Botswana’s electricity supply is overwhelmed by the growing energy demands
with the peak electric power deficits being met through imports. This study seeks to
understand the key drivers of this increasing electricity demand. Using the Autoregressive
Distributed Lag (ARDL) bounds testing and Error Correction Model (ECM), it examines
the role played by financial development, industrialisation and urbanization in Botswana’s
energy (or more specifically electricity)-growth nexus between 1981 and 2011. The findings
reveal that economic growth, financial development and industrialization positively affect
electricity consumption in the short-run and long-run. However, urbanization increases
electricity consumption only in the long-term. These finding not only support conservation
hypothesis but also imply that policy-makers should take into account the increase in
electricity demand arising from financial development, urbanization and industrialisation
in energy (electricity) consumption planning in the economy to avoid energy crisis. In
addition, policy-makers should search and invests in renewable energy sources such as
solar to increase access to cheap energy source.