Determinants of Energy Efficiency Enhancement from five selected West African Countries

Sammanfattning

This study employs a Stochastic Frontier Analysis (SFA) framework with a True Fixed Effects (TFE) model to examine the factors that influence energy efficiency in five chosen West African nations: Ghana, Mali, Burkina Faso, The Gambia, and Benin. Key explanatory variables such as labour force participation, gross capital formation, urbanisation, and foreign direct investment (FDI) are included in the research, which makes use of panel data from 2000 to 2021. The TFE model enables a more precise evaluation of efficiency determinants by separating technical inefficiency from country-specific variation. According to the results, energy intensity increases significantly with urbanisation, indicating that uncontrolled urban growth could result in increased energy inefficiencies. In contrast, foreign direct investment (FDI) is linked to lower energy intensity, suggesting that it may help transfer technology and encourage cleaner production methods. Urbanization contributes to increasing energy intensity implying efficiency loss, whereas FDI helps offset this effect by lowering energy intensity through technology transfer. There was no statistical significance in other variables, including capital formation and labour force participation. Furthermore, it was discovered that the inefficiency term was statistically insignificant, suggesting that random shocks rather than long-term inefficiency account for a large portion of the fluctuation in energy use.