Resources Policy 91 (2024) 104875

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Resources Policy
journal homepage: www.elsevier.com/locate/resourpol

Understanding the Interplay: Oil price and renewable energy investment in

Africa’s net oil importing and net oil exporting countries
Ishaya Tambari *, Pierre Failler , Shabbar Jaffry
Centre for Blue Governance, University of Portsmouth, P01 3DE, United Kingdom

A B S T R A C T

This study investigates the symmetric and asymmetric relationships between oil price and renewable energy investment (REI) in six African countries (Algeria,
Angola, Egypt, Ethiopia, Nigeria, and South Africa), examining the differences between net oil-importing and net oil-exporting countries in Africa. The study employs
autoregressive distributed lag bounds testing and the non-linear autoregressive distributed lag approaches to analyse the data. The results reveal symmetric and
asymmetric relationships between oil prices and REI across the countries examined. Algeria, Egypt, and Nigeria exhibit symmetric relationships, whereas Angola,
Ethiopia and South Africa demonstrate asymmetric relationships. Oil prices have statistically significant effects on REI in all countries, albeit with varying levels of
magnitude. In symmetric relationships, oil price influences REI in the long run for Egypt and Nigeria, while Algeria shows significant effects in both the short- and
long-term. In asymmetric relationships, a positive change in oil price has a significant negative impact on REI in the long run for Angola, Ethiopia, and South Africa,
while a negative change in oil price positively affects REI. Notably, Ethiopia does not exhibit statistical significance regarding negative oil price change. Overall, the
study provides valuable insights into the complex relationship between oil prices and REI in Africa, emphasising the need for strategic policies to promote renewable
energy adoption and reduce dependence on fossil fuels.

1. Introduction
African countries are experiencing significant developments in
renewable energy markets, leveraging diverse natural resources, and
implementing supportive policies to transition to a more sustainable
energy future. The renewable energy markets in Algeria, Angola, Egypt,
Ethiopia, South Africa, and Nigeria are also influenced by the global
push for clean energy and the need to mitigate climate change, and the
significance of renewable energy in achieving sustainable development
goals and reducing greenhouse gas emissions (IRENA, n.d.). These
countries are aligning energy strategies with international commit­
ments, such as the Paris Agreement that acknowledges the importance of
transitioning to renewable energy sources. With its vast solar potential
and favourable policy environment, Algeria has made notable progress
in developing solar projects and promoting solar energy adoption,
endeavouring to increase the share of the renewable energy in its elec­
tricity mix and diversify energy sources beyond fossil fuels (Beyond the
Grid for Africa, n.d.). Angola is exploring its potential for developing
hydropower and solar energy to address energy access challenges and
reduce dependence on costly fossil fuel imports (Beyond the Grid for
Africa, n.d.). Ethiopia’s commitment to renewable energy has been
demonstrated through flagship projects such as the Grand Ethiopian
Renaissance Dam, which harnesses hydropower resources. Ethiopia’s
renewable energy sector has also attracted significant investment and
international partnerships, contributing to economic growth and job
creation (Microsoft.NET, n.d.). Similarly, South Africa has implemented
successful renewable energy procurement programmes, attracting sub­
stantial investment in wind and solar power sectors, and driving job
creation and economic development (PwC, n.d.). As one of the largest
economies in Africa, Nigeria recognises the importance of diversifying
its energy mix and reducing dependence on fossil fuels. The country has
set ambitious targets for renewable energy deployment and imple­
mented various policy measures to encourage investment in the sector.
These efforts endeavour to expand energy access, promote energy se­
curity and unlock the economic potential of renewable energy in Nigeria
(IRENA, n.d.).
The transition towards renewable energy is driven by various factors,
including concerns regarding climate change, energy security and the
need to reduce reliance on fossil fuels (IEA, 2021; Oyewo et al., 2021;
Tambari et al., 2020). In response to these challenges, significant in­
vestment has been made in renewable energy technologies, infrastruc­
ture, markets, and policy frameworks worldwide. However, despite the
overall growth in renewable energy investment (REI), many African
countries still face substantial challenges in developing renewable en­
ergy sectors (Schwerho and Sy, 2017). The need to address energy
poverty and promote sustainable development in Africa has underscored

