Abstract:
Energy security is crucial for Eastern Africa's economic prosperity and the improvement of
living standards. Exploring the drivers of energy consumption is essential for crafting effective
energy policy actions that are aligned with focused developmental goals and leveraging
available energy resources. Using the Panel Autoregressive Distributed Lag model, this study
examines the short and long-run macroeconomic drivers of energy consumption in Eastern
Africa from the period 2000-2021. Results reveal that inflation (i.e. consumer price index)
exhibits a short-run negative impact on energy consumption. However, in long term, inflation
has a positive relationship with energy consumption. The study also show that population size
has a negative short-run effect on energy consumption. However, in long term an increase in
population size drives energy consumption in EAC. Moreover, trade openness influences shortrun consumption and foreign direct investment impacts long-run consumption. The
mechanisms influencing these macroeconomics determinants of energy consumption are
discussed. We suggest addressing population trends, inflation crisis, and trade-induced
fluctuations in the short run, while fostering an environment conducive to attracting foreign
direct investment and controlling inflation in the long run. Achieving regional energy security
and economic resilience necessitates a balanced approach that considers both internal and
external factors across different timeframes.
