Sectoral Energy Consumption in South Africa and Its Implication for Economic Growth
Abstract:South Africa is in its post-industrial era moving from
the primary and secondary sector to the tertiary sector. The study
investigated the impact of the disaggregated energy consumption
(coal, oil, and electricity) on the primary, secondary and tertiary
sectors of the economy between 1980 and 2012 in South Africa.
Using vector error correction model, it was established that South
Africa is an energy dependent economy, and that energy (especially
electricity and oil) is a limiting factor of growth. This implies that
implementation of energy conservation policies may hamper
economic growth. Output growth is significantly outpacing energy
supply, which has necessitated load shedding. To meet up the excess
energy demand, there is a need to increase the generating capacity
which will necessitate increased investment in the electricity sector as
well as strategic steps to increase oil production. There is also need to
explore more renewable energy sources, in order to meet the growing
energy demand without compromising growth and environmental
sustainability. Policy makers should also pursue energy efficiency
policies especially at sectoral level of the economy.
 C.-C. Lee, “The causality relationship between energy consumption and
GDP in G-11 countries revisited,” Energy Policy, vol. 34, no. 9, pp.
1086–1093, Jun. 2006.
 N. D. Uri, “A reconsideration of the effect of energy scarcity on
economic growth,” Energy, vol. 20, no. 1, pp. 1–12, 1995.
 E. Yıldırım, D. Sukruoglu, and A. Aslan, “Energy consumption and
economic growth in the next 11 Countries: The bootstrapped
autoregressive metric causality approach,” Energy Econ., vol. 44, pp.
 D. I. Stern, “A multivariate cointegration analysis of the role of energy
in the US economy,” Energy Econ., vol. 22, pp. 267–83, 2000.
 M. J. Herrerias, R. Joyeux, and E. Girardin, “Short- and long-run
causality between energy consumption and economic growth: Evidence
across regions in China,” Appl. Energy, vol. 112, pp. 1483–1492, 2013.
 N. M. Odhiambo, “Electricity consumption and economic growth in
South Africa: A trivariate causality test,” Energy Econ., vol. 31, no. 5,
pp. 635–640, Sep. 2009.
 E. Ziramba, “Disaggregate energy consumption and industrial
production in South Africa,” Energy Policy, vol. 37, no. 6, pp. 2214–
2220, Jun. 2009.
 M. E. Bildirici and T. Bakirtas, “The relationship among oil, natural gas
and coal consumption and economic growth in BRICTS (Brazil,
Russian, India, China, Turkey and South Africa) countries,” Energy, vol.
65, pp. 134–144, Feb. 2014.
 “Country analysis briefs: South Africa,” Energy Information Agency,
2014. (Online). Available: http://www.eia.gov/countries/cab.cfm/fips=sf.
 “World development Indicator 2014,” World Bank, 2014. .
 “Digest of South African energy statistics 2006,” Department of
Minerals and Energy, 2006. .
 “South African energy synopsis 2010,” Department of Energy, 2010.
(Online). Available: www.doe.gov.za.
 A. Eberhard and C. Van Horen, Poverty and Power. London: London
Pluto Press, 1995.
 N. S. Ouedraogo, “Energy consumption and economic growth: Evidence
from the economic community of West African States (ECOWAS),”
Energy Econ., vol. 36, pp. 637–647, Mar. 2013.
 N. Bowden and J. E. Payne, “The causal relationship between U.S.
energy consumption and real output: A disaggregated analysis,” J.
Policy Model., vol. 31, no. 2, pp. 180–188, Mar. 2009.
 N. Apergis and J. E. Payne, “Energy consumption and economic growth
in Central America: Evidence from a panel cointegration and error
correction model,” Energy Econ., vol. 31, no. 2, pp. 211–216, 2009.
 L. Jinke, S. Hualing, and G. Dianming, “Causality relationship between
coal consumption and GDP: difference of major OECD and non-OECD
countries,” Appl. Energy, vol. 85, no. 6, pp. 421–429, Jun. 2008.
 S. Z. Tsani, “Energy consumption and economic growth: A causality
analysis for Greece,” Energy Econ., vol. 32, no. 3, pp. 582–590, May
 N. M. Odhiambo, “Energy consumption and economic growth nexus in
Tanzania: An ARDL bounds testing approach,” Energy Policy, vol. 37,
no. 2, pp. 617–622, 2009.
 L. Dagher and T. Yacoubian, “The Causal Relationship between Energy
Consumption and Economic Growth in Lebanon,” Energy Policy, vol.
50, no. 2010, pp. 795–801, 2012.
 N. Apergis and J. E. Payne, “Energy consumption and economic growth:
Evidence from the Commonwealth of Independent States,” Energy
Econ., vol. 31, no. 5, pp. 641–647, 2009.
 U. Soytas and R. Sari, “Energy consumption and GDP: Causality
relationship in G-7 countries and emerging markets,” Energy Econ., vol.
25, no. 1, pp. 33–37, Jan. 2003.
 A. E. Akinlo, “Electricity consumption and economic growth in Nigeria:
Evidence from cointegration and co-feature analysis,” J. Policy Model.,
vol. 31, no. 5, pp. 681–693, 2009.
 J. Yuan, C. Zhao, S. Yu, and Z. Hu, “Electricity consumption and
economic growth in China: cointegration and co-feature analysis,”
Energy Econ., vol. 29, no. 6, pp. 1179–1191, Nov. 2007.
 S. Tsani, “Natural resources, governance and institutional quality: The
role of resource funds,” Resour. Policy, 2012.
 J. Squalli, “Electricity consumption and economic growth: Bounds and
causality analyses of OPEC members,” Energy Econ., vol. 29, no. 6, pp.
1192–1205, Nov. 2007.
 S. M. Onuonga, “The relationship between commercial energy
consumption and gross domestic income in Kenya,” The Journal of
Developing Areas, vol. 46, no. 1. pp. 305–314, 2012.
 S. Nasreen and S. Anwar, “Causal relationship between trade openness,
economic growth and energy consumption: A panel data analysis of
Asian countries,” Energy Policy, vol. 69, pp. 82–91, Jun. 2014.
 M. Shahiduzzaman and K. Alam, “Cointegration and causal
relationships between energy consumption and output: Assessing the
evidence from Australia,” Energy Econ., vol. 34, no. 6, pp. 2182–2188,
 A. Belke, F. Dobnik, and C. Dreger, “Energy consumption and
economic growth: New insights into the cointegration relationship,”
Energy Econ., vol. 33, no. 5, pp. 782–789, 2011.
 G. Zou and K. W. Chau, “Short- and long-run effects between oil
consumption and economic growth in China,” Dec. 2006.
 W. Oh and K. Lee, “Causal relationship between energy consumption
and GDP revisited : The case of Korea 1970 – 1999,” vol. 26, pp. 51–59,
 G. Erdal, H. Erdal, and K. Esengün, “The causality between energy
consumption and economic growth in Turkey,” Energy Policy, vol. 36,
no. 10, pp. 3838–3842, Oct. 2008.
 S. A. R. Bank, “Online database,” 2014. (Online). Available:
 “BP Statistical review of world energy,” BP Statistics, 2013. (Online).
 “BP Statistical Review of World Energy,” BP Statistics, 2014. (Online).
 “World energy outlook 2014 factsheet energy in Sub-Saharan Africa
today,” International Energy Agency, 2014. (Online). Available:
 D. Gujarati and D. Porter, Basic econometrics, 5th ed. Palgrave
 D. Gujarati, Basic econometrics, Fourth. The McGraw-Hill Companies,
 A. Dimitrios and G. H. Stephen, Applied econometrics: A modern
approach, Revised Ed. New York: Palgrave Macmillan, 2007.
 W. Enders, Applied econometric time series, 2nd ed. New York: Wiley
& Sons Inc, 2004.
 B. Chris, Introductory econometrics for finance, 3rd Editio. United
Kingdom: Cambridge University Press, 2014.