Digitalisation, Energy Market Integration and Inclusive Development in Sub-Saharan Africa: Conditional Distributional Effects

Energy market integration and digitalisation are advancing together across Sub-Saharan Africa, yet their distributional effects are studied separately, most often through aggregate indices. This paper shows that both habits conceal what matters. In a panel of 26 countries observed over 2000-2022 and estimated with country and year fixed effects, a composite index of inclusive development responds neither to intraregional trade, nor to energy market integration, nor to digitalisation. Its components, however, reveal two offsetting forces of comparable magnitude that cancel out in the aggregate, energy market integration reducing income inequality while digitalisation widens it (−0.23 and +0.41 Gini points per within-country standard deviation). These forces are not independent. The unequalising effect of digitalisation emerges only beyond a threshold of energy market integration (0.39), reached by one third of the sample, because access to electricity conditions the adoption of digital technologies and, with it, their power to differentiate incomes. Across countries, digitalisation alone predicts levels of inclusive development (standardised coefficient of 0.46). An aggregate digital dividend can therefore coexist with an internal polarisation that energy market integration, paradoxically, activates. Policy would gain from coupling energy market integration with digital inclusion and redistributive instruments, rather than expecting from intraregional trade distributional gains that remain undetectable over the period.