Shades of sustainability: decoding the impact of foreign direct investment on CO2 emissions in Africa’s growth trajectory

The atmospheric carbon dioxide (CO2) escalation, primarily attributable to human activities, has formally instigated climate change. Despite Africa’s minor global CO2 emissions, the continent remains disproportionately vulnerable to its impacts. This study delves into the nexuses between foreign direct investment (FDI) and CO2 emissions in Africa. The primary focus is to unveil the earthly fallout of FDI, particularly in less developed African countries, which have witnessed substantial FDI inflows, by employing an expanded two-step generalized method of moments (GMM) approach. The study’s findings support a positive link between FDI and CO2 emissions in Africa, affirming the validity of Africa’s Pollution Haven Hypothesis (PHH). Additionally, the study identifies factors affecting per capita CO2 emissions, including FDI, trade openness, GDP growth, human capital, population growth, government consumption, domestic investment, trade openness, and inflation. These findings suggest conditional convergence, indicating that higher FDI leads to increased carbon emissions, with substantial implications for development. To address this, policymakers are advised to promote clean technologies and renewable energy adoption. These actions can mitigate FDI’s environmental impact and steer the continent toward sustainability. The study also suggests that governments should prioritize education and training programs focused on environmental conservation, sustainable resource management, and promoting green technologies.