Agronomic structural transformation in Africa: The role of external finance

This study examines the impact of diverse sources of external finance, including official development aid (ODA), foreign direct investment (FDI), external debt, and remittances, on agronomic transformation in African economies from 2000 to 2022. Data is obtained from the World Development Indicators, and a plethora of estimation approaches is used, such as the Driscoll-Kraay, the fully generalized least squares, the quantile regression, and the generalized method of moments type sequential regression techniques. The outcomes reveal ample evidence of an augmenting effect of external debt and remittances on agronomic transformation in Africa. However, sub-regional comparisons demonstrate that the influence of remittances is insignificant for East African economies, while external debt has a negative impact on North African economies. Furthermore, FDI negatively affects agronomic transformation but fails to be significant for East and Southern African economies. Finally, ODA was generally positive but insignificant. External finance sources variably influence agronomic transformation, with outcomes shaped by regional contexts. The heterogeneity underscores the need for nuanced, region-specific policy frameworks. Policymakers should prioritize remittance channels and debt management to foster agronomic transformation while tailoring strategies to sub-regional dynamics. East and Southern Africa require cautious ODA utilization, and FDI policies should be redesigned to align with agricultural development goals.