Does capital flight set Africa as the seat of darkness? Linking capital flight and energy poverty

Désire Avom, Chrysost Bangake () and Brice Kamguia
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Désire Avom: CEREG, Faculty of Economics and Management, University of Yaoundé 2 SOA
Chrysost Bangake: LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique
Brice Kamguia: CEREG, Faculty of Economics and Management, University of Yaoundé 2 SOA

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Abstract: Despite the fact that capital flight is a scourge for African economies, no study, to the best of our knowledge, has analyzed its effects on energy poverty. This study aims to fill this gap in the literature by providing one of the first empirical studies of the effects of capital flight on energy poverty. The present study focuses on a panel of 30 countries in Africa over the period 2000–2018. We use Principal Component Analysis (PCA) to construct an energy poverty indicator. Results suggest that capital flight increases energy poverty in Africa. This result is robust when controlling for endogeneity. Additionally, good institutional quality helps mitigate the negative effects of capital flight on energy poverty. Further analysis allows us to identify income inequality, government spending and unemployment as the channels through which capital flight influences energy poverty. Policy wise, better control of capital flows based on appropriate institutional settings should reduce energy poverty in Africa.

Date: 2024-11-01
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Published in Energy, 2024, 308, pp.133033. ⟨10.1016/j.energy.2024.133033⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04816685

DOI: 10.1016/j.energy.2024.133033

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