Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

The Influence of GDP, Population, and Governance on Green Finance in Sub Sahara Africa

Obiora Peters, Emeka PhD

Abstract

Green finance inflow in Subsahara Africa has remained persistently low beyond the universal average, thereby attracting investigation on what influences its investment. The study examined the influence of GDP, Population & Governance quality on Green finance investment in forty- one Subsahara out of 46 subsahara Africa from 2015-2022. The study adopted quantitative, explanatory research design using panel data analysis to examine the influence of GDP, population, and governance on green finance inflows in Sub-Saharan Africa, with corruption perception as a moderating variable. GDP (LogGDP) displayed a positive and statistically significant(?=19,611.81,P= 0.047), Population (LogPop) also showed a highly significant and positive coefficient of 17.8031 (p = 0.000),Governance (Average Governance Index) had a negative and statistically insignificant coefficient (-5.39, p = 0.611), contrary to expectations derived from Institutional Theory; Corruption Perception Index (CPI) showed a weak and statistically insignificant relationship with green finance (coefficient = 317,086.9, p = 0.879). the study concluded that economic strength (GDP) and demographic expansion (population) are the most influential drivers of green finance inflows in Sub-Saharan Africa. governance quality and perceptions of corruption presents a disconnect between formal institutional ratings and the operational environment investors encounter on the ground. It recommends Promotion of inclusive economic growth, Harness demographic potential, strengthen institutional implementation, deepen anti-corruption efforts and integrate governance with economic planning.

Keywords

Green FinanceGross Domestic Product (GDP)Population GrowthGovernance

References

Adebayo, T., & Ochieng, J. (2023). Governance indicators and the financing of green growth: Evidence from East Africa. African Journal of Sustainable Finance and Development, 4(1), 45–61. Ahmed, M., & Liu, X. (2023). Green finance and economic scale: A cross-country study. Journal of Climate Investment, 12(2), 113–130. African Development Bank. (2022). Green growth and climate finance in Africa. https://www.afdb.org African Development Bank. (2023). Africa’s climate financing gap and youth potential. https://www.afdb.org Asongu, S. A., & Odhiambo, N. M. (2021). Sustainable development and green finance: Evidence from Africa. Journal of Sustainable Finance & Investment, 11(4), 441–457. Bai, C., Qian, X., & Wang, J. (2022). Corruption, institutional capacity, and green finance effectiveness. Ecological Economics, 195, https://doi.org/10.1016/j.ecolecon.2022.107395 Chen, X., Wang, Y., & Liu, H. (2023). Overpopulation and climate finance allocation: Cross- national analysis. Climate Policy and Economics, 9(3), 202–219. Desta, T., & Melesse, D. (2023). Economic performance and green finance in Sub-Saharan Africa: A panel data analysis. African Review of Economics and Finance, 15(1), 134– Huber, J. (1982). Die verlorene Unschuld der Ökologie: Neue Technologien und superindustrielle Entwicklung. Frankfurt: Fischer. International Energy Agency. (2023). World Energy Investment Report. https://www.iea.org/reports/world-energy-investment-2023 Kinda, T., & Loening, J. (2023). Institutional fragility and climate finance: Empirical evidence from Africa. IMF Working Papers, 2023(75), 1–31. Kim, S., & Park, J. (2022). Institutional quality, corruption, and green bond market development: A cross-country study. Journal of Environmental Investing, 13(2), 89– Mensah, J. T., & Adu-Gyamfi, R. (2023). Governance and green finance: Empirical evidence from West Africa. Ghana Journal of Economics and Development, 11(1), 55–78. Mensah, J. T., Adu-Gyamfi, R., & Boateng, E. (2024). Macroeconomic drivers of green finance in Sub-Saharan Africa. Journal of African Economic Research, 9(1), 72–91. Mohammed, A., & Kedir, M. (2023). Youth demography and green innovation: Evidence from North Africa. African Journal of Environmental Economics, 6(2), 98–112. Mol, A. P. J., & Spaargaren, G. (1992). Ecological modernization and the governance of environmental reform: Environmental politics in the Netherlands. Environmental Politics, 1(1), 1–26. Moyo, T., Khumalo, D., & Achieng, M. (2024). The structural challenges of green transformation in Africa. African Journal of Policy and Sustainable Development, 5(2), 100–118. Mwangi, P. M., Njoroge, M., & Wambua, S. (2021). Institutional effectiveness and investor confidence in green finance markets. Nairobi Economic Review, 3(1), 42–58. Nguyen, D., & Bui, T. (2021). Governance and green finance flows: ASEAN experience. Asia- Pacific Journal of Sustainable Development, 10(3), 250–266. Omulo, E., & Wambua, M. (2023). Governance quality and climate finance absorption in East Africa. Journal of Development and Sustainability, 12(1), 47–68. Osei, M., & Boateng, R. (2023). Determinants of green finance uptake in Sub-Saharan Africa: A panel data approach. African Journal of Economic Policy and Development, 28(2), 101–119. Rahedi, E., Tanaka, T., & Yusuf, S. (2021). Green bond issuance and GDP growth in Asia’s emerging economies. Journal of Finance and Environmental Policy, 4(2), 35–50. Tapsoba, S. J. A., & Asongu, S. A. (2022). Population growth, emissions, and green finance: Empirical assessment in Africa. Environmental Economics Review, 17(3), 120–139. Transparency International. (2024). Corruption Perception Index https://www.transparency.org/en/cpi/2024 United Nations Department of Economic and Social Affairs (UN DESA). (2024). World Population Prospects. https://population.un.org/wpp/ UNEP. (2023). Global green bond issuance 2023. United Nations Environment Programme. https://www.unep.org UNEP FI. (2023). Green finance flows in Africa: A climate financing update. United Nations Environment Programme Finance Initiative. https://www.unepfi.org UN-Habitat. (2023). State of African Cities Report. https://unhabitat.org Wang, Y., & Zhang, L. (2021). Population dynamics and green finance development: Evidence from developing economies. Journal of Sustainable Finance & Investment, 11(3), 412– https://doi.org/10.1080/20430795.2020.1724856 Wang, Y., & Zhang, L. (2022). Corruption perception and green finance: A global panel analysis. Journal of Sustainable Investment Research, 5(1), 55–73. World Bank. (2023). Worldwide Governance Indicators. https://databank.worldbank.org/source/worldwide-governance-indicators World Bank. (2024). World Development Indicators. https://databank.worldbank.org/source/world-development-indicators Zhou, L., Mlambo, C., & Opoku, E. E. (2023). Macroeconomic drivers of green bond issuance in Africa. Journal of Green Finance and Economics, 10(1), 21–40.