Association between rural electrification and agricultural output: Evidence from Sub-Saharan Africa

This paper explores the association between rural electrification and agricultural output at the macro level using panel data on 43 Sub-Saharan African countries from 1990 to 2016. We employed Fully Modified Ordinary Least Squares (FMOLS) with time trend and country fixed effect in our econometrics estimation to address the potential serial correlation. Our study investigates the following; i) the association between rural electrification and agricultural output, measured as agricultural output per GDP and agricultural output per worker, ii) whether the relationship between rural electrification and agricultural output is conditional on institutional quality of a country, and iii) whether electrification enhances the marginal effect of factor inputs. We find a positive significant association between rural electrification and agricultural output. Also, our result shows that the relationship between electrification and agricultural output is conditional on the quality of institution and factor inputs of a country. With the exception of capital, the association between the interaction term of rural electrification and factor inputs (labour and land), and agricultural output is negative. However, we find a higher positive direct relationship between labour and agricultural output per GDP, implying a higher productivity for those labour who remain in the sector. Our results are heterogenous across population size quartiles sub-samples.