Can green trade promotion lessen energy poverty in Sub-Saharan Africa? The role of macroeconomic performance index

Abstract

This study explores the effect of green trade (GT) on energy poverty (EP) moderating the macroeconomic performance (MP) levels in this nexus. It examined panel data from 28 Sub-Saharan Africa (SSA) countries covering the years 2000 to 2021. Reflecting the non-normal distribution of the data, a panel quantile regression technique (PQR) was applied to address both distribution characteristics and unobserved individual differences. The Partial Linear Functional Coefficient (PLFC) method was adopted for deep nonlinearity analysis. First, both PQR and PLFC results indicate that GT has significant positive nonlinear impacts on EP alleviation. Second, the PQR findings indicate that GT positively impacts EP alleviation more in countries with lower EP than in those with high EP. The PLFC results indicated that countries with MP that surpass the established threshold experience a significant increase in the positive impacts of GT on EP alleviation. Considering the heterogeneity of regional and settlement patterns, the Eastern and Southern regions exert a greater adverse effect of GT on EP than the Western and Central regions of SSA, with urban areas experiencing higher impacts than rural areas. The results remain consistent even when considering variable substitution, various heterogeneity, and endogeneity issues, demonstrating that GT exerts nonlinear positive heterogeneous impacts on EP alleviation. Our results advocate for focused efforts to reduce EP, promote MP and enhance GT within the four established power pools in SSA. The governments should negotiate more green products trade agreements, green joint ventures and green bonds promotion in SSA. In addition, governments should enhance macroeconomic conditions by investing in hands-on skills training development through more partnerships with industries and effective governance.