Renewable energy demand, financial reforms, and environmental quality in West Africa

Sustainable Development Goal (SDG-7) stipulates the need for clean energy, reduced carbon dioxide emissions, prevention of environmental degradation, promotion of biodiversity, and ecosystem preservation. Toward achieving these goals, this study provides new evidence on the causal link between renewable energy demand, financial reforms, economic growth, foreign direct investment, and environmental quality among emerging West African economies. The study adopted the fully modified ordinary least squares, dynamic ordinary least squares, pooled mean group estimation, and Granger causality test for its analysis. It was found that renewable energy demand has been favorable to the environmental health of West African economies. Also, financial reforms made within the region contributed to increasing the ecological footprints of the region. Direct investments from foreigners showed encouraging results as they improved the quality of the environment. We also found a unidirectional causality from ecological footprints to renewable energy demand and financial reforms but a bidirectional relationship with economic growth and foreign direct investment. Moreover, it was evident that ecological footprints Granger cause financial reforms and economic growth but not vice versa. Policy recommendations outlined encourage governments and policymakers to embark on intensive clean energy technologies and effective green financial reforms to help achieve Sustainable Development Goals.