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The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa
Thesis (PhD)--Stellenbosch University, 2025.
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Stellenbosch : Stellenbosch University
2025
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| author | Thebuho, Winifred Nsozi |
| author2 | Steenkamp, Lee-Ann |
| author_browse | Steenkamp, Lee-Ann Thebuho, Winifred Nsozi |
| author_facet | Steenkamp, Lee-Ann Thebuho, Winifred Nsozi |
| author_sort | Thebuho, Winifred Nsozi |
| collection | Thesis |
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Thesis (PhD)--Stellenbosch University, 2025. |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/132402 |
| institution | Stellenbosch University (South Africa) |
| language | en_ZA |
| last_indexed | 2026-06-10T12:45:38.927Z |
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| publishDate | 2025 |
| publishDateRange | 2025 |
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| publisher | Stellenbosch : Stellenbosch University |
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| spelling | oai:scholar.sun.ac.za:10019.1/132402 The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa Thebuho, Winifred Nsozi Steenkamp, Lee-Ann Opperman, Pieter Stellenbosch University. Faculty of Economic and Management Sciences. University of Stellenbosch Business School. Sustainable development -- Government policy -- Africa, Sub-Saharan Environmental justice -- Government policy -- Africa, Sub-Saharan International trade -- Environmental aspects -- Africa, Sub-Saharan Renewable energy sources -- Environmental aspects -- Africa, Sub-Saharan UCTD Thesis (PhD)--Stellenbosch University, 2025. Thebuho, W. N. 2025. The Effect of Financial Globalisation and Energy Consumption on Environmental Sustainability in Sub-Saharan Africa. Unpublished doctoral dissertation. Stellenbosch: Stellenbosch University [online]. Available: https://scholar.sun.ac.za/items/bff7bd14-3f0e-40d9-a8c2-567164805d91 ENGLISH SUMMARY: Financial globalisation, driven by reduced barriers to capital movement and strengthened crossborder financial links, promotes lower finance costs, better resource allocation, and increased investment, leading to economic growth. However, this growth can also increase industrial activity and CO2 emissions, threatening Africa’s ability to meet the United Nation's Sustainable Development Goals (SDGs). Africa is highly vulnerable to climate change due to low adaptive capacity and reliance on climate-sensitive industries, despite contributing little to global emissions. A just energy transition, focusing on accessible and affordable clean energy, is critical. Over 600 million Africans lack electricity, and COP28 emphasised the need to address energy poverty. While foreign capital can boost development and energy consumption, it may lead to environmental degradation without alternative energy solutions. Policies at national, regional, and international levels can help mitigate these effects. Therefore, this study explores the impact of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa through three empirical essays. The first essay investigates the relationship between financial globalisation (and components thereof, i.e., foreign direct investment (FDI), portfolio equity (PE) and foreign debt) on CO2 emissions, with data for 21 SSA countries from 2002 to 2021. The models are estimated using the common correlated effects mean group (CCEMG) estimator to determine the long-run coefficients and to capture the cross-sectional dependence (CD). The study's main findings show that financial globalisation could improve CO2 emissions in the long run, implying that increasing financial globalisation leads to lesser CO2 emissions. The results showed that FDI could improve the environment after attaining a negative coefficient with CO2 emissions. Conversely, portfolio equity and debt can worsen CO2 emissions. These results imply that increasing portfolio equity or debt leads to more CO2 emissions. Considering the diverse outcome of foreign capital stock on environmental degradation, some policy recommendations are appropriate. The study emphasises the significance of taking the heterogeneity of various foreign capital flow forms and how they relate to the environment into account. Policymakers should pursue more green FDI, such as investments in electric vehicles, recycling and tree planting strategies, to offset CO2 emissions and enhance the global demand for investing in a sustainable environment. The second essay provides insight into the symmetric and asymmetric relationship between financial development and energy consumption, using annual data from 21 SSA countries from 1990 to 2016. Countries in SSA rank lowest globally concerning energy access rates. The long-run and short-run coefficients were tested for linearity and symmetric effects using the Autoregressive Distributed Lag (ARDL) panel estimator. The asymmetry was found by decomposing financial development into positive and negative