Green total factor energy efficiency gap in Africa: Exploring the role of technology, human resources, and institutions

Energy efficiency (EE) is essential for sustainable development; nevertheless, Africa, which faces some of the most acute energy challenges globally, remains underexplored in this context. Although existing literature emphasizes technology, human capital, and institutional quality as crucial determinants of EE, their specific effects in Africa have received less attention. This study utilizes stochastic frontier analysis to investigate the influence of these factors on green total factor energy efficiency (GTFEE) in 33 African nations from 1990 to 2020 within a unified framework for precise estimation. We find that a 1% improvement in institutional quality or human capital is associated with a 4.7% and 4.5% increase in GTFEE, respectively. Technology has a significant impact at first, but it becomes statistically insignificant when all three variables are considered simultaneously. Nonetheless, technology improves efficiency in middle-income countries when income is disaggregated, but it exacerbates it in low-income settings, implying that the benefits of technological adoption have developmental limitations. These results are similar across different GDP measures and functional forms. EE remains unevenly distributed across the continent in terms of GTFEE performance. The average GTFEE is 0.80, with South Africa (0.95), Egypt (0.93), and Morocco (0.90) ranking highest and Mozambique and Rwanda (0.57) ranking lowest. Based on these findings, several policies are proposed.

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