Asymmetric effect of renewable energy consumption on economic growth in Uganda

Abstract

Under the program sustainable energy development, the National Planning Authority aims at increasing access and consumption of clean energy within five years from 2020. This is expected to lead to sustainable growth, and poverty reduction, as well as the social and cultural transformation of society. However, the country is faced with slow progress in terms of sustainable economic growth due to low access to different forms of renewable energy like electricity, low investment, and supply shocks due to COVID-19 among other factors. This study examines the asymmetric effects of renewable energy consumption on economic growth in Uganda using a Nonlinear Autoregressive Distribution Lag framework for data obtained from the World Development Indicators. The study findings reveal that an increase in renewable energy consumption in the short- and long-run is favorable for economic growth while a decrease in renewable energy consumption has a negative association with economic growth in the long run. Furthermore, the study finds that capital has a positive effect on economic growth while labor hurts economic growth in the short run. To achieve high and sustainable rates of growth, the study recommends the exploitation of renewable energy (solar power, wind power, bioenergy (organic matter burned as a fuel), and hydroelectric, among others. In addition, the government should allocate more resources towards boosting local investors, forming synergies to curb the situation of unemployment as well, and encouraging more people to join the money economy in Uganda.