IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v9y2025issue-9p9031-9043.html

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
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-9-issue-9/9031-9043.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/green-investment-outcomes-external-debt-and-economic-resilience-in-africa-a-dynamic-panel-analysis-of-emerging-african-economies/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, January.
    2. Essers, Dennis & Cassimon, Danny & Prowse, Martin, 2021. "Debt-for-climate swaps in the COVID-19 era: killing two birds with one stone?," IOB Analyses & Policy Briefs 43, Universiteit Antwerpen, Institute of Development Policy (IOB).
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    4. Lino Pascal Briguglio, 2016. "Exposure to external shocks and economic resilience of countries: evidence from global indicators," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(6), pages 1057-1078, November.
    5. Tim Zajontz, 2022. "Debt, distress, dispossession: towards a critical political economy of Africa’s financial dependency," Review of African Political Economy, Taylor & Francis Journals, vol. 49(171), pages 173-183, January.
    6. Farhad Taghizadeh-Hesary & Naoyuki Yoshino, 2020. "Sustainable Solutions for Green Financing and Investment in Renewable Energy Projects," Energies, MDPI, vol. 13(4), pages 1-18, February.
    7. Sohail Abbas & Ghulam Dastgeer & Samia Nasreen & Shazia Kousar & Urooj Riaz & Saira Arsh & Muhammad Imran, 2024. "How Financial Inclusion and Green Innovation Promote Green Economic Growth in Developing Countries," Sustainability, MDPI, vol. 16(15), pages 1-19, July.
    8. Oliver E. Ogbonna & Jonathan E. Ogbuabor & Charles O. Manasseh & Davidmac O. Ekeocha, 2022. "Global uncertainty, economic governance institutions and foreign direct investment inflow in Africa," Economic Change and Restructuring, Springer, vol. 55(4), pages 2111-2136, November.
    9. Leininger, Julia & Strupat, Christoph & Adeto, Yonas Adaye & Shimeles, Abebe & Wasike, Wilson & Aleksandrova, Mariya & Berger, Axel & Brandi, Clara & Brüntrup, Michael & Burchi, Francesco & Dick, Eva , 2021. "The COVID-19 pandemic and structural transformation in Africa: Evidence for action," IDOS Discussion Papers 11/2021, German Institute of Development and Sustainability (IDOS).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rao, Amar & Srivastava, Mrinalini & Parihar, Jaya Singh & Chavriya, Shubham & Hosen, Mosharrof, 2024. "Minerals at the crossroads: Economic policies, global trade, and renewable energy in the global South," Resources Policy, Elsevier, vol. 97(C).
    2. Eliphas Ndou, 2025. "Macroeconomic resilience and GDP growth nexus: evidence from GDP growth dynamics in South Africa," SN Business & Economics, Springer, vol. 5(7), pages 1-40, July.
    3. Elton Beqiraj & Giovanni Di Bartolomeo & Marco Di Pietro & Carolina Serpieri, 2024. "An integrated Bayesian-principal component approach to macroeconomic resilience: the case of the Central Europe and Baltic macro-region," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 52(5), pages 843-858, August.
    4. Kamal Chakir, 2025. "Economic resilience governance and adaptation capacities to external shocks: building a composite index for North African economies and South Africa [Gouvernance de la résilience économique et capacités d’adaptation face aux chocs externes : const," Post-Print hal-05290728, HAL.
    5. Alim BELEK & Djimoudjiel DJEKONBE & Anatole Toinar MOGOTA, 2022. "Economic resilience under COVID-19 in the CEMAC zone: Are procyclical adjustments of capital requirements necessary?," Journal of Economics Library, EconSciences Journals, vol. 9(3), pages 159-177, September.
    6. Tongle Si & Pedro Senna & Jaime Bonnin Roca, 2026. "Resilience: The Need for an Interdisciplinary Research Agenda for Policymaking," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-16, April.
    7. Zhou, Jiaxin & Wang, Shihao & Duan, Haipeng, 2025. "The impact of trade sanctions on financial risk: Empirical evidence from global data," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).
    8. Sena Kimm Gnangnon, 2022. "International Trade Cooperation and Exogenous Economic Shocks in Developing Countries," Arthaniti: Journal of Economic Theory and Practice, , vol. 21(2), pages 139-175, December.
    9. Mirjalili, Seyed hossein & Saadat, Hossein, 2020. "شاخص های آسیب پذیری اقتصادی [Indicators of Economic Vulnerability]," MPRA Paper 125887, University Library of Munich, Germany, revised 15 Feb 2020.
    10. Coulibaly, Yacouba, 2024. "Resource-backed loans and ecological efficiency of human development: Evidence from African countries," Ecological Economics, Elsevier, vol. 224(C).
    11. Liu, Xiaojun & Yang, Fang & Xie, Chao, 2025. "Local government debt governance and urban economic resilience," Finance Research Letters, Elsevier, vol. 85(PA).
    12. Mirjalili, Seyed hossein, 2017. "بررسی و تحلیل آثار مربوط به تجربه اقتصادهای شرق آسیا در مقاوم سازی اقتصاد [Economic Resilience: lessons of The East Asian Experience]," MPRA Paper 125672, University Library of Munich, Germany, revised 15 Mar 2018.
    13. André Arnaud ENGUENE & Romaric Armel WEPAGUIEWE & Ouedraogo IDRISSA, 2025. "The dual effect of (Extractive) foreign direct investment on institutional quality in sub-Saharan Africa," SN Business & Economics, Springer, vol. 5(11), pages 1-29, November.
    14. Dimitrios Tsiotas & Marina‐Selini Katsaiti, 2025. "A 3D index for measuring economic resilience with application to modern financial crises," Journal of International Development, John Wiley & Sons, Ltd., vol. 37(2), pages 371-404, March.
    15. Irine Tahjiba Angela, 2026. "Global economic policy uncertainty and credit risk in emerging economies: evidence from Bangladesh," Future Business Journal, Springer, vol. 12(1), pages 1-32, December.
    16. Lian, Haoyu & Kong, Shuning & Yu, Yihua, 2025. "Tight spaces, strong cities: The resilience payoff of urban compactness," Land Use Policy, Elsevier, vol. 156(C).
    17. Bastanifar Iman & Shirkhani Asma, 2025. "A Dynamic Economic Resilience Model: A Case Study of a Regional Integration Organization in Eurasia," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 40(1), pages 157-179.
    18. Lea Steininger & Casimir Hesse, 2024. "Buying into new ideas: The ECB’s evolving justification of unlimited liquidity," Department of Economics Working Papers wuwp357, Vienna University of Economics and Business, Department of Economics.
    19. Miklesh Yadav & Nandita Mishra & Shruti Ashok, 2023. "Dynamic connectedness of green bond with financial markets of European countries under OECD economies," Economic Change and Restructuring, Springer, vol. 56(1), pages 609-631, February.
    20. Akhtaruzzaman, Muhammad & Berg, Nathan & Lien, Donald, 2017. "Confucius Institutes and FDI flows from China to Africa," China Economic Review, Elsevier, vol. 44(C), pages 241-252.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:9031-9043. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.