Author(s)

Morlai Bangura^*, Olufemi Saibu

Department of Economics, University of Lagos, Lagos, Nigeria.

Despite the implementation of various initiatives and reforms aimed at enhancing electricity generation in the West African sub-region, the provision of reliable and consistent electricity supply remains a challenge. Consequently, the objective of this study is to examine the factors that influence the demand for electricity within the Economic Community of West African States (ECOWAS). To achieve this objective, this study utilised a balanced panel dataset comprising eleven (11) countries spanning the period from 1980 to 2019. Specifically, three commonly employed static models were utilised, namely pooled ordinary least squares, fixed effect, and random effect models. The model selection criteria confirmed the superiority of the fixed effect model. There were signs of serial correlation, heteroscedasticity, and cross-sectional dependency in the fixed effect model when it was carefully tested for its robustness. To address these concerns, the fixed effect regression with Driscoll and Kraay standard errors technique was utilised. The findings from the study suggest that economic growth, foreign direct investment, and industrial expansion exert a significant and positive influence on the demand for electricity in the ECOWAS region. The study further revealed that there is no statistically significant impact of population growth and trade openness on electricity demand. Therefore, it is recommended that the governments within the ECOWAS region intensify their efforts in implementing reforms aimed at enhancing the capacity and efficacy of electricity generation. Such endeavours will contribute to the region’s capacity for long-term economic growth. Furthermore, it is imperative to implement policies that are specifically designed to establish a favourable environment for attracting foreign direct investment and promoting industrialization.

Energy, Electricity Demand, Panel Data, Ecowas

Bangura, M. and Saibu, O. (2024) Modeling Electricity Demand in the Ecowas Region: New Insights Using Fixed Effect with Driscoll and Kraay Standard Errors. Modern Economy, 15, 67-85. doi: 10.4236/me.2024.151004.