The investment dynamics in renewable energy transition in Africa: the asymmetric role of oil prices, economic growth and ICT

Abstract

Purpose This study aims to investigate the effect of oil prices, economic growth and information communication technology (ICT) on investment into renewable energy transition (RET). Design/methodology/approach Based on six selected African countries (i.e. Algeria, Egypt, Angola, Ethiopia, South Africa and Nigeria), the study uses a nonlinear autoregressive distributed lag model over the period from 1995 to 2020. Findings The results show that increasing oil prices, by substitution effect, leads to increasing RET investment, while declining oil prices lead to decreasing RET investment in the short and long run. Furthermore, the results reveal that increasing real gross domestic product leads to increased RET investment, while declining real gross domestic product (GDP) leads to decreasing RET investment both in the short and long run. Simultaneously, the study shows that increasing ICT has a significant and positive impact on RET investment, while declining ICT has a significant negative impact on RET investment in the short and long run. Originality/value The findings of this study have advanced the understanding of which factors significantly influence RET investment and the need to concentrate efforts on strategically addressing those factors. The findings indicate that these countries are at the progressive stage in terms of renewable energy; though increasing oil prices contribute to rising RET investment, the countries can be more proactive by improving the full potential of ICT as well as facilitating the growth of their economies.