IDEAS home Printed from https://ideas.repec.org/a/bla/afrdev/v35y2023i4p376-389.html
   My bibliography  Save this article

Income–environmental nexus in Africa: The integrating role of renewable energy transition and governance quality

Author

Listed:
  • Paul Terhemba Iorember
  • Nora Yusma Mohamed Yusoff

Abstract

The economies of the African countries are gradually expanding, but they mostly depend on fossil fuels for energy use. This exacerbates environmental damage, which renders the continent susceptible to the effects of climate change. Therefore, this study aims to examine the integrating role of renewable energy transition and governance quality in the income–environmental quality nexus in Africa. The study applies second‐generation econometric techniques on annual panel data of 34 African countries covering the period 1996–2018. The fixed effect ordinary least square (OLS‐FE), feasible generalized least squares (FGLS), system generalized method of moments (SYS‐GMM) and cross‐sectionally augmented ARDL (CS‐ARDL) are applied to both the baseline model and the interactive models. The results provide diverse findings. In the baseline models, the study verifies the increasing effect of income on carbon dioxide (CO2) emissions, which continues to dampen environmental quality. Regarding the interaction effect models, the findings show that the interactive term of renewable energy transition and income per capita has a significant negative effect on CO2 emission levels which implies that renewable energy transition ensures green growth. Further, the results indicate that the interactive terms of governance quality have significant reducing effect on emission levels. In terms of policy, achieving green growth necessitates increased renewable energy deployment and policies that will enhance governance effectiveness towards enforcing environmental regulations.

Suggested Citation

  • Paul Terhemba Iorember & Nora Yusma Mohamed Yusoff, 2023. "Income–environmental nexus in Africa: The integrating role of renewable energy transition and governance quality," African Development Review, African Development Bank, vol. 35(4), pages 376-389, December.
  • Handle: RePEc:bla:afrdev:v:35:y:2023:i:4:p:376-389
    DOI: 10.1111/1467-8268.12723
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-8268.12723
    Download Restriction: no

