The impact of renewable energy consumption and environmental sustainability on economic growth in Africa

Abstract

In line with the global call for alternative sources of energy rather than conventional fossil-based sources, research in the area of renewable energy, energy efficiency, and sustainability seems to have intensified in Africa in the last five years. As a form of a contribution to the existing body of knowledge, this study seeks to parametrically estimate the effects of renewable energy consumption and environmental sustainability on economic growth in Africa. Using panel data, for thirty-seven African countries, and employing the system Generalized Method of Moments estimation technique which more efficiently solves the problems of endogeneity and omitted variable bias than least squares and causal estimation method, this study found that renewable energy adoption and development will lead to an increase in economic growth in Africa, both in the long run and short run as a one percent increase in renewable energy consumption will lead to 0.07% and 1.9% increases in economic growth in both the short-run and long-run, respectively The study also found that environmental sustainability through a reduction of emission may not be Africa’s priority towards achieving an all-inclusive development at present because the coefficient of CO2 emission in the study is not statistically significant. Therefore, African countries’ governments should intensify efforts towards developing the renewable energy sector, especially using policy instruments, while also harnessing the already mature nonrenewable industry for more rapid growth in the continent and the attainment of Agenda 2063.

Keywords

• Renewable energy consumption
• Environmental sustainability
• Economic growth
• CO2 emissions
• Africa
• GMM