* Corresponding author.
E-mail address: ishaya.tambari@myport.ac.uk (I. Tambari).

https://doi.org/10.1016/j.resourpol.2024.104875
Received 4 July 2023; Received in revised form 30 January 2024; Accepted 23 February 2024
Available online 5 March 2024
0301-4207/© 2024 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-
nc-nd/4.0/).
I. Tambari et al. Resources Policy 91 (2024) 104875

Table 1
Relevant literature on oil price and renewable energy investment.
Author(s) Country/Area Period Method Results

Apergis and Payne 11 South American 1980–2010 Panel co- integration and error correction Heterogeneity exists between countries regarding the effects of oil price
(2015) countries modelling on renewable energy consumption.
Eregha (2017) Five energy- 1980–2013 Fully modified and dynamic OLS co- Energy consumption and crude oil price positively and significantly
dependent African integration approaches enhance the growth of output.
countries
Troster et al. United States 1989–2016 Quantiles of distribution Bi-directional causality between changes in renewable energy
(2018) consumption and economic growth at the lowest tail of the distribution;
besides, changes in renewable energy consumption lead economic
growth at the highest tail of the distribution.
Tugcu and Topcu G7 countries 1980–2014 NARDL and asymmetric Causality Strong asymmetric relationship between renewable energy
(2018) approaches consumption and economic growth in the long run.
Tuna and Tuna Five Asian countries 1980–2015 Hacker and Hatemi (2006) tests for No causality is evident between renewable energy consumption and
(2019) symmetric causality analysis and Hatemi economic growth for Indonesia, Malaysia, Singapore, and Thailand. The
(2012) test increase in income level in the Philippines increases renewable energy
consumption and energy saving policies have no effect economic
growth.
Dominioni et al. – 2006–2016 Integrable nonautonomous Lotka–Volterra The transmission effects of oil price on renewable energy consumption
(2019) model Marasco et al. (2016) may be asymmetric.
Toumi and Toumi Saudi Arabia 1990–2014 NARDL Positive impacts on real GDP in the long-term that are unobservable in
(2019) the short-term. The short- and the long- term incidences of positive
shocks on real GDP are not like the negative shock to REC, implying the
existence of asymmetric impacts on renewable energy. Consumption in
both short- and long-term forms.
Cao et al. (2020) China 2000–2017 Fixed effect model Oil price uncertainty has significantly negative effects on corporate
investment efficiency in renewable energy firms.
Tambari and Six African Countries 1990–2018 VAR model Renewable energy investment remains at an infant stage in many
Failler (2020) African countries, with a large deficit compared with the investment
needs.
Malik et al. (2020) Pakistan 1971–2014 ARDL and NARDL Symmetric results reveal that oil price increases short- term emissions
and reduces emissions in the long-term. The asymmetric analysis
demonstrates that an increase in oil price lowers emissions, while a
lower oil price raises emissions in the long term, whereas higher oil price
harms the environment.
Murshed and South Asian – Cross-sectional dependency analysis A non-linear U-shaped relationship is evident between oil price and
Tanha (2021) countries renewable energy consumption.
İçen and Tatoglu 42 net energy 2000–2018 Heteroscedasticity and PSAR Price has asymmetric effects on solar, wind and geothermal renewable
(2021) exporters countries energy. In contrast, price and income have an asymmetric effect on oil
consumption. Moreover, the consumption of all energy sources is
sensitive to oil price, and positive shocks in price are more effective on
consumption than negative shocks in price.
Guo et al. (2021) G7 countries 1980–2018 ARDL and NARDL The oil price of G7 countries, except for France and Germany, have a
significant asymmetric effect on renewable energy consumption:
however, there is considerable heterogeneity between England and
Japan.
Yang and 27 African countries 1990–2018 ARDL and NARDL The symmetric results show that a 1% increase in renewable energy
Danwana consumption is projected to result in an ecological deficit in ecological
(2022) reserve countries. The asymmetric results show that a 1% increase
(decrease) in renewable energy consumption is projected to decrease
(increase) ecological footprint by 0.16% (0.13%) in countries with
ecological reserves.
Ali et al. (2022) ( South Africa 1990–2019 ARDL and NARDL Renewable energy improves environmental quality in both the short and
Ali et al., 2022) long term. Positive shocks in oil price contribute negatively to
environmental pollution in South Africa.
Borozan and Lolic G7 Countries 1997–2019 NARDL Asymmetric effects in the long term imply both negative and a positive
(2022) shock in lagged uncertainty reduce renewable energy consumption.
Eyuboglu and 15 emerging 1990–2015 Bootstrap panel causality test Asymmetric causality is evident from negative shocks of economic
Uzar (2022) countries growth to negative shocks of renewable energy consumption in South
Africa, Thailand, and Turkey. No causal correlations between renewable
energy consumption and economic growth are evident in Malaysia,
Mexico, Nigeria, Pakistan, Philippines, Poland, and Russia.
Joof et al. (2023) China 1988–2018 NARDL and bootstrap ARDL Oil price symmetrically influence the ecological footprint and
asymmetric analysis shows that a positive shock in oil price enhance
ecological quality while negative shocks deteriorate ecological quality.

