Renewable energy consumption, government policy and income inequality dynamics: Empirical evidence from Africa

This paper examines the unconditional and contingent effects of renewable energy adoption and government policy on income inequality in Africa. The two-step System Generalized Method of Moments (SGMM) is the primary estimator. In addition, however, the Feasible Generalized Least Square (FGLS) that addresses cross-sectional dependence, heteroscedasticity and autocorrelation is deployed on a panel data that includes 52 African countries from 1990 – 2023. The data are gleaned from the Standardized World Income Inequality Database and the World Bank. The findings show that as a co-benefit, renewable energy deployment reduces income inequality. More notably, a synergy of renewable energy and sound government policy via regulatory quality and government effectiveness further reduces income inequality. Accordingly, the computed negative net effects confirm this stance of synergistic effects. Given that North Africa and Southern Africa deploy the least renewables, it is incumbent on these governments to increase renewable energy adoption and also improve their governance index. This is even pertinent for Southern Africa, where income inequality is more persistent. The general policy direction in line with the SDGs is that, besides promoting environmental quality, promoting renewable energy adoption via sound government policy is relevant for income redistribution.