Renewable energy, trade performance and the conditional role of finance and institutional capacity in sub-Sahara African countries

Abstract

The paper investigates the dynamic relationship between renewable energy usage and trade performance in sub-
\nSaharan Africa (SSA), while considering the conditioning role of corruption control, regulatory quality, and the
\nprivate sector access to finance. Focusing on 42 SSA countries for the period 2004–2016, and engaging the
\nSystem generalized method of moments (GMM) technique for its estimation, this study found a negative relationship
\nbetween renewable energy usage and the indicators of trade performance. However, with corruption
\ncontrol, improved regulatory framework, and better finance for the private sector, there are potentials for a
\npositive net impact of renewable energy usage on manufacturing export. For renewable energy and total trade
\nnexus, we find that improved regulatory framework, and better finance for the private sector are important
\nconditioning structures. These findings are significant because they highlight the different important structures
\nof SSA countries that improves the effect of renewable energy use on trade outcomes. For instance, the consideration
\nof the financial, institutional and regulatory frameworks in SSA countries in conditioning the renewable
\nenergy-trade nexus stipulates a clear policy pathway for countries in this region as the debate for
\ntransition to the use of renewable energy progresses.