Informality and energy efficiency in Africa: Evidence from symmetric and asymmetric (nonlinear) panel ARDL cointegration approaches

Informality and energy efficiency in Africa: Evidence from symmetric and asymmetric (nonlinear) panel ARDL cointegration approaches | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Informality and energy efficiency in Africa: Evidence from symmetric and asymmetric (nonlinear) panel ARDL cointegration approaches Princewill Okwoche, Milan Scasny, Amin Karimu This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4016234/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Energy efficiency is a key component of sustainable and inclusive growth for African countries. However, the informal economy which is prevalent in Africa, affects the continent’s energy efficiency performance. This study therefore investigates the asymmetry in the nexus between the informal economy and energy efficiency. The study employs data on 46 African countries spanning 1990-2017. To measure energy efficiency, the study estimates an energy distance function using Stochastic Frontier Analysis instead of the commonly used energy intensity measure in previous studies. The symmetric and asymmetric panel auto-regressive distributed lag (PARDL) models and the Panel Quantile Regression methods are used to examine the nexus with emphasis given to the asymmetric effects. First, we find considerable variability in energy efficiency performance in African countries. We also find a declining trend in efficiency scores. The results point to a large scope for energy efficiency improvements, showing that the elimination of all types of energy inefficiencies could realise energy savings of up to 58%. Second, the asymmetric PARDL regressions show a decline in energy efficiency performance in response to a positive shock that increases the size of the informal economy and an increase in performance in response to a negative shock that shrinks the size of the sector. Third, we find a positive association between technical innovation and an effect of foreign direct investment on energy efficiency that varies with the method of estimation. Among other things, the study recommends a policy focus aimed at incentivising businesses to formalize operations. JEL classification: Q43, Q48, O17, O13 Environmental Economics Development Economics informal economy energy efficiency stochastic frontier analysis (SFA) nonlinear panel ARDL Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4016234","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":276459497,"identity":"85dd8acd-b868-4c10-96d5-d66ae36ceee6","order_by":0,"name":"Princewill Okwoche","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAy0lEQVRIiWNgGAWjYDACHiBmbGBg4AdxEgpI0SLZANJiQIoWgwMgHjFa+HnOGD74ucMmz/j86sQPDwwY5PnFDuDXItnbY2zYeyat2OzG280SQIcZzpydgF+LwXnebdKMbYcTt904uwGkJcHgNnFa/idunnF28w/itJztBWk5kLiBv3cbcbZI9pz/bNjbllwscYN3m0WCgQRhv/DzpCU++Nlml8fff3bzzR8VNvL80gS0wEACgwRYpQRxyiFa+A8Qr3oUjIJRMApGFgAATR1GqeWxVVQAAAAASUVORK5CYII=","orcid":"https://orcid.org/0000-0002-1887-9688","institution":"School of Economics, University of Cape Town","correspondingAuthor":true,"prefix":"","firstName":"Princewill","middleName":"","lastName":"Okwoche","suffix":""},{"id":276459498,"identity":"71c5d099-1d90-46a3-a74d-62aaaa815a87","order_by":1,"name":"Milan Scasny","email":"","orcid":"https://orcid.org/0000-0001-5040-1281","institution":"Charles University Environment Centre","correspondingAuthor":false,"prefix":"","firstName":"Milan","middleName":"","lastName":"Scasny","suffix":""},{"id":276459499,"identity":"ff8e1bec-787e-4619-a961-d304f91406aa","order_by":2,"name":"Amin Karimu","email":"","orcid":"https://orcid.org/0000-0003-3931-8828","institution":"School of Economics, University of Cape Town","correspondingAuthor":false,"prefix":"","firstName":"Amin","middleName":"","lastName":"Karimu","suffix":""}],"badges":[],"createdAt":"2024-03-05 09:29:43","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-4016234/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4016234/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":52062284,"identity":"41b11487-9530-496a-a9ad-36aeb4ae81cd","added_by":"auto","created_at":"2024-03-06 05:46:44","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":551776,"visible":true,"origin":"","legend":"","description":"","filename":"InformalityenergyefficiencyPreprint.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4016234/v1_covered_a7c28b07-4628-4243-a473-4acc13cfc2e8.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003e\u003cstrong\u003eInformality and energy efficiency in Africa: Evidence from symmetric and asymmetric (nonlinear) panel ARDL cointegration approaches\u003c/strong\u003e\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"University of Cape Town","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"informal economy, energy efficiency, stochastic frontier analysis (SFA), nonlinear panel ARDL","lastPublishedDoi":"10.21203/rs.3.rs-4016234/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4016234/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eEnergy efficiency is a key component of sustainable and inclusive growth for African countries. 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