Are abundant energy resources and Chinese business a solution to environmental prosperity in Africa?

Abstract

Africa is abundantly endowed with oil and mineral resources and investment (Habiyaremye, 2020; Zakari and Khan, 2021). However, the region has failed to transform this ample advantage for environmental prosperity. This study centers on the influence of energy resources, Chinese investment, and trade in Africa on the environmental quality of the 40 SSA countries. To achieve this objective, we applied Panel Driscoll-Kraay Standard Errors (PDSE) and System-Generalized Method of Moment (S-GMM) estimators for yearly data spanning the period of 1992–2018. The empirical finding demonstrates that there is a positive relationship between energy resources and environmental degradation. This suggests that energy resources cannot help improve the environmental degradation in Africa. However, we find a negative relationship between Chinese investment, trade, and environmental degradation, indicating that Chinese investment and trade are associated with improving environmental quality. In the light of this, we strongly advise that the SSA states should direct their foreign business to China. With that, environmental-friendly technologies can be obtained to cut down environmental pollution. However, the government should formulate and enforce regulations against non-environmentally friendly energy resources systems capable of damaging the environment.