The relationship between clean energy use, carbon emissions, financial development, and economic growth in forty-three selected african countries

Clean energy adoption is projected to be a multi-decadal process rather than an immediate shift, as the Africa accounted for only 0.7% of global renewable capacity additions in 2024 despite its vast resource potential (IRENA, 2025). the transition to renewable energy is constrained by significant macroeconomic barriers, most notably the high weighted average cost of capital (WACC). Recent data states that the equity cost of clean energy projects in Africa or the selected countries can be three times higher than in developed economies, often exceeding 15%, due to high credit risk and limited financial market maturity (IEA, 2024; Clean Air Task Force, 2024). If investments in infrastructure and governance are significantly increased, clean energy is seen as key to unlocking sustainable development, enhancing energy security, and reducing Africa's dependence on fossil fuels. This thesis analyses 43 selected African countries, outlined the dynamic relationships between clean energy consumption, Carbon emissions, financial development, and economic growth over the period 1990-2019. Using ARDL/PMG and causality tests. Empirical results confirm the existence a bidirectional causality occurs in the financial development, clean energy consumption and growth in the selected countries highlighting the critical role in shaping the region's economic path. This supports with Acheampong et al. (2021) revealed a bidirectional causality from growth and renewables, alongside the findings that economic expansion drives an increase in CO2 emissions. In the ARDL estimation the study highlights that clean energy consumption negatively impacts short-term growth since the high costs of renewable energy infrastructure in Africa, while its long-term economic benefits remain statistically insignificant. Financial development supports short-term growth by enabling infrastructure and institutional lending, but its long-term effectiveness is constrained by inefficiencies and unsustainable debt expansion. While carbon emissions short-term economic growth and provide no clear long-term benefits, underscoring the need for greener industrial practices and energy-efficient technologies.