Long-run Causality and Short-term Adjustments: The Role of Financial Development and Renewable Energy in Reducing GHG Emissions in Africa

The African region combines emerging and low-income economies, each with distinct economic growth and development paths. A significant characteristic of these economies is their dependence on Foreign Direct Investment (FDI) because the natural resources in the region attract investment. This makes the region dependent on advanced and rich countries for investment. Production in the region predominantly relies on inefficient and non-renewable energy sources, obstructing the achievement of SDG 7’s clean energy goals. This energy inefficiency not only diminishes industrial competitiveness but also curtails job creation. Inconsistent energy infrastructure and a lack of sustainable practices deter FDI, as investors often prioritise stable energy prices and sustainable operations.