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Digital economy, financial development and energy transition in Africa: Exploring for synergies and nonlinearities

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  • Horvey, Sylvester Senyo
  • Odei-Mensah, Jones
  • Moloi, Tankiso
  • Bokpin, Godfred A.

Abstract

The transition to sustainable energy for all is a crucial aspect of the sustainable development goals, particularly Goal 7, which underscores the need for clean and affordable energy. This requires the development of digital infrastructure and a strong financial system. As a result, this study contributes to knowledge by exploring the synergies and nonlinear effects of the digital economy and financial development on renewable energy, which remains underexplored. To this effect, this study recruits the dynamic panel threshold and the generalised method of moments estimations to evaluate the linear, synergies and nonlinearities among these factors using a panel of forty-seven African countries. The key empirical results are stated as follows: (1) renewable energy is positively impacted by the digital economy; (2) the impact of the digital economy on renewable energy is moderated by financial development. This suggests that to ensure the propelling effect of the digital economy on renewable energy, there is a need for a stable and robust financial system; and (3) the study further found nonlinear effects of the digital economy and financial development on renewable energy, which takes a U-shaped relationship, implying that low level of digitalisation and financial development may hinder the transition to renewable energy, while high levels of these factors are essential to expedite the transition to a more sustainable energy system. Hence, African countries must embrace digitalisation and commit significant financial resources to developing their digital infrastructure to facilitate the achievement of the net zero agenda.

Suggested Citation

  • Horvey, Sylvester Senyo & Odei-Mensah, Jones & Moloi, Tankiso & Bokpin, Godfred A., 2024. "Digital economy, financial development and energy transition in Africa: Exploring for synergies and nonlinearities," Applied Energy, Elsevier, vol. 376(PB).
  • Handle: RePEc:eee:appene:v:376:y:2024:i:pb:s0306261924016805
    DOI: 10.1016/j.apenergy.2024.124297
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    More about this item

    Keywords

    Digital economy; Financial development; Renewable energy;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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