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Green Investment Outcomes, External Debt, and Economic Resilience in Africa: A Dynamic Panel Analysis of Emerging African Economies

Author

Listed:
  • Joseph Otsayi Udenyi

    (Department of Economics, Federal University of Lafia.)

  • Benedict Akombo

    (Department of Economics, Federal University of Lafia.)

  • Ilemona Adofu

    (Department of Economics, Federal University of Lafia.)

  • Obadiah Gimba

    (Department of Economics, Federal University of Lafia.)

Abstract

Amid growing climate challenges and economic shocks, there is increasing interest in how green investment can support economic resilience in emerging African economies. However, the effectiveness of green finance in fostering macroeconomic stability remains underexplored, particularly in the presence of external debt pressures. This study investigates the dynamic relationship between green investment outcomes and economic resilience in selected African countries, with particular attention to the moderating role of external debt. Using quarterly panel data from 2004Q1 to 2023Q4, the analysis applies a Dynamic Autoregressive Distributed Lag (DARDL) model to estimate both short- and long-run effects. Green investment outcomes are measured using a composite index derived from progress on SDG 7 (clean energy), SDG 12 (sustainable consumption), and SDG 15 (life on land). The findings show that green investment enhances economic resilience in the short run, while its long-run effects are influenced by institutional and fiscal contexts. External debt negatively affects resilience directly, but its interaction with green investment turns significantly positive, suggesting that debt-financed green initiatives can help offset fiscal vulnerability when well-targeted. Trade openness and foreign direct investment also strengthen resilience, while institutional quality exhibits a nonlinear influence, dampening short-term gains but reinforcing long-run stability. These results underscore the importance of aligning green finance with debt sustainability and institutional reforms to achieve resilient and inclusive growth in Africa.

Suggested Citation

  • Joseph Otsayi Udenyi & Benedict Akombo & Ilemona Adofu & Obadiah Gimba, 2025. "Green Investment Outcomes, External Debt, and Economic Resilience in Africa: A Dynamic Panel Analysis of Emerging African Economies," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 9031-9043, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:9031-9043
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    References listed on IDEAS

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