the importance of REI in the region.
While a considerable body of literature explores the relationship
between oil price and renewable energy consumption, the impact of oil
price on REI has received less attention (Apergis and Payne, 2015;
Dominioni et al., 2019; Rentschler, 2013; Sadorsky, 2009a; Salim and
Rafiq, 2012). A majority of previous studies focus on the symmetric
effects of oil price, assuming linear relationships between variables.
However, recent research demonstrates that the relationship between oil
price and REI may exhibit asymmetric characteristics (Dominioni et al.,
2019; Cao et al., 2020; Ipcc and Report, 1969). The concept of the
asymmetric effects of oil price refers to the differential impact that
positive and negative changes in oil price can have on economic vari­
ables or phenomena, suggesting that the effects of oil price increases
may differ from those of oil price decreases. In the context of our study
regarding the impact of oil price on REI, exploring the asymmetric ef­
fects of oil price is crucial for a comprehensive understanding of the

2
I. Tambari et al.
relationship between these two factors.
This exploration of the asymmetric effects in the oil price–REI rela­
tionship is motivated by three considerations. First, substantial fluctu­
ations in oil price have occurred over the past few decades, indicating
the potential for non-linear effects on REI (Murshed and Tanha, 2021).
Second, determining the asymmetric effects of oil price can provide
insights into the dynamics of REI in different market conditions. Third,
the majority of the research examining the effects of oil price on REI
focus on developed countries, and research on developing economies,
especially in Africa, is limited.
To address these gaps, this empirical study investigates the sym­
metric and asymmetric effects of oil price on REI in Africa, to answer the
following research questions.
i. What are the short- and long-term correlations between oil price
and REI in African countries?
ii. Are the effects of oil price on REI symmetric or asymmetric?
iii. How do net oil-importing and net oil-exporting countries in Af­
rica differ in terms of the relationship between oil price and REI?
The classification of the six African countries in the study, which
includes Algeria, Angola, Egypt, Ethiopia, Nigeria, and South Africa, is
based on specific criteria related to their characteristics, particularly
their status as major oil-exporting countries. One justification for
including Nigeria, Angola, and Algeria as net oil exporters is their sizable
contributions to the continent’s overall oil production, which highlights
their crucial roles in the continent’s oil industry. The study not only
identifies oil-exporting countries but also distinguishes them from net
oil-importing countries. This binary categorization adds nuance to the
analysis, recognising that Egypt, Ethiopia, and South Africa are net
importers despite their presence in the oil sector. This distinction allows
for a more detailed examination of the energy dynamics within the
sample. Second, by selecting countries with varying levels of depen­
dence on oil exports, the study aims to draw comparisons and contrasts
between their renewable energy investment strategies. The classifica­
tion aligns with the study’s focus on renewable energy investment.
Major oil-exporting countries are likely to have different considerations
and challenges in transitioning to renewable energy compared to net oil-
importing nations. This classification sets the stage for exploring how
these two groups of countries approach renewable energy initiatives,
given their distinct positions in the oil market. Three of the selected
countries represent different regions of Africa, each with its own eco­
nomic and developmental challenges. The diverse geographical repre­
sentation allows for a more comprehensive understanding of the African
context in the study. Fourth, the choice of these specific countries is
driven by their unique policy landscapes. Understanding how countries
with diverse economic structures approach renewable energy implica­
tions for policy recommendations, particularly for oil-dependent econ­
omies seeking to diversify their energy sources.
Autoregressive distributed lag (ARDL) and non-linear autoregressive
distributed lag (NARDL) models are employed to answer the questions
above. These econometric approaches allow us to examine the short-
and long-term relationships between oil price and REI and explore po­
tential non-linearities and asymmetries in these relationships.
This study makes three main contributions to the existing literature.
First, it fills a research gap by examining the symmetric and asymmetric
effects of oil price on REI in developing countries, particularly in Africa.
Second, it employs both ARDL and NARDL models to provide robust
analysis and insights into the short- and long-term correlations between
oil price and REI. Third, identifying asymmetric effects can reveal the
