External Financing Policies and Sustainable Energy Development in Africa: Evidence from Sub-Sahara African Countries

Energy is a fundamental pillar for economic advancement, particularly inhigh-growth economies. However, Sub-Saharan Africa (SSA) is facing aworsening energy crisis compared to other regions globally. These energysector challenges not only affect people’s living standards but also hindereconomic growth, employment prospects, and investments in the region.Despite having abundant energy resources, SSA struggles to adequatelypower its homes and businesses, necessitating the exploration and utilizationof these resources to their full potential. The persistent energy crisis can beattributed to the inability of energy organisers to comprehend the complexmacroeconomic elements that shape the development of energy. Nonetheless,substantial external financing has been absorbed by the sector in the past twodecades. This study explores the influence of external financing policies,namely official development assistance, private participation in infrastructure,and foreign direct investment, on energy development within selected SSAnations from 1990 to 2021. Using the panel autoregressive distributed lagmodel, the empirical findings suggest that official development assistancehampers energy development in SSA, while foreign direct investment andprivate participation in infrastructure influence energy development in thelong run. These outcomes imply that policymakers in SSA need to focusmore and prioritize domestic financial development to ensure increaseinvestment toward achieving sustainable energy development.