Determinants of Renewable Electricity Generation in Africa

Abstract

Africa’s electricity insecurity issues are getting worse. However, there has been significant foreign direct investment (FDI) absorbed by the renewable electricity generation (REG) industry in the last twenty years. To date, the impact of FDI on REG in Africa has yet to be investigated. This study thus empirically examines REG determinants with a special focus on FDI in forty African countries between 2000 and 2019. By using the Prais-Winsten panel corrected standard errors model, a range of promising results are revealed. Importantly, we find compelling evidence that FDI inflows directly and indirectly limit, or even impede, REG development. What’s more, Africa’s population growth undermines REG. However, the encouraging result is that raising awareness in Africa of renewable energy boosts REG. We conclude that there is a necessity for the gradual reform of lax environmental laws and renewable energy education plans in Africa.