Energy Consumption, Economic Growth, Financial Development and Environmental Sustainability: Evidence from Sub-Saharan Africa Region

Abstract

This study examines how renewable energy consumption, non-renewable energy consumption, financial development, and economic growth influence environmental sustainability in Sub-Saharan Africa. Using panel data for 22 Sub-Saharan African countries over 2000–2023 which is 528 country-year observations, we estimate a dynamic emissions model with the system Generalized Method of Moments to address endogeneity and persistence, and we report fixed-effects and random-effects estimates as robustness checks. The results show that renewable energy consumption is associated with lower emissions, while non-renewable energy consumption, foreign direct investment, and economic growth are associated with higher emissions. These findings imply that accelerating the deployment of renewables supported by green finance and supportive regulation can help decouple growth from emissions and enhance environmental sustainability. From an operations research perspective, the estimated coefficients provide empirically grounded parameters for multi-objective decision models that balance emissions reduction with energy security and economic development in SSA. Policymakers and practitioners in the energy sector, as well as government leaders, need to focus on incorporating renewable resources into their energy strategies to counteract environmental sustainability.