ORIGINAL ARTICLE Total factor energy efficiency and economic development in Africa Kwaku Ohene-Asare & Eric Nuertey Tetteh & Evelyn Lamisi Asuah Received: 16 February 2019 /Accepted: 16 June 2020 # Springer Nature B.V. 2020 Abstract This paper presents an energy efficiency as- sessment of 46 African countries and analyzes possible bidirectional relationship between energy efficiency and economic development within a three-stage framework. In the first stage, energy efficiency is measured within a total factor framework using the slack-based measure with undesirable output and sub-regional comparisons are done. The second stage assesses the determinants of en- ergy efficiency in Africa by way of a bootstrapped trun- cated regression. The third stage tests the reverse causal relationship between energy efficiency and economic de- velopment using 2-stage least squares. The results showed African countries to be on average, 56% energy efficient within the study period. Other African sub-regions could adopt the energy efficiency policies of North Africa as benchmark to improve energy efficiency. Economic de- velopment and technological progress are found to have significant positive effects on energy efficiency of African countries, while higher energy prices lead to higher inef- ficiency. Also, a bi-causal relationship is found to exist between total factor energy efficiency and economic de- velopment, giving support to the concept of sustainable development and confirming the International Energy Agency’ s assertion on the positive macroeconomic im- pacts of energy efficiency. African countries are therefore, encouraged to invest in energy efficiency technologies and policies to drive sustainable economic development. Keywords Energy efficiency . TFEE . Slack-based measure . Economic development . Africa . Undesirable output Introduction The accessibility and utilization of energy are vital for almost all major economic activities, as such, energy is the driving force of life on earth (Mahmood and Kanwal 2017). Consequently, energy remains the major ingredi- ent for economic development and prosperity (Chontanawat et al. 2008; Asafu-Adjaye 2000; Apergis and Payne 2009; Belloumi 2009; Costantini and Martini 2010; Mehrara 2007; Pao and Tsai 2011; Yuan et al. 2008; Lee and Chang 2007; Huang et al. 2008). Due to the indispensable nature of energy, global energy con- sumption in 2017 amounted to 14,050 million tonnes of oil equivalent (Mtoe), compared with 10,035 Mtoe in 2000 (International Energy Agency 2017). Meanwhile, Africa’ s energy consumption increased by 2.9% in 2017, faster than the world’ s average of 2.2% (BP 2017). It has been predicted that Africa may become a worldwide motor of growth in the future (Koskimäki Energy Efficiency https://doi.org/10.1007/s12053-020-09877-1 K. Ohene-Asare (*) : E. L. Asuah Department of Operations and Management Information Systems, University of Ghana Business School, Legon, Ghana e-mail: kohene-asare@ug.edu.gh E. L. Asuah e-mail: elasuah@st.ug.edu.gh E. N. Tetteh Principal Capital Microfinance Ltd., Accra, Ghana e-mail: eric.tetteh20@yahoo.com