Global Geopolitical Risk, Oil Price Volatility and Economic Growth in Africa

Abstract

Focusing on Africa’s oil-exporting economies, this study assessed how global geopolitical risk and swings in oil prices relate to economic growth, using Nigeria and Angola as paired case studies from 2000 to 2025. The work stems from rising geopolitical frictions and the recurring turbulence in international oil markets, pressures that keep feeding into the macroeconomic outcomes of oil-dependent countries. Two questions guided the analysis: how global geopolitical risk affects growth, and how oil price volatility influences growth in the two selected economies.To address these questions, the study relied on annual secondary panel data drawn from widely recognized international sources, namely the World Bank, the International Monetary Fund, the Organization of Petroleum Exporting Countries, the International Energy Agency, and the Caldara, Iacoviello Geopolitical Risk database. An ex post facto design was adopted. For estimation, the Panel Autoregressive Distributed Lag (Panel ARDL) approach was applied, using the Pooled Mean Group estimator to capture both short-run movements and longer-run linkages.Before estimation, the analysis ran through descriptive statistics, panel unit root checks, panel cointegration procedures, and a set of diagnostic tests. Results pointed to a long-run association among global geopolitical risk, oil price volatility, and economic growth. The estimates also showed that higher geopolitical risk and greater oil price volatility are linked to lower growth in Nigeria and Angola, with these effects remaining negative and statistically significant. Evidence from the error-correction term indicated that, after short-run shocks, the system adjusts back toward its long-run path. Overall, the study finds that persistent geopolitical uncertainty and unstable oil prices act as major external constraints on growth in African oil- producing economies. It recommends faster economic diversification, stronger fiscal stabilization arrangements, better macroeconomic policy coordination, increased infrastructure spending, deeper regional cooperation, improvements in institutional quality, and the creation of geopolitical risk monitoring systems to raise resilience to future external shocks.

Keywords

References