricity and further examine whether this impact is contingent on the governance architecture. Using a sample of 36 African countries, and the instrumental variable (IV) approach to the generalized method of moments (GMM), our results suggest that, for the most part, the direct impacts of FDI and governance on access to electricity are positive. The role of governance in the FDI impact on electricity was established.

AB - Despite efforts and commitments to achieve universal coverage of electricity, overall access in Africa is below expectation, making the attainment of the United Nations' Sustainable Energy for All Initiative almost a mirage for this region. The inability to mobilize adequate domestic financial resources and a seeming lack of political will (reflected in governance) have been highlighted as two of the major bottlenecks in the development of electricity infrastructure in African regio. Regarding inadequate financial resources, we argue that inflows of foreign direct investment (FDI) and the influx of multinational enterprises can help a great deal. To this end, we investigate the impact of FDI on access to electricity and further examine whether this impact is contingent on the governance architecture. Using a sample of 36 African countries, and the instrumental variable (IV) approach to the generalized method of moments (GMM), our results suggest that, for the most part, the direct impacts of FDI and governance on access to electricity are positive. The role of governance in the FDI impact on electricity was established.

KW - Africa

KW - Electricity access

KW - FDI

KW - Governance

UR - https://www.scopus.com/pages/publications/85148039294

U2 - 10.1016/j.eneco.2023.106563

DO - 10.1016/j.eneco.2023.106563

M3 - Article

AN - SCOPUS:85148039294

SN - 0140-9883

VL - 119

JO - Energy Economics

JF - Energy Economics

M1 - 106563

ER -