    File URL: https://libkey.io/10.1111/1467-8268.12723?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2016. "The Mobile Phone in the Diffusion of Knowledge for Institutional Quality in Sub-Saharan Africa," World Development, Elsevier, vol. 86(C), pages 133-147.
    2. Simplice A. Asongu & Chimere O. Iheonu & Kingsley O. Odo, 2019. "The Conditional Relationship between Renewable Energy and Environmental Quality in Sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 19/074, African Governance and Development Institute..
    3. Mehdi Ben Jebli & Slim Ben Youssef & Ilhan Ozturk, 2015. "The Role of Renewable Energy Consumption and Trade: Environmental Kuznets Curve Analysis for Sub-Saharan Africa Countries," African Development Review, African Development Bank, vol. 27(3), pages 288-300, September.
    4. Edmond Noubissi & Boker Poumie & Hilaire Nkengfack, 2021. "Effect of environmental policies on exports from sub‐Saharan African countries," African Development Review, African Development Bank, vol. 33(4), pages 688-702, December.
    5. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    6. Paul Terhemba Iorember & Solomon Gbaka & Gylych Jelilov & Nargiza Alymkulova & Ojonugwa Usman, 2022. "Impact of international trade, energy consumption and income on environmental degradation in Africa's OPEC member countries," African Development Review, African Development Bank, vol. 34(2), pages 175-187, June.
    7. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    8. Bali Swain, Ranjula & Kambhampati, Uma S. & Karimu, Amin, 2020. "Regulation, governance and the role of the informal sector in influencing environmental quality?," Ecological Economics, Elsevier, vol. 173(C).
    9. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    10. Abdullahi Muazu & Qian Yu & Mona Alariqi, 2023. "The Impact of Renewable Energy Consumption and Economic Growth on Environmental Quality in Africa: A Threshold Regression Analysis," Energies, MDPI, vol. 16(11), pages 1-29, June.
    11. Payne, James E. & Truong, Huong Hoang Diep & Chu, Lan Khanh & Doğan, Buhari & Ghosh, Sudeshna, 2023. "The effect of economic complexity and energy security on measures of energy efficiency: Evidence from panel quantile analysis," Energy Policy, Elsevier, vol. 177(C).
    12. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    13. Peterson K. Ozili & Paul Terhemba Iorember, 2024. "Financial stability and sustainable development," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2620-2646, July.
    14. Shahbaz, Muhammad & Haouas, Ilham & SBIA, Rashid & Ozturk, Ilhan, 2018. "Financial Development-Environmental Degradation Nexus in the United Arab Emirates: The Importance of Growth, Globalization and Structural Breaks," MPRA Paper 87365, University Library of Munich, Germany, revised 11 Jun 2018.
    15. Westerlund, Joakim & Edgerton, David L., 2007. "A panel bootstrap cointegration test," Economics Letters, Elsevier, vol. 97(3), pages 185-190, December.
    16. Krishna, Vijesh V. & Pascual, Unai & Zilberman, David, 2010. "Assessing the potential of labelling schemes for in situ landrace conservation: an example from India," Environment and Development Economics, Cambridge University Press, vol. 15(2), pages 127-151, April.
    17. Solomon Aboagye, 2017. "Economic Expansion and Environmental Sustainability Nexus in Ghana," African Development Review, African Development Bank, vol. 29(2), pages 155-168, June.
    18. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    19. Ojonugwa Usman & Paul Terhemba Iorember & Ilhan Ozturk & Festus Victor Bekun, 2022. "Examining the Interaction Effect of Control of Corruption and Income Level on Environmental Quality in Africa," Sustainability, MDPI, vol. 14(18), pages 1-15, September.
    20. Steve Yaw Sarpong & Murad A. Bein, 2021. "Effects of good governance, sustainable development and aid on quality of life: Evidence from sub‐saharan Africa," African Development Review, African Development Bank, vol. 33(1), pages 25-37, March.
    21. Paul Terhemba Iorember & Gideon G. Goshit & Dalis T. Dabwor, 2020. "Testing the nexus between renewable energy consumption and environmental quality in Nigeria: The role of broad‐based financial development," African Development Review, African Development Bank, vol. 32(2), pages 163-175, June.
    22. Wang, Shuhong & Zhao, Danqing & Chen, Hanxue, 2020. "Government corruption, resource misallocation, and ecological efficiency," Energy Economics, Elsevier, vol. 85(C).
    23. Abbas, Jawad & Wang, Lisu & Ben Belgacem, Samira & Pawar, Puja Sunil & Najam, Hina & Abbas, Jaffar, 2023. "Investment in renewable energy and electricity output: Role of green finance, environmental tax, and geopolitical risk: Empirical evidence from China," Energy, Elsevier, vol. 269(C).
    24. Mehmood, Usman, 2021. "Contribution of renewable energy towards environmental quality: The role of education to achieve sustainable development goals in G11 countries," Renewable Energy, Elsevier, vol. 178(C), pages 600-607.
    25. Emma Serwaa Obobisa & Haibo Chen & Isaac Adjei Mensah, 2023. "Transitions to sustainable development: the role of green innovation and institutional quality," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6751-6780, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul Terhemba Iorember & Solomon Gbaka & Gylych Jelilov & Nargiza Alymkulova & Ojonugwa Usman, 2022. "Impact of international trade, energy consumption and income on environmental degradation in Africa's OPEC member countries," African Development Review, African Development Bank, vol. 34(2), pages 175-187, June.
