Climate finance, institutions and innovation systems in Sub-Saharan Africa

Frank Adu () and Roshelle Ramfol ()
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Frank Adu: College of Accounting Sciences, University of South Africa, Pretoria, South Africa
Roshelle Ramfol: College of Accounting Sciences, University of South Africa, Pretoria, South Africa

Public Sector Economics, 2025, vol. 49, issue 2, 309-337

Abstract: To enhance climate finance’s effectiveness in Sub-Saharan Africa (SSA) and explore how it can be deployed to boost innovation, this study has explored the effect of climate finance combined with institutional quality on innovation while emphasizing the multidimensional measurement approach to innovation. Using data from twenty-three (23) countries in SSA spanning the period 2011 to 2022 and the system Generalized Method of Moment (GMM) estimator, the results from the study show a negative and significant effect of climate finance on innovation in SSA. Also, we found that institutional quality has a positive and significant effect on innovation. Further, we realized from the conditional effect results that when the level of institutions in SSA is highly effective, the positive effect of climate finance on innovation is magnified. Given these findings, this study recommends that policies to improve climate finance in SSA should be pursued simultaneously with policies promoting strong institutions.

Keywords: climate finance; innovation; institutions; climate mitigation; climate adaptation; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: H23 H30 H50 I30 N17 O10 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ipf:psejou:v:49:y:2025:i:2:p:309-337

DOI: 10.3326/pse.49.2.6

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