underlying mechanisms and drivers behind the observed relationships,
potentially indicating that REI responds differently to positive and
negative oil price shocks. Uncovering these mechanisms can expand our
understanding of the factors influencing REI. The findings of this study
uncover the dynamics between oil price and REI in Africa, to inform
policymakers’ and investors’ development of effective strategies to
3
Resources Policy 91 (2024) 104875
advance renewable energy development in the region. Moreover, the
results enhance our knowledge regarding the relationship between oil
price and REI in the context of developing economies, shedding light on
the potential asymmetric effects.
The bulk of the research on oil price and renewable energy focuses on
oil price’s effects on renewable energy consumption (Apergis and Payne,
2015; Dominioni et al., 2019; Rentschler, 2013; Sadorsky, 2009a,
2009b; Salim and Rafiq, 2012). These studies demonstrate significant
heterogeneity between countries in the transmission effects of oil price
on renewable en ergy consumption, indicating potential asymmetries
(Dominioni et al., 2019; Cao et al., 2020; Ipcc and Report, 1969). For
example, (Cao et al., 2020) explores the influence of fluctuations in in­
ternational oil price on Chinese renewable energy companies’ invest­
ment decisions, with a particular focus on the relationship between oil
price uncertainty and sensitivity to investment opportunities. Employ­
ing a robust two-step system-generalised method of moments estimator
and analysing a sample of publicly listed renewable energy firms from
2002 to 2016, the study reveals that oil price uncertainty has a signifi­
cant negative impact on investment across the entire sample.
However, research attention has shifted towards exploring the
asymmetric effects of oil price on renewable energy consumption,
particularly following weaker relationships between oil price and the US
gross domestic product (GDP) since 1985 (Apergis and Payne, 2010).
Studies suggest that the volatility effects of oil price on renewable en­
ergy consumption can be non-linear, with the impact becoming signif­
icant only after reaching a critical threshold (Murshed and Tanha,
2021). These findings highlight the importance of considering
non-linearity when examining the relationship between oil price and
renewable energy consumption.
Oil price volatility can have mixed effects on REI. High oil price can
make renewable energy sources more attractive, as they offer a stable
and potentially less costly alternative to oil-based energy (Song et al.,
2021). This can incentivise investment in renewable energy projects and
technologies. In contrast, low oil price can reduce the competitiveness of
renewable energy by making fossil fuels inexpensive (Guo et al., 2021).
This may lead to a decrease in REI, as investors may perceive fossil
fuel-based energy as more economically viable.
Symmetric effects assume linearity, wherein the impact of variables
is the same in both directions, while asymmetric effects consider non-
linearity, which leads to different impacts in positive and negative di­
rections. Understanding the symmetric and asymmetric effects of oil
price on REI is essential for policymakers and investors. The literature
acknowledges the considerable changes in oil price over the last three
decades, suggesting potential variations in the effects of oil price on REI
(Murshed and Tanha, 2021; Troster et al., 2018). Therefore, examining
both symmetric and asymmetric effects is essential for capturing the
complex relationship between oil price and REI. The asymmetric effects
of oil price on REI in Africa are not yet well understood. The impact of oil
price changes on REI may differ depending on whether oil price is rising
or falling. For example, during a period of rising oil price, REI may
become more attractive, as investors seek alternative energy sources to
mitigate the risks associated with oil price volatility. Conversely, when
oil prices fall, investors may be less inclined to invest in renewable en­
ergy, as the relative cost advantage of fossil fuels becomes more
prominent.
Recent research has started to investigate the effects of oil price on
REI (Song et al., 2021; Guo et al., 2021). This shift in focus is driven by
the significance of REI for macroeconomic performance and the need to
understand the impact of energy policies and country-specific charac­
teristics (Eregha, 2017). Nevertheless, the literature lacks studies
regarding how low oil price may influence the rollout of electricity
decarbonisation in developing countries. Moreover, research has not
thoroughly addressed the issue of non-linearity in the impact of oil price
on REI, which is crucial for capturing potential asymmetric effects.
Thus, understanding the relationship between oil price and REI in
Africa is a complex and evolving area of research. The above review and
I. Tambari et al. Resources Policy 91 (2024) 104875

