The moderating role of financial development in energy poverty–sustainable environment linkages: evidence from Africa

Abstract

PurposeDriven by the Sustainable Development Goals (goals 7, 8, 12 and 13), this study investigates the moderating role of financial development in the link between energy poverty and a sustainable environment in African nations.Design/methodology/approachPanel cointegration analysis, fully modified least squares, Driscoll and Kraay least squares and method of moments quantile regression were used as estimation techniques to examine the link between financial development, energy poverty and sustainable environment for 28 African nations. Energy poverty is measured using two proxies-access to clean energy and access to electricity, while the environment is gauged using ecological footprint.FindingsThe regression outcomes show that access to clean energy and electricity negatively impacts the ecological footprint across all the quantiles; hence, energy poverty increases environmental degradation. Financial development positively influences environmental degradation in the region at the upper quantiles. Similarly, the interactive term of energy poverty and financial development has a significant positive impact on ecological footprint; thus, the financial sector adds to energy poverty and environmental degradation. The results of other variables hint that per capita income and institutions worsen environmental quality while urbanisation strengthens the environment.Originality/valueThis study offers fresh insights into the moderating effect of financial development in the link between energy poverty and sustainable environment in African countries.