Divergence of Electric Power Consumption: Evidence from the Sapp

By Jaunky, Vishal C. | The Journal of Developing Areas, Fall 2010 | Go to article overview

Divergence of Electric Power Consumption: Evidence from the Sapp


Jaunky, Vishal C., The Journal of Developing Areas


ABSTRACT

With the relatively low per capita electric power consumption in Africa, several electric power pools have been emerging recently. The South African Power Pool (SAPP), the first of those power pools, started operating in 1995 under the aegis of the Southern African Development Community (SADC). This paper attempts to assess the convergence pattern of relative per capita electric power consumption within the SAPP over the period 1995-2005. A comparative study across regions is first conducted. Evidence in support of neoclassical convergence hypotheses such as the β-convergence and σ-convergence is obtained. Stochastic convergence is investigated by applying panel unit roots tests. In contrast, stochastic divergence of electric power consumption is found. Additionally, stochastic kernel analysis provides some evidence of club-formation.

Keywords: Convergence, Electric Power Consumption, Africa

JEL: C23, Q41

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

Africa is abundantly endowed with natural resources and yet electricity consumption remains quite sparse. Less than one-third of the African countries are connected to the power grid (Kauffman, 2005). It is well established that sustainable economic growth goes through the development of a reliable electrical power sector. An amalgamation of bad climatic conditions, political turmoil, wars, damage or poor maintenance policy of electrification infrastructure has led to erratic and inadequate electric power supply in many African states. These factors, coupled with the wide disparity in energy resources among countries, have provided solid grounds for energy integration. Regional power pools have been recently been enacted by several regional blocks such as the Southern African Development Community (SADC), Economic Community of West African States (ECOWAS) and Central African Power Pool (CAPP). The main objectives of these power pools are to enhance greater access to electricity among members and neighboring states, minimize production costs and ensure stability of energy supply across regions.

The first power pool, namely the South African Power Pool (SAPP), was created in August 1995 by the SADC. The SAPP encompasses twelve states which are Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. In 2001, under the aegis of the ECOWAS, the West African Power Pool (WAPP) was established. It is made up of fourteen countries which are Benin, Burkina Faso, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. In 2005, the CAPP was formed by nine countries mainly Angola, Cameroon, Central African Republic, Chad, Congo, Democratic Republic of Congo, Equatorial Guinea, Gabon and Sao Tome & Principe. The East African Power Pool (EAPP) is set to be instituted by nine electric power corporations from Ethiopia, Kenya, Democratic Republic of Congo, Rwanda, Burundi, Tanzania, Uganda, Sudan and Egypt (Sudan Tribune, 2005). The North African Power Pool (NAPP) consists of North African countries such as Algeria, Egypt, Libya, Mauritania, Morocco and Tunisia. These Maghreb countries are actually negotiating beyond the continent with their Mediterranean European neighbors such as Spain, Italy or Cyprus to formally establish the NAPP which will be connected to a Mediterranean Power Pool (MPP). Such eventual Mediterranean "ring" is bound to have major implications for economic growth and development in the region (ESI-Africa.Com, 2007).

Table 1 exposes the overall electricity generation and consumption by each regional pool. The SAPP is the highest electricity supplier and consumer whilst the CAPP the lowest. The development of regional power pools is an important step towards enhancing economic development in member states. With biomass constituting about 58% of total energy consumption in Africa (Kauffman, 2005), improved accessibility to electric power grid will enable women and children to rather spend their time doing valuable activities instead of searching for wood, dung, crop wastes, kerosene or other biomasses.

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