Table 1 demonstrate that while some studies have explored the effects of
oil price on renewable energy consumption, the literature on REI in
Africa remains limited. The impact of oil price volatility on REI in Africa
is likely to be influenced by symmetric and asymmetric effects. By
considering the asymmetric effects, we reveal insights into how
renewable energy responds to changes in oil price, depending on
whether the price is rising or falling. The significance of examining
asymmetric effects lies in its potential to reveal nuanced dynamics and
patterns in REI practices, allowing us to assess whether the magnitude
and direction of the impact of oil price volatility on REI differ under
different market conditions. Understanding these nuances can provide
valuable insights for policymakers and investors in terms of decision-
making and strategic planning. Further research is needed to provide
a more comprehensive understanding of these dynamics and inform
effective policies and strategies for promoting REI in Africa.

2. Theoretical framework

The resource curse hypothesis represents a significant theoretical

framework in the realm of natural resource economics. Originating from
the observation that some countries blessed with abundant non-
renewable resources, particularly oil, face economic challenges, this
hypothesis highlights a potential paradox. Instead of serving as an
economic boon, the reliance on oil revenues may inadvertently impede a
nation’s capacity to diversify its economic activities. The crux of the
resource curse hypothesis lies in the idea that countries overly depen­
dent on non-renewable resources may find it challenging to channel
their bib_joof_et_al_2023economic gains into alternative and sustainable
sectors, such as renewables.
A key implication of the resource curse hypothesis is the hindered
development of renewable energy sources in nations reliant on non-
renewable resources. The substantial revenues generated from oil may
create a disincentive for governments and private entities to invest in
alternative and cleaner energy options. This reduced inclination towards
diversification may stem from the immediate economic gains associated
with the extraction and export of non-renewable resources. Conse­
quently, the resource curse hypothesis suggests that, despite the eco­
nomic windfalls from oil, nations may find themselves trapped in a cycle
that limits their ability to transition to more sustainable energy prac­
tices, including renewable energy investment.
The theoretical underpinning of the resource curse hypothesis gains
further depth through empirical studies that examine its applicability to
renewables. For instance, (Li et al., 2023) contribute to this discourse by
evaluating the role of renewable energy and research and development
(R&D) in the context of the resource curse hypothesis. Their study delves
into the intricate dynamics between resource dependence and sustain­
able development, specifically examining how investments in renewable
energy and R&D may mitigate the adverse effects associated with
resource dependence. By linking the resource curse hypothesis to sus­
tainable development, Li et al.’s research offers a nuanced perspective,
suggesting that strategic investments in renewables and innovation can
play a pivotal role in breaking the shackles of resource dependence.
Ref. (Anser et al., 2020) extend the exploration of the resource curse
hypothesis by investigating its mediation role in the relationship be­
tween financial development and clean energy sources. Their study in­
troduces the dimension of ‘go-for-green’ resource policies, emphasising
the potential of aligning financial development strategies with clean
energy initiatives. Anser et al.’s findings underscore the importance of
policy interventions in mitigating the resource curse, particularly when
framed within the broader context of fostering financial development
and promoting clean energy sources.
Furthermore, (Ahmad et al., 2023) contributes to the theoretical
landscape by incorporating considerations of institutional issues into the
resource curse hypothesis. Their research underscores the significance of
a comprehensive policy framework that not only acknowledges the
challenges posed by resource dependence but also addresses
Fig. 1. The steps in the ARDL and NARDL Procedures.
institutional dynamics and facilitates the transition towards renewable
energy sources. The findings of these studies not only corroborate the
challenges outlined by the resource curse hypothesis but also contribute
to a more comprehensive understanding of how resource dependence
shapes economic trajectories and, potentially, the transition to renew­
able energy sources. As we navigate the complexities of
resource-dependent economies, these empirical insights guide our
theoretical understanding, emphasising the need for context-specific
approaches to address the multifaceted challenges associated with the
resource curse.
3. Materials and methods
3.1. Data
This study samples six African countries (Algeria, Angola, Egypt,
Ethiopia, Nigeria, and South Africa). The major oil-exporting countries
in the sample include Nigeria, Angola and Algeria, which accounted for
58% of total crude oil production from Africa in 2021 (British Petro­
leum, 2022). We use annual data for renewable energy production, oil
price, per capita real GDP and carbon dioxide (CO2) emissions from
1990 to 2020. The selection of variables references previous studies
(Apergis and Payne, 2015; Sadorsky, 2009b), economic theory (Shah
et al., 2018; Tambari et al., 2023) and data availability to ensure
comprehensive and accurate empirical results. The secondary data used
in the analysis are obtained from various sources. Renewable energy
production is used as a proxy for REI based on the high correlation be­
tween the two variables (Tambari and Failler, 2020; Shah et al., 2018;
Tambari et al., 2023). This approach is based on the high correlation
between renewable energy production and investment, as an increase in
renewable energy production reflects a corresponding increase in in­
vestment in renewable energy sources (Shah et al., 2018; Tambari et al.,
2023). Accordingly, increased investment in renewable energy infra­
structure and technology is expected to lead to higher levels of renew­
able energy production over time. When investors allocate capital
towards the development and expansion of renewable energy projects, it
should ultimately result in a greater capacity to generate renewable
energy.

