Climate Finance, Institutions and Innovation Systems in Sub-Saharan Africa.
By Frank Adu and Roshelle Ramfol
To enhance climate finance’s effectiveness in Sub-Saharan Africa (SSA) and explore how it can be deployed to boost innovation, this studyhas explored the effect of cli- mate finance combined with institutional quality on innovation while emphasizing the multidimensionalmeasurement 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 negativeand significant effect of climate finance on innovation in SSA.
Also, we found that institu- tional 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.
