Exploring the Effects of Green Finance on Inclusive Growth: Empirical Evidence From African Countries

ABSTRACT This study examines the impact of green finance on inclusive growth in African countries from 2015 to 2024, focusing on transmission channels involving energy sources and institutional factors. Panel data from African economies are used to construct a multidimensional inclusive growth index based on income, education, health, electricity access and digital connectivity. Applying Driscoll–Kraay robust standard errors to address cross‐sectional dependence and error structures, the analysis finds mixed effects: Green finance does not uniformly enhance inclusive growth but proves more effective when directed towards renewable energy rather than nonrenewable sources. Government stability and sectoral allocation critically moderate outcomes. Policy recommendations stress accelerating renewable energy transitions, improving governance and adopting targeted sectoral strategies to maximize socio‐economic benefits.