Electricity consumption and economic growth in East Africa

Electricity consumption is one of the aspects which influence economic growth in mostly of the countries. The more the electricity consumption, the more economic activity emerged in the nation and as a result a massive economic growth arose. This study uses East African countries as a cases study, using a sample data from 1984 to 2015. This study uses s time series cross sectional data (panel data) to analyze the electricity consumption and economic growth. Furthermore, pooled OLS (with robust standard errors), fixed and random effect model, difference and system GMM analysis used to examine the relationship between electricity consumption and economic growth. Through the widely used estimator of panel generalized method of moments (GMM) the result show that electricity consumption has insignificant effect on economic growth due to under performance of energy sector. This result is important and well be alarm call to respectively authorities especially Government and the Ministry responsible for energy as well as the development partners to ensure effectively consistent supply of electricity to both rural and urban area so as to facilitate economic growth. Furthermore, the study recommends that the power industry in East African countries should strongly focus on increasing the power generation capacity in order to facilitate economic growth. This can be done by encouraging new investments in the electricity sector and by using alternative energy sources for generating electricity power such us coal, wind, uranium and solar just mention the few.