components using the non-linear ARDL (NARDL) regression method. The results reveal that positive financial development shock is certainly associated with energy consumption in the long run. Results of the negative shock in financial development are also positively linked with energy consumption in the long run. Countries in SSA should initiate the development of more inclusive financial systems to increase the availability and stability of funding sources, which may protect against financial contraction. Policy makers should allow independent private investors to generate their power plants with a minimum capacity, and decentralise power grids, which may improve energy access and domestic capacity to enhance energy consumption. The third essay examines the interplay between FDI inflows, energy consumption and CO2 emissions stemming from the pollution haven hypothesis (PHH). The rationale is to determine if FDI inflows affirm the PHH or pollution halo hypothesis (PHL). A theory among researchers is that FDI inflows contribute to PHH if pollution-intensive industries in multinational corporations (MNCs) have shifted from developed countries to developing countries with weaker environmental regulations and dominant resources. However, PHL is achieved if FDI from advanced nations provides new technologies and cleaner production methods that supplant less effective local enterprises. These relationships were examined by analysing panel data for 21 SSA countries from 1990-2016. More FDI inflows were found to worsen CO2 emissions. Conversely, more FDI inflows reduced CO2 emissions when linked with relative income. Consequently, the existence of the PHH could not be unequivocally confirmed in SSA. The level of economic growth was also examined to assess the impact on CO2 emissions. This validated the Environmental Kuznets Curve (EKC) hypothesis, which confirms the Ntype relationship. Therefore, introducing market-based pricing instruments (MBIs) can provide solutions that could abate CO2 emissions and eliminate pollution havens. In conclusion, the collective evidence shows that countries in SSA should be concerned with ending poverty and energy poverty to meet SDGs 1 and 7, and not only the environmental effect of financial globalisation. The significance of energy consumption as a driver of environmental degradation is highlighted. Africa could benefit from the implementation and enforcement of strict environmental protection and energy consumption rules that would turn pollution havens into pollution halos. AFRIKAANSE OPSOMMING: Finansiele globalisering, aangedryf deur verminderde hindernisse vir die beweeglikheid van kapitaal en versterkte grensoorstegende finansiele verbindings, bevorder laer finansieringskoste, beter hulpbronverdeling en verhoogde beleggings, wat lei tot ekonomiese groei. Hierdie groei kan egter ook industriele aktiwiteit en CO2-uitstoot verhoog, wat Afrika se vermoe om die VN se Volhoubare Ontwikkelingsdoelwitte (VOD's) te bereik, bedreig. Afrika is baie kwesbaar vir klimaatsverandering as gevolg van lae aanpassingskapasiteit en afhanklikheid van klimaatsensitiewe nywerhede, ondanks die feit dat dit min bydra tot wereldwye uitstoot. 'n Regverdigde energie-oorgang, wat fokus op toeganklike en bekostigbare skoon energie, is krities. Meer as 600 miljoen Afrikane het nie toegang tot elektrisiteit nie, en COP28 het die behoefte beklemtoon om energie-armoede aan te spreek. Alhoewel buitelandse kapitaal ontwikkeling en energieverbruik kan bevorder, kan dit lei tot omgewingsdegradasie as alternatiewe energie-oplossings nie gebruik word nie. Beleide op nasionale, streek- en internasionale vlakke kan help om hierdie effekte te verminder. Daarom ondersoek hierdie studie die impak van finansiele globalisering en energieverbruik op omgewingsvolhoubaarheid in Sub-Sahara-Afrika deur middel van drie empirie-gebaseerde opstelle. Die eerste opstel ondersoek die verhouding tussen finansiele globalisering (en die komponente daarvan, d.w.s., buitelandse direkte belegging (BDV), portefeuljebeurse (PB) en buitelandse skuld) op CO2-emissies, met data vir 21 SSA lande van 2002 tot 2021. Die modelle word geskat met behulp van die gemeenskaplike korreleerende effekte gemiddelde groep (CCEMG) skatter om die langtermynkoeffisiente te bepaal en om die dwars-aksiale afhangendheid (DA) vas te vang. Die belangrikste bevindinge van die studie toon aan dat finansiele globalisering die CO2-emissies op die langtermyn kan verbeter, wat impliseer dat toenemende finansiele globalisering lei tot minder CO2-emissies. Die resultate het getoon dat BDV die omgewing kan verbeter na die bereiking van 'n negatiewe koeffisient met CO2-emissies. Oor die algemeen kan portefeuljebeurse en skuld die CO2-emissies vererger. Hierdie resultate impliseer dat die toename van portefeuljebeurse of skuld lei tot meer CO2-emissies. Gevolglik is sommige beleidsaanbevelings gepas, gegewe die diverse uitkoms van buitelandse kapitaalvoorraad op omgewingsafbraak. Die studie beklemtoon die belangrikheid om die heterogeniteit van