The relationship between external debt and ecological footprint in SANE countries: insights from Kónya panel causality approach

Akam, Darlington; Nathaniel, Solomon Prince; Muili, Hamid Adebayo; Eze, Samuel Nzube

The relationship between external debt and ecological footprint in SANE countries: insights from Kónya panel causality approach

2022

Akam, Darlington | Nathaniel, Solomon Prince | Muili, Hamid Adebayo | Eze, Samuel Nzube

There are many studies on the relationship between energy consumption and various environmental indicators in Africa, and SANE countries in particular. However, there is a dearth of studies that relate external debt to CO₂ emissions, and even the ecological footprint, which is a more comprehensive environmental indicator. As such, this paper applies advanced estimation techniques to explore the role of external debt in the famous energy-growth-environmental nexus in SANE countries from 1970 to 2018. The findings from the Augmented Mean Group estimator indicate that economic growth and energy consumption increase environmental pressure in the SANE countries. On country-level results, the environmental Kuznets curve (EKC) hypothesis, monotonic increase, and monotonic decrease for ecological footprint holds in South Africa, Algeria, and Nigeria, respectively. Also, the results reveal that external debt increases the ecological footprint in South Africa and Algeria. Furthermore, the Kónya (2006) bootstrap country-level Granger causality test shows that ecological footprint is sensitive to economic growth and energy consumption in South Africa and Nigeria, while economic growth is sensitive to the ecological footprint in both Algeria and Nigeria. This study argues that stringent policy suggestions should be centred on reducing the overdependence on non-renewable energy sources since it underscores the major deteriorating state of environmental quality across SANE countries.

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