The role of green finance and natural resources rent in eradicating energy poverty – the case of the Sub-Saharan African countries

Abstract

This research addresses energy poverty in Sub-Saharan African (SSA) countries, emphasizing improved access to clean cooking electricity and technologies in urban areas. Urbanization in the SSA region has intensified the problem, with informal settlements relying on traditional and polluting cooking methods, causing indoor air pollution, environmental damage, and economic struggles. The research employs the Methods of Moments Quantile Regression with fixed effects to assess the factors that enhance access to clean energy and technologies for cooking in the urban areas. The data of forty-four SSA countries during the timeframe spanning 2004 to 2020 is used. This research adds to the growing body of literature on how energy poverty can be eradicated, considering the few studies that has been done to address this issue. Specifically, the effect of green finance and financial development on energy poverty has not been widely done, thus this research covers the literature gap present. The major results of this research depicts that financial development, government effectiveness, natural resources rents and technological innovations are fundamental in improving access to clean electricity in the urban areas of the SSA nations. We also show that economic growth, foreign direct investment and green finance are counterproductive in fostering the access to clean electricity in this region. This research show that the resource curse hypothesis does not hold in the SSA countries in the context of energy poverty. The major policies presented in this research calls for the developing countries to promote financial development, technological innovations and natural resource rents in alleviating energy poverty. Corruption levels and political instability in these countries should be reduced.