Tii N. Nchofoung, Ofeh Marilyn Edoh, and Nara Monkam provide key insights into the relationship between green finance, green innovation, and Africa’s industrialization journey using data from 41 African countries. The African continent faces the challenge of industrializing with limited financial resources while committing to sustainable development goals. Therefore, the way toward successful industrialization should involve fostering a competitive environment to attract both domestic and foreign investments which are crucial to achieve a structural transformation.
The study reveals that green finance significantly promotes industrial development in Africa. Improved access to green finance enables African nations to invest in cleaner technologies and industries, driving more sustainable industrialization. Green bonds, grants, and loans tailored for environmental projects are examples of mechanisms that provide the needed capital to industries in Africa. In addition, green finance also interacts with renewable energy, producing positive net synergies within the industrial and agricultural sectors. While green innovation is crucial for long-term sustainable growth, its implementation is costlier and requires advanced skilled workers which Africa currently lacks.
Several strategies are recommended to address these issues. Africa needs reforms at the levels of multilateral development agencies, development banks, and national governments in terms of climate financing to fill the gap of 242.4 billion per year in green investments. National governments can also support this by mobilizing other sources of green finance like environmental taxation and fostering partnerships between private and public sectors. Education and capacity building should also be a main consideration, especially among rural communities. That implies investment in training and higher educational programs. Subsidizing green technologies and investing in R&D will alleviate the cost and ensure their efficiency and affordability. The development of a hybrid energy system that integrates both renewable and conventional energy sources might be a more practical approach in the African context.
Green finance, green innovation, and industrial development in Africa – ScienceDirect
