The Cointegration Between Energy Subsidy and Energy Accessibility in Eastern Africa Countries

Abstract

Despite the significant potential, the energy industry in East Africa remains largely underdeveloped, with minimal modern energy access, low per capita consumption, and heavy reliance on biomass energy, which makes up over 90% of the region’s energy consumption. Less than 1% of rural areas have access to electricity. Introduction of subsidies on energy influences energy accessibility. The study found it clear that subsidies slightly improved energy accessibility in Eastern African countries in the long run. This can be explained by the fact that energy subsidies often result in lower prices for energy consumers. This makes energy more affordable for households, particularly those with lower incomes. Lower energy prices reduce the financial burden of meeting energy needs, making it easier for individuals and families to access essential energy services such as electricity, heating, and cooking. Lower energy prices due to subsidies can lead to increased energy consumption. It is therefore the responsibility of each member state to encourage the adoption of renewable energy sources by providing subsidies and incentives for renewable energy technologies such as solar panels, wind turbines, and energy-efficient appliances. Subsidizing renewable energy reduces reliance on fossil fuels, mitigates environmental impacts, and promotes sustainable energy practices.