Energy Consumption and Economic Growth in Africa: Examining the Influence of Income Level and Oil Production

Abstract

Abstract This study investigates how oil production and income levels influence the relationship between energy consumption and economic growth across the 54 African countries over the period 1996 to 2022. Employing the Random Effects Method—validated through the Hausman Test—the analysis explores both the direct and interactive (moderating) roles of income and oil production. The findings reveal that income level significantly impacts economic growth in two ways: directly and by strengthening the positive effect of energy consumption on growth. This dual influence underscores the critical role of income as both a catalyst for economic expansion and a key factor in shaping the energy-growth relationship. In contrast, oil production demonstrates neither a statistically significant independent effect nor a moderating influence on the energy-growth nexus. This outcome suggests that, despite the prominence of oil in many African economies, its role in fostering broad-based economic growth through energy consumption may be limited or context dependent. The results emphasize the importance of tailoring energy and development policies to reflect the varying income dynamics among African nations. By prioritizing income-sensitive strategies, policymakers can better support sustainable economic growth while effectively managing the region’s diverse energy demands and development challenges especially in resource-constrained and fossil-fuel-dependent economies.