The low statistical significance of the impact of electricity access on foreign firms can be partly explained by the fact that foreign direct investments (FDIs) in SSA are market-seeking rather than efficiency-seeking (see Farole, 2011). FDIs with a market-seeking objective are certainly impacted by the business climate, but their main determinants are market size and market opportunities. Efficiencyseeking FDIs, on the other hand, are primarily concerned with competitiveness and are therefore influenced by the business climate, in this case, access to electricity. This could thus explain why the effect of our electricity access variable is less statistically significant for foreign firms than it is for domestic ones. The reality of market-seeking FDIs in SSA is also confirmed by the fact that most FDIs in SSA are concentrated in the natural resources sector (see Asiedu, 2006). The other explanation is related to the fact that foreign manufacturing firms are much more export-oriented – especially for FDIs concentrated in natural resources sector – than domestic firms. Therefore, having access to reliable electricity could be more attractive to firms with a limited presence on the export market than those with a significant presence. As previously, electricity access may allow domestic firms to catch up in terms of exports.

_Focus on natural resource intensive countries_ It is well known that many SSA countries are heavily dependent on natural resource exports, which often have deleterious impacts on the development of manufacturing companies, notably through the DD. We, therefore, analyze the sensitivity of our results by considering both resource intensive and non-resource intensive countries. Our samples of resource intensive and non-resource intensive countries are from the International Monetary Fund’s (IMF’s) Regional Economic Outlook (REO).<sup>10</sup> The REO of October 2024 classification is based on the following criteria: a country is considered intensive in natural resources if these resources account for at least 25% of total exports otherwise it is a non-resource intensive country.

Table 7 summarizes the results of these sensitivity tests. Whatever sample we consider, we find that electricity access increases the share of exports of medium-sized manufacturing companies in both resource intensive and non-resource intensive countries. Although the impact is unsurprisingly stronger in non-resource intensive countries, the effect of electricity access in resource-intensive countries is not negligible. These results have strong policy implications, as they suggest that even for resource intensive countries, measures to improve access to electricity can boost the export performance of medium-sized manufacturing companies. Electricity access can therefore be a solution to reduce the crowding-out of manufacturing companies in a context of resource dependence in general, and DD in particular. Indeed, in a DD situation, companies in the tradable sector (manufacturing companies in this case) experience price competitivity losses due to their inability to modify international prices. Therefore, by improving electricity access for manufacturing companies, especially for the medium-sized ones, policy makers provide a non-price competitiveness advantage to the non-resource sector that will enable firms to be more competitive, especially in export markets.

# 5.2. Robustness Check

10 The list of resource intensive countries according to the IMF’S REO is Angola, Botswana, Burkina Faso, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Republic of Congo, Gabon, Ghana, Guinea, Liberia, Mali, Namibia, Niger, Nigeria, Sierra Leone, South Africa, Zambia, Zimbabwe. The list of non-resource intensive countries according to the IMF’S REO is Benin, Burundi, Cabo Verde, Côte d'Ivoire, Djibouti, Ethiopia, The Gambia, Kenya, Lesotho, Madagascar, Mauritania, Mauritius, Mozambique, Rwanda, Senegal, Sudan, Eswatini, Togo, Uganda.

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