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Fig. 2. Main findings.

Renewable energy generation is measured as the total generation
from various sources such as hydroelectricity, solar, wind, biomass and
waste, hydroelectric pumped storage, non-hydroelectric renewables,
geothermal, tide and wave (units: billions of kilowatt-hours). Per capita
CO2 emissions are measured based on fossil fuel consumption and
burning (units: million metric tonnes of CO2 per person). GDP is
measured in billions of US dollars, interest rate in percentages and the
oil price in dollars per barrel. Due to a lack of domestic oil price data, the
average annual oil price in US dollars per barrel is adjusted for inflation
using each country’s annual consumer price index (CPI) to obtain the

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I. Tambari et al. Resources Policy 91 (2024) 104875

Table 2
Summary statistics.
Variable Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis

Algeria REI 319.39 251.00 956.00 54.00 233.96 1.27 3.75

OP 0.74 0.62 2.88 0.25 0.53 2.44 9.83
RGDP 3117.58 3113.00 5591.00 1452.00 1430.65 0.35 1.71
CO2 3.27 3.20 4.23 2.70 0.41 0.60 2.50

Angola REI 3100.26 2219.00 10050.00 725.00 2735.41 1.18 3.33

OP 22.78 1.21 309.05 0.09 57.10 4.30 21.86
RGDP 2201.36 1896.00 5408.00 329.00 1726.36 0.45 1.74
CO2 0.76 0.78 1.40 0.30 0.28 0.40 2.80

Egypt REI 13926.74 13996.00 20178.00 9700.00 2534.73 0.33 3.13

OP 0.81 0.77 2.34 0.13 0.46 1.06 5.16
RGDP 1887.65 1398.00 3599.00 651.00 999.10 0.48 1.72
CO2 2.08 2.14 3.03 1.40 0.44 0.18 2.40

Ethiopia REI 5070.90 2833.00 14358.00 1062.00 4669.60 1.01 2.45

OP 0.87 0.86 2.41 0.12 0.50 0.65 4.04
RGDP 340.45 244.00 936.00 112.00 253.62 1.00 2.68
CO2 0.09 0.07 0.60 0.04 0.10 4.55 23.87