verskeie vorme van buitelandse kapitaalvloei in ag te neem en hoe dit met die omgewing verband hou. Beleidsmakers moet meer groen BDV nastreef, soos belegging in elektriese voertuie, herwinning en boomplantstrategiee, om CO2-emissies te vergoed en die globale vraag na belegging in 'n volhoubare omgewing te bevorder. Die tweede opstel verskaf insigte in die simmetriese en asimmetriese verhouding tussen finansiele ontwikkeling en energieverbruik, met behulp van jaarlikse data van 21 SSA lande van 1990 tot 2016. Lande in SSA rangskik die laagste globaal rakende energie toegang. Die langtermyn- en korttermynkoeffisiente is getoets vir lineariteit en simmetriese effekte met behulp van die Outoregressiewe Verspreide Vertraagde (ARDL) paneel skatter. Die asimmetrie is gevind deur finansiele ontwikkeling te dekomposeer in positiewe en negatiewe komponente met behulp van die nie-lineere ARDL (NARDL) regressiemetode. Die resultate toon dat 'n positiewe finansiele ontwikkeling skok beslis geassosieer word met energieverbruik op die langtermyn. Resultate van die negatiewe skok in finansiele ontwikkeling is ook positief gekoppel aan energieverbruik op die langtermyn. Lande in SSA moet die ontwikkeling van meer inklusiewe finansiele stelsels begin om die beskikbaarheid en stabiliteit van finansieringsbronne te verhoog, wat mag beskerm teen finansiele inkrimping. Beleidsmakers moet onafhanklike private beleggers toelaat om hul eie kragstasies met 'n minimum kapasiteit te genereer en die kragnetwerke te decentraliseer, wat die toegang tot energie en binnelandse kapasiteit om energieverbruik te verhoog, kan verbeter. Die derde opstel ondersoek die wisselwerking tussen BDV vloei, energieverbruik en CO2-emissies wat voortkom uit die besoedeling toevlugsoord hipotesis (BTH). Die rasionele is om te bepaal of BDV vloei die BTH of besoedeling halo hipotesis (BHH) bevestig. 'n Teorie onder navorsers is dat BDV vloei bydra tot BTH as besoedeling-intensiewe nywerhede in multinasionale korporasies (MNK's) verskuif het van ontwikkelde lande na ontwikkelende lande met swakker omgewingsregulasies en oorheersende hulpbronne. Daarenteen word BHH bereik as BDV uit gevorderde nasies nuwe tegnologiee en skoner produksiemetodes verskaf wat minder doeltreffende plaaslike ondernemings vervang. Hierdie verhoudings is ondersoek deur paneeldata vir 21 SSA lande van 1990-2016 te ontleed. Meer BDV vloei is gevind om CO2-emissies te vererger. Oor die algemeen het meer BDV vloei die CO2-emissies verminder wanneer dit gekoppel word aan relatiewe inkomste. Gevolglik kon die bestaan van die BTH nie onomwonde bevestig word in SSA nie. Die vlak van ekonomiese groei is ook ondersoek om die impak op CO2-emissies te evalueer. Dit het die Omgewings Kuznets Kurwe (OKK) hipotesis bevestig, wat die N-tipe verhouding bevestig. Daarom kan die bekendstelling van markgebaseerde prysinstrumente (MBI's) oplossings bied wat CO2-emissies kan verminder en besoedeling toevlugsoorde kan elimineer. Ten slotte toon die samegestelde bewyse dat lande in SSA hul fokus moet vestig op die beeindiging van armoede en energiearmoede om SDG’s 1 en 7 te bereik, en nie net op die omgewingsimpak van finansiele globalisering nie. Die belangrikheid van energieverbruik as 'n dryfkrag van omgewingsdegradasie word beklemtoon. Afrika kan baat vind by die implementering en handhawing van streng omgewingsbeskermings- en energieverbruiksreels wat besoedelingsoorde in besoedelinghalos kan omskep. Doctoral 2025-06-06T06:52:34Z 2025-06-06T06:52:34Z 2025-03 Thesis https://scholar.sun.ac.za/handle/10019.1/132402 en_ZA Stellenbosch University xvii, 204 pages : illustrations, includes annexures application/pdf Stellenbosch : Stellenbosch University |
| spellingShingle | Sustainable development -- Government policy -- Africa, Sub-Saharan Environmental justice -- Government policy -- Africa, Sub-Saharan International trade -- Environmental aspects -- Africa, Sub-Saharan Renewable energy sources -- Environmental aspects -- Africa, Sub-Saharan UCTD Thebuho, Winifred Nsozi The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa |
| title | The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa |
| title_full | The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa |
| title_fullStr | The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa |
| title_full_unstemmed | The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa |
| title_short | The effect of financial globalisation and energy consumption on environmental sustainability in Sub-Saharan Africa |
| title_sort | effect of financial globalisation and energy consumption on environmental sustainability in sub saharan africa |
| topic | Sustainable development -- Government policy -- Africa, Sub-Saharan Environmental justice -- Government policy -- Africa, Sub-Saharan International trade -- Environmental aspects -- Africa, Sub-Saharan Renewable energy sources -- Environmental aspects -- Africa, Sub-Saharan UCTD |
| url | https://scholar.sun.ac.za/handle/10019.1/132402 |
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