    2. John A. Jinapor & Shafic Suleman & Richard Stephens Cromwell, 2023. "Energy Consumption and Environmental Quality in Africa: Does Energy Efficiency Make Any Difference?," Sustainability, MDPI, vol. 15(3), pages 1-26, January.
    3. Balcilar, Mehmet & Usman, Ojonugwa & Ike, George N., 2023. "Operational behaviours of multinational corporations, renewable energy transition, and environmental sustainability in Africa: Does the level of natural resource rents matter?," Resources Policy, Elsevier, vol. 81(C).
    4. Arsene Mouongue Kelly & Isaac Ketu & Jules‐Eric Tchapchet Tchouto & Luc Nembot Ndeffo, 2024. "Investigating the link between exhaustion of natural resources and economic complexity in sub‐Saharan Africa," African Development Review, African Development Bank, vol. 36(3), pages 486-502, September.
    5. Hassan, Mahmoud & Kouzez, Marc & Lee, Ji-Yong & Msolli, Badreddine & Rjiba, Hatem, 2024. "Does increasing environmental policy stringency enhance renewable energy consumption in OECD countries?," Energy Economics, Elsevier, vol. 129(C).
    6. Ajanaku, B.A. & Collins, A.R., 2021. "Economic growth and deforestation in African countries: Is the environmental Kuznets curve hypothesis applicable?," Forest Policy and Economics, Elsevier, vol. 129(C).
    7. Ariel Herbert Fambeu & Georges Dieudonné Mbondo & Patricia Tchawa Yomi, 2022. "Bigger or better? The effect of public spending on happiness in Africa," African Development Review, African Development Bank, vol. 34(4), pages 487-499, December.
    8. Xia, Wanjun & Apergis, Nicholas & Bashir, Muhammad Farhan & Ghosh, Sudeshna & Doğan, Buhari & Shahzad, Umer, 2022. "Investigating the role of globalization, and energy consumption for environmental externalities: Empirical evidence from developed and developing economies," Renewable Energy, Elsevier, vol. 183(C), pages 219-228.
    9. Dehghan Shabani, Zahra & Shahnazi, Rouhollah, 2019. "Energy consumption, carbon dioxide emissions, information and communications technology, and gross domestic product in Iranian economic sectors: A panel causality analysis," Energy, Elsevier, vol. 169(C), pages 1064-1078.
    10. Xiangdong Sun & Ziwen Cheng & Hongxu Shi & Jinhao Zhang, 2025. "Abnormal Temperature and Rural Energy Poverty: A Threshold Effect Analysis Based on the Urban–Rural Gap and the Quality of Rural Housing," Energies, MDPI, vol. 18(3), pages 1-23, January.
    11. Zheng Fang & Bihong Huang & Zhuoxiang Yang, 2020. "Trade openness and the environmental Kuznets curve: Evidence from Chinese cities," The World Economy, Wiley Blackwell, vol. 43(10), pages 2622-2649, October.
    12. Awad, Atif & Albaity, Mohamed, 2022. "ICT and economic growth in Sub-Saharan Africa: Transmission channels and effects," Telecommunications Policy, Elsevier, vol. 46(8).
    13. Chen, Ping-Yu & Chen, Sheng-Tung & Hsu, Chia-Sheng & Chen, Chi-Chung, 2016. "Modeling the global relationships among economic growth, energy consumption and CO2 emissions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 420-431.
    14. Zhao, Jun & Shahbaz, Muhammad & Dong, Xiucheng & Dong, Kangyin, 2021. "How does financial risk affect global CO2 emissions? The role of technological innovation," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    15. Shi, Hongxu & Xu, Hao & Gao, Wei & Zhang, Jinhao & Chang, Ming, 2022. "The impact of energy poverty on agricultural productivity: The case of China," Energy Policy, Elsevier, vol. 167(C).
    16. Binder, Michael & Hsiao, Cheng & Pesaran, M. Hashem, 2005. "Estimation And Inference In Short Panel Vector Autoregressions With Unit Roots And Cointegration," Econometric Theory, Cambridge University Press, vol. 21(4), pages 795-837, August.
    17. Jasnine Mogem Kouam & Luc Nembot Ndeffo & Mathurin Aimé Mekam Pouatcha, 2023. "The long and short run effects of foreign direct investment on economic complexity in Sub-Saharan African countries," Economics Bulletin, AccessEcon, vol. 43(3), pages 1421-1433.
    18. Paul Terhemba Iorember & Solomon Gbaka & Abdurrahman Işık & Chinazaekpere Nwani & Jaffar Abbas, 2024. "New insight into decoupling carbon emissions from economic growth: Do financialization, human capital, and energy security risk matter?," Review of Development Economics, Wiley Blackwell, vol. 28(3), pages 827-850, August.
    19. Mehmet Demiral & Özkan Haykır & Emine Dilara Aktekin-Gök, 2024. "Environmental pollution effects of economic, financial, and industrial development in OPEC: comparative evidence from the environmental Kuznets curve perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(10), pages 24905-24936, October.
    20. Sinha, Avik & Shahbaz, Muhammad & Balsalobre, Daniel, 2017. "Exploring the Relationship between Energy Usage Segregation and Environmental Degradation in N-11 Countries," MPRA Paper 81212, University Library of Munich, Germany, revised 07 Sep 2017.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:afrdev:v:35:y:2023:i:4:p:376-389. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/afdbgci.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.