Energy Demand, Productivity Growth and Economic Growth in Oil producing African countries Ishmael Ackah , University of Portsmouth, [email protected] Supervisor:Dr Renatas Kizys Introduction Energy is the convertible currency of modern development. This is because energy facilitates production, transportation and communication .  Despite these benefits, only 31% of the population of Sub-Saharan African have access to modern forms of energy. Figure 1. A child studying with lantern This study builds on the paper by Hunt Productivity is estimated in a Hicksian growth accounting et al (2003) by estimating productivity InA  InYt  InKt  InLt separately from the stochastic trend. The Following Hunt et al (2003), the structural time series study seeks to: model proceed as: Estimate the effect of economic and non-economic factors on renewable and t y t p t A t it t non-renewable energy demand. e is energy demand, p is price, y is income, A is Productivity, and is  the stochastic trend  Examine the causal relation between energy demand and economic growth e   y   p   A     Results Energy Demand Table 1. STSM output (short run) Nigeria Figure 2. energy demand R Source: Economist, November 18th, 2013 18 Productivity 0.003 17 Income 16 Price for investment 0.005 Ghana NR R -3.242 ---- 3.04 0.095 NR Algeria R South Africa NR R NR -4.136 1.341 0.866 --- 0.587 0.582 0.682 1.308 0.964 3.004 in energy Changes in income have more effect on energy demand than changes in price There is a causal relation between energy demand and growth The study recommends that energy policies should consider investment in renewable energy and productivity. In addition, energy price subsidies should be removed since price changes do not have much impact on energy demand. References *R is renewable energy * NR is non-renewable energy *--- not significant 13 Hunt LC, Judge G. and Ninomiya Y. 2003a “Modelling Underlying Energy Demand Trends.” in Energy in Competitive Market: Essays in Honour of Colin Robinson pp. 140-174. Hunt LC (Ed) Edward Elgar, UK 12 Table 2. STSM output (Long run) 11 Since energy investments require huge capital outlay and long lead times, knowledge of energy demand trend can assist with investment and policy decision making. Renewable and non-renewable energy demand are responsive to changes in productivity -0.0001 -0.011 -0.0007 -0.014 -0.038 -0.002 -0.012 -0.003 15 14  This calls resources Conclusion Method Research Aims 1975 1980 1985 1990 1995 Non-Renewable Renewables 2000 2005 2010 Nigeria R NR Ghana R NR Algeria R NR South Africa R NR Renewable energy grew at 0.48% whilst Productivity 0.004 -0.915 --- -2.021 -0.034 8.407 --- 1.583 non-renewable grew at 0.54% per annum Income 0.005 2.314 0.509 2.831 1.583 6.621 2.351 1.607 from 1971 to 2010 Price -0.0013 -0.031 -0.610 -0.007 -0.043 -0.019 -0.023 -0.005