Do remittances align with energy transition in Africa? An approach with the level of income of countries

Abstract

AbstractThe main objective of this paper was to highlight the nexus between migrant remittances and energy transition in a panel of 45 African countries from 2000 to 2020. The study utilized several estimation techniques ranging from fixed and random effects to two‐stage least square. The empirical findings suggest that remittances reduce energy transition in African countries. However, the growth of remittances reverses this relationship. There is therefore an U‐shaped relationship between remittances and energy transition in Africa. Furthermore, when disaggregating countries by income level, the results reveal that in low‐income countries, remittances reduce energy transition, but this effect is reversed in low‐ and middle‐income countries. Remittances are therefore a determinant in the choice of households for the process of energy transition. Thus, in order to take advantage of this relationship, African countries need to emphasize policies that can increase the flow of remittances by improving their financial system. In addition, migrant remittances contribute to improving access to modern, reliable, and affordable energy services through income growth of remittance‐receiving households.