Climate finance, green growth, and environmental resilience in Africa

This study examines the effects of climate adaptation finance on green growth and climate mitigation finance on environmental quality in Africa. The data of 40 African countries covering 2010 through 2024 are utilised. Climate adaptation and mitigation finance are disaggregated into principal and significant components. The estimation results reveal that both principal and significant climate adaptation finance stimulate green growth in the region, with significant climate finance having a marginally larger effect on green growth. Interestingly, the impact of adaptation finance on green growth is persistent. Conversely, although principal mitigation finance leads to a significant improvement in environmental quality via reduced carbon emissions, significant mitigation finance does not exhibit a statistically significant effect. This implies that climate finance allocated to projects where climate objectives are secondary may not have a measurable impact on environmental quality in Africa. These findings have significant implications for climate policy actions in the region.