Nigeria REI 6029.39 5775.00 8234.00 4387.00 877.45 0.94 4.00

OP 2.48 0.97 18.53 0.13 4.18 2.70 9.59
RGDP 1422.94 1268.00 3223.00 270.00 944.10 0.29 1.62
CO2 0.54 0.58 0.77 0.32 0.14 0.06 1.95

South Africa REI 17912.13 16644.00 32457.00 8746.00 5738.73 1.14 3.71
OP 0.70 0.67 1.76 0.24 0.33 1.01 4.44
RGDP 4837.26 5091.00 8007.00 2502.00 1601.89 0.23 1.79
CO2 8.66 8.70 9.96 7.24 0.60 0.15 2.96

All REI 7726.47 5759.00 32457.00 54.00 7038.19 0.92 3.51

OP 4.73 0.83 309.05 0.09 24.45 10.80 131.57
RGDP 2301.20 1845.50 8007.00 112.00 1881.85 0.82 2.85
CO2 2.57 1.40 9.96 0.04 2.96 1.32 3.36

Note: OP, RGDP, REI, and CO2 represent the price of oil, real GDP, REI, and CO2 emissions, respectively. Std. Dev. Is the standard deviation.

real oil price.
Data on renewable energy generation and CO2 emissions from 1990
to 2020 are obtained from the US Energy Information Administration.
The real GDP series, which is measured in billions of US dollars at
constant 2015 price, is obtained from the United Nations economic
database. The nominal oil price series represents the average crude price
of different types of petroleum (Dubai, Brent, Nigerian and West Texas
Intermediate) measured in US dollars per barrel. Real oil price is
calculated by deflating nominal oil price using each country’s implicit
CPI. Nominal oil price data is sourced from the British Petroleum (BP)
annual report and CPI data for individual countries are obtained from
the International Monetary Fund (IMF) International Energy Agency and
International Financial Statistics (IFS). Real interest rate, adjusted for
inflation as measured by the GDP deflator, is obtained from the World
Bank Development Indicators and the IMF’s IFS (See Fig. 2).
3.2. Econometric model
Aligned with this study’s objectives and previous literature such as [
(Sadorsky, 2012)], the model employed in this study is expressed as
follows:
REI = f(OP, RGDP, CO2)
where REI represents renewable energy generation per capita, Op de­
notes oil price and RGDP represents real GDP per capita.
The inclusion of REI, OP and RGDP in Equation (IEA, 2021) is sup­
ported by previous research. (Shah et al., 2018) demonstrates a signif­
icant relationship between real GDP and renewable energy, indicating
that economic growth can drive the growth of renewable energy. Hence,
a positive association can be assumed between GDPs per capita and REI.
Oil price serves as an alternative to renewable energy, implying that
increased oil price may incentivise greater investment in renewable
energy sources (Simionescu et al., 2020), and the expectation is nega­
tive, as increased oil price could also lead to a rise in non-oil energy
production. Additionally, the expectation of the relationship between
CO2 and renewable energy is negative, as renewable energy consump­
tion is negatively associated with per capita CO2 emissions growth
(Chen et al., 2022).
3.3. Econometric techniques: ARDL and NARDL
This study adopts ARDL and NARDL approaches to test for symmetric
and asymmetric relationships between the variables for four reasons
(the steps are presented in Fig. 1). First, ARDL is suitable for variables
that are either I(0) or I(1). Second, ARDL estimates provide unbiased
results that capture long-term relationships between variables. Third,
the model estimates a single reduced equation rather than a series of
equations, unlike other approaches such as Johansen co-integration.
Finally, the ARDL model is more suitable for different sample sizes,
whereas other methods can be influenced by sample size (Sadorsky,
2012). Therefore, this study estimates an error correction model (ECM)
using the bounds testing approach. The ARDL–ECM model is as follows:
p1
∑
ΔREIt = α + γ 1 REIt− 1 + γ2 OPt− 1 + γ3 RGDPt− 1 + γ4 CO2t− 1 + δ1 ΔREIt− i
j=1
(1) p2
∑ p3
∑ p4
∑
+ δ2 ΔOPt− i + δ3 ΔGDPt− i + δ4 ΔCO2t− i + ϵt .
i=0 i=0 i=0
(2)
In this equation, Δ represents the first-difference operator, α is the
constant parameter, REI represents the logarithm of REI, OP represents
the logarithm of oil price, RGDP represents the logarithm of real GDP
and CO₂ represents the logarithm of CO2 emissions. The coefficients γ
represent the long-run estimates, δ represents the short-run estimates, p
denotes the lag orders of the variables and is the error term.
The bounds’ testing approach is applied to test the null hypothesis of
no long-run co-integration, characterised by the condition γ₁ = γ₂ = γ₃ =

