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Climate finance, institutions and innovation systems in Sub-Saharan Africa

Author

Listed:
  • Frank Adu

    (College of Accounting Sciences, University of South Africa, Pretoria, South Africa)

  • Roshelle Ramfol

    (College of Accounting Sciences, University of South Africa, Pretoria, South Africa)

Abstract

To enhance climate finance’s effectiveness in Sub-Saharan Africa (SSA) and explore how it can be deployed to boost innovation, this study has explored the effect of climate finance combined with institutional quality on innovation while emphasizing the multidimensional measurement approach to innovation. Using data from twenty-three (23) countries in SSA spanning the period 2011 to 2022 and the system Generalized Method of Moment (GMM) estimator, the results from the study show a negative and significant effect of climate finance on innovation in SSA. Also, we found that institutional quality has a positive and significant effect on innovation. Further, we realized from the conditional effect results that when the level of institutions in SSA is highly effective, the positive effect of climate finance on innovation is magnified. Given these findings, this study recommends that policies to improve climate finance in SSA should be pursued simultaneously with policies promoting strong institutions.

Suggested Citation

  • Frank Adu & Roshelle Ramfol, 2025. "Climate finance, institutions and innovation systems in Sub-Saharan Africa," Public Sector Economics, Institute of Public Finance, vol. 49(2), pages 309-337.
    • Handle: RePEc:ipf:psejou:v:49:y:2025:i:2:p:309-337
    DOI: 10.3326/pse.49.2.6
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    More about this item

    Keywords

    climate finance; innovation; institutions; climate mitigation; climate adaptation; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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