article · Natural Resources Forum
Resource-rich African nations face significant financial hurdles in transitioning to capital-intensive renewable energy, despite holding substantial natural resource wealth. Evaluating data from 2000 to 2021, this research assessed how institutional quality influences whether resource rents aid or hinder the shift towards renewable energy sources. The findings reveal that prevailing institutions often foster corruption and bureaucratic inefficiency in managing resource revenues, preventing these funds from supporting clean energy initiatives. Furthermore, threshold analyses show that the majority of resource-rich African countries operate below the governance level required for resource rents to positively drive renewable adoption. Consequently, weak governance reinforces the resource curse by obstructing the channelling of mineral and energy revenues into sustainable power infrastructure.
Transitioning to renewable energy is vital for tackling climate change and achieving global sustainability goals, yet clean infrastructure requires massive capital investments. Highlighting that natural resource revenues cannot drive clean energy transitions without strong governance helps international partners, development agencies, and governments prioritise anti-corruption measures and institutional reforms before expecting resource wealth to fund renewable energy programmes.
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Abstract Transitioning to a carbon‐neutral renewable energy (REN) option to decarbonize ecosystems and mitigate carbon dioxide (CO 2 ) emissions and the negative impacts of climate change is consistent with United Nations Sustainable Development Goals 7 and 13. Scholars have identified natural resource wealth and institutions as critical factors in the REN transition in resource‐rich countries. Financial barriers are arguably the most significant impediments to transitioning to REN, as it is more capital‐intensive and costly to produce, invest in, and use than traditional fossil fuel‐based energy. Meanwhile, weak institutions and corruption in most resource‐rich countries culminate in the resource curse phenomenon and the mismanagement of natural resource wealth. It implies that institutions (weak or strong) modify the natural resource rent contribution to the REN transition. Previous research has paid little attention to the impact of the interplay between natural resources and institutional quality on the REN transition in resource‐rich African countries. This study examines how institutions moderate the contribution of natural resource wealth to accelerating or inhibiting the REN switch in resource‐rich African countries for the period 2000–2021, using fully modified ordinary least squares, a Driscoll–Kraay nonparametric covariance matrix, and moments‐based quantile regression estimators. This study departs from earlier studies by determining the institutional quality threshold above which institutions significantly stimulate natural resource rents to accelerate Africa's REN transition. The findings indicate that institutions in resource‐rich African countries breed inefficient bureaucracies and corruption in natural resource rent administration. These undermine the ability of natural resource incomes to facilitate a shift to renewable energy sources. The threshold analyses indicate that most resource‐rich African countries operate below the institutional quality threshold. This finding corroborates that inefficient institutions abet natural resource rent mismanagement and hinder the channeling of resource income toward the REN transition. The findings' policy implications are robustly articulated and outlined.
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DOI: 10.1111/1477-8947.12430
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