Energy Transition and Economic Growth in African OPEC Countries

Abstract

<title>Abstract</title> The study examined the relationship between energy swap and economic growth in OPEC African countries from 1990 to 2023, employing panel and time series ARDL estimation techniques. By examining GDP per capita as the dependent variable, along with fossil fuel consumption and total renewable energy consumption as independent variables, this study provides insightful findings. The results indicate a noteworthy divergence: approximately 57.14% of the countries analyzed, namely Algeria, Nigeria, Angola, and the Democratic Republic of Congo, exhibit a negative and non-significant relationship between both fossil fuel and renewable energy consumption and economic growth. In contrast, around 42.86% of the countries assessed, including Gabon, the Republic of Congo, and Equatorial Guinea, demonstrate a positive correlation, suggesting that energy consumption can significantly contribute to economic development. The results further revealed that a unidirectional relationship exists between fossil fuel consumption, renewable energy consumption, and economic growth. Based on the results, this study contributes to recent energy discussions as it advocates for a re-evaluation of government policies surrounding energy consumption in OPEC African countries. By adopting a hybrid energy strategy, policymakers in OPEC countries could facilitate a more seamless transition to renewable sources while still benefiting from fossil fuels. This balanced approach has the potential to enhance energy integration and promote sustainable economic growth across the OPEC countries in Africa.