Abstract
This research adds to the existing research on remittances and energy poverty by exploring the potential non-linear link between these two variables. Additionally, it identifies the remittance threshold necessary to mitigate energy poverty in Sub-Saharan African (SSA) countries. This study also assesses whether the remittance threshold varies among different countries in SSA, depending on their respective income levels. To this end, this study makes use of the two-step system generalised method of moments (GMM) estimator applied to a panel dataset comprising of 41 SSA nations from 1996 to 2020. The research shows that remittances positively influence access to clean cooking fuels and technology in SSA and in higher-income countries more specifically. However, in low-income countries, the impact of remittances on promoting access to clean cooking fuels and technology is negative. Furthermore, the remittance thresholds vary across different countries’ income groups and according to the two measures of energy poverty. When considering access to clean fuels and technology the remittance threshold for SSA is 35.75% of GDP, whereas for low-income countries the remittance threshold is 8.73% of GDP, significantly lower than in lower-middle, upper-middle- and high-income countries, where the remittance threshold is 30.31% of GDP. Additionally, when considering access to electricity, the remittance threshold for SSA is 16.84% of GDP, while the remittance threshold for low-income countries is 19.6% of GDP, significantly higher than in lower-middle, upper-middle- and high-income countries, where the remittance threshold is 17.3% of GDP. In light of the research outcomes, policymakers are presented with several recommendations to facilitate energy poverty reduction in SSA countries. Policymakers are advised to ease the costs that migrants have to incur when sending remittances to family members in their home countries as a strategy to promote an increase in remittance inflows.
Keywords: remittances, energy poverty, electricity, clean fuels and technologies, Sub-Saharan Africa, two-step system GMM.