Do Digitalization, Green Finance and Financial Development Promote Sustainable Development in the African Countries?

ABSTRACT Sustainable Development is one of the core goals that countries all over the World are striving to achieve. It entails the ability of economies to promote economic goods without exhausting the limited resources that are available for use in producing the economic goods of the generations to come. This research adopts the Sustainable Development index that considers two important dimensions of human development and ecological sustainability to examine its drivers in the ECOWAS countries. This research adopts the “Methods of Moments Quantile Regression” method to analyze the data of the 15 ECOWAS countries considering the time ranging from 2004 to 2022. The “Panel Correlated Standard Errors” technique is also adopted to ensure that the findings presented are results. Results show that financial development, digitalization, and renewable energy advance Sustainable Development in the ECOWAS region. Specifically, digitalization and financial development reduce environmental degradation and improve human development, while renewable energy is strong in reducing environmental degradation. Health expenditures also exhibit asymmetric effects, by promoting Sustainable Development in the lower quantiles, but reducing it in the upper quantiles. Health expenditures support the improvements in human development and not ecological sustainability per se. Consequently, the employment level and green finance are counterproductive in fostering Sustainable Development in this region. This study informs the need for policy reforms in the allocation of green funds and in supporting green transition projects in order to foster Sustainable Development in the ECOWAS region.