Evaluating the influence of Chinese investment, FDI and digitalization on renewable energy dynamics in Africa

Energy drives economic growth but comes with environmental costs. Renewable energy offers a sustainable solution, with foreign investment facilitating access to advanced technologies. China's growing investment in Africa has sparked debates about its impact relative to other foreign investments. This study examines the impact of Chinese investment, FDI inflows, and digitalization on renewable energy development in African countries from 2003 to 2021. Using advanced machine learning regression and econometric methods—including Partialing-out LASSO regression, Cross-fit Partialing-out Linear Regression, Panel-Corrected Standard Errors (PCSE), Driscoll-Kraay Standard Errors (DKSE), and Instrumental Variable methods. These approaches accounts for cross-sectional dependency, heterogeneity, and endogeneity, thereby enhancing the robustness of the analysis. Our findings reveal that Chinese investment and FDI inflows significantly enhance renewable electricity production and renewable energy consumption, highlighting the role of foreign capital in supporting Africa's renewable energy development. In contrast, digitalization negatively affects renewable electricity production while reducing renewable energy consumption, suggesting that digitalization may divert attention and resources away from renewable energy production but improve efficiency in energy use. Policies should attract tech-driven investments and optimize digitalization for sustainable renewable energy in Africa. Policymakers should prioritize efficient foreign investments to bolster renewable energy infrastructure.