Financial inclusion and globalization: catalysts for renewable energy adoption in Sub-Saharan Africa

Abstract:
Purpose
This study explores the impact of financial inclusion and globalization on renewable energy consumption in Sub-Saharan Africa (SSA). Given the urgent need for sustainable energy solutions in the face of climate change, the research investigates how economic integration, social exchanges, political cooperation and improved financial services contribute to the adoption of renewable energy sources in the region.

Design/methodology/approach
The study utilizes a comprehensive dataset spanning from 1995 to 2022, employing a two-step system generalized method of moments to rigorously analyze the relationships. Both aggregated measures (overall financial inclusion and globalization indices) and disaggregated components (economic, social and political globalization; financial access, usage and quality) are examined to provide a nuanced understanding of the factors driving renewable energy consumption.

Findings
The analysis reveals a robust and significant positive relationship between renewable energy consumption and the indices of financial inclusion and globalization. Economic globalization enhances renewable energy adoption by facilitating trade and investment flows. Social globalization promotes knowledge transfer and cultural exchanges that support renewable energy technologies. Political globalization fosters international cooperation and policy alignment, which are crucial for renewable energy initiatives. Financial inclusion, through improved access, usage and quality of financial services, directly supports investments in renewable energy infrastructure and projects.

Practical implications
The findings underscore the need for Sub-Saharan African governments to implement policies that reduce trade barriers to facilitate the import of renewable energy technologies and attract foreign direct investment. Encouraging technology transfer and educational exchanges will build local expertise and capacity in renewable energy. Enhancing the accessibility, usage and quality of financial services through regulatory reforms and digital financial innovations will enable greater investment in renewable energy projects.

Originality/value
This study contributes to the existing literature by integrating Sustainable Development Theory and Diffusion of Innovation Theory to explain renewable energy adoption in SSA. It is among the first to empirically examine the combined and disaggregated effects of financial inclusion and globalization. The findings provide new theoretical insights and fill a significant empirical gap by demonstrating how local financial systems and global flows of technology and information can together foster a transition toward renewable energy in developing economies.