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I. Tambari et al. Resources Policy 91 (2024) 104875

Table 3 decreases in the main explanatory variables on dependent variables.

Unit root test results. The NARDL equation is as follows:
a. Traditional Unit root test results
zt = κ+ dt+ + κ− dt− + μt (3)
Variable Level First difference

ADF PP ADF PP where zt is REIt, dt is OPt, RGDPt, and CO2t, and κ+ and κ− stand for the
asymmetric long-term parameters and are white noise processes.
Algeria REI 2.14 2.03 6.94*** 6.61***
The decomposition of dt is as follows:
− − −
OP − 2.54 − 2.09 5.88*** − 5.77***
RGDP 1.74 1.92 4.01*** 4.03***
− − −
dt = d0 + dt+ + dt− (4)
CO2 − 2.50 − 2.67 _6.49*** − 6.35***

Angola REI − 1.89 − 2.05 − 5.69*** − 5.49*** where dt represents a k*1 vector; d0 is a given preliminary value; d+
t
OP 2.79 2.50 6.25*** 6.13***
represents the partial sum processes of positive change and is repre­
− − − −
RGDP − 2.55 − 2.48 − 5.84*** − 5.61*** ∑t + ∑t
CO2 − 3.24 − 3.14 − 6.66*** − 6.58*** sented as d+t = j=1 dj = j=1 max (Δdj , 0); and dt stands for the
−

Egypt REI − 2.20 − 2.08 − 5.08*** − 5.03*** partial sum processes of negative change and is expressed as d−t =
∑t ∑t
j=1 dj = j=1 min (Δdj , 0). The NARDL–ECM is as follows:
OP − 3.14 − 2.85 − 6.55*** − 6.19*** −
RGDP − 2.39 − 2.29 − 6.54*** − 5.51***
CO2 − 2.96 − 2.66 − 5.75*** − 5.37*** ΔREIt = β + θ1 REIt− 1 + θ2 RGDPt− 1 + θ3 CO2t− 1 + ω+ + − −
1 OPt− 1 + ω1 OPt− 1
Ethiopia REI − 3.26** − 3.79** − 6.71*** − 6.76*** p1
∑ p2
∑ p3
∑ p4
∑
OP − 1.52 − 1.74 − 5.17*** − 4.95*** + φi ΔREIt− i + ρi ΔGDPt− i + τi ΔCO2t− i + π+i ΔOP+t− i
RGDP − 2.21 − 1.92 − 7.50*** − 6.45*** i=1 i=0 i=0 i=0
CO2 − 1.11 − 1.09 − 3.98*** − 3.97*** q− 1
∑
Nigeria REI − 3.44 − 3.24 − 7.86*** − 7.47*** + π −i ΔOP−t− i + ϵt
OP − 1.05 − 1.44 − 3.99*** − 3.84*** i=0

RGDP − 3.45 − 2.46 − 3.56*** − 3.79*** (5)

CO2 − 2.25 − 2.00 − 4.32*** − 4.01***

South Africa REI − 1.55 − 1.42 − 4.45*** − 4.07***

where θ1 , θ2 , θ3 , ω+
1 , and ω1 are the long-run estimates and φ, ρ, τ, π i ,
− +

OP − 0.95 − 0.96 − 5.91*** − 5.49*** and π i are the short-run estimates. The remaining variables and co­
−

RGDP − 1.18 − 1.09 − 6.96*** − 6.51*** efficