Electricity Availability, Electricity Prices And Growth Of Uganda’s Industrial Sector: A Causality And Shock Impact Analysis
Auteurs : Ssebuyungo Geofrey . Kaberuka Wills . Turyareeba Dickson . Nkote Isaac .
Résumé
Abstract Background: Evidence suggests that a well-developed and sound industrial sector plays a pivotal role in economic development of nations. Given this empirical stance, the realization of sustainable growth trajectories of developing countries, Uganda in particular, require the policy makers to have an understanding of the causality relationships between the industrial output and its stimulus factors and an assessment of how the industrial sector output growth responds to sudden changes in its stimulus factors in a dynamic setting. Purpose: This study sought to investigate the causality relationships and assess shock effects between electricity availability, electricity prices and industrial sector performance in Uganda. Methodology: While utilizing quarterly time series secondary data for the period 2009-2024, assessment of the of causality relationships is achieved by first estimating a Structural Vector Auto Regression with exogenous regressors (SVARX) and then employing the Wald granger causality tests. Shock impact assessment is done by estimating and assessing the impulse response functions (IRFs) after the SVARX estimation. Findings: Findings from the study can be summarized as follows: The causality test results reveal that (i) there is a bidirectional causality between industrial sector output and electricity access, (ii) there is a bidirectional causality between industrial sector output and electricity consumption, (iii) there is a unidirectional causality running from electricity installed capacity to industrial sector output, (iv) there is a unidirectional causality running from electricity supply volatility to industrial sector output, and (v) there is no causality between industrial electricity prices and industrial sector output. Findings further indicate that a shock to the variables of electricity installed capacity, electricity access and industrial electricity prices will have asymmetric positive and negative impact on industrial sector output which appear to persist even after the first eight quarters time period. On the other hand, findings from the shock impact analysis indicate that a shock to electricity supply volatility and a shock to electricity consumption have asymmetric effects on the industrial sector output but which appear to die out in the eight quarter. However, the asymmetric effects on the industrial sector output caused by shocks in the electricity installed capacity, electricity access and industrial electricity prices appear to persist even after the eight quarter time period. Practical implications: Deliberate policy should be directed toward cushioning electricity installed capacity, electricity access and industrial electricity prices to shocks, for Uganda to realize robust and sustainable industrial sector output growth
Mots clés
Electricity availability, industrial electricity prices, Industrial Sector output, Causality, Uganda.
