The impact of environmental degradation and financial development on agricultural productivity in selected African countries

The influence of financial development and environmental deterioration on agricultural output in a few African nations between 2000 and 2023 is examined in this study. Through the use of panel data methodologies, such as panel unit root, cointegration, and Pooled Mean Group (PMG) estimate methods, the study offers empirical insights into the dynamics of these variables over the short and long term. The findings show that pollution, deforestation, and stress from climate change have a negative impact on farming production, since environmental deterioration dramatically lowers agricultural productivity over the long and short terms. Financial development, on the other hand, has a positive and statistically significant impact on agricultural production, indicating that increased farm performance is a result of financial inclusion, investment in modern inputs, and loan availability. The correlation between environmental deterioration and financial development is noteworthy and favorable, suggesting that financial development helps to lessen some of the negative consequences of environmental degradation. Rainfall and trade openness are control factors that boost agricultural output, while increased temperatures and pressure from the rural population have a detrimental impact on productivity. The necessity of coordinated policies that support environmental preservation, sustainable farming practices, and financial inclusion is highlighted by these findings. As essential steps to boost agricultural output while preserving environmental sustainability in Africa, the report suggests focused green finance programs, strict environmental laws, and easier access to rural borrowing options. In addition to providing useful insights for policymakers, financial institutions, and development partners seeking to advance sustainable agriculture and food security on the continent, the study adds to the expanding body of research on the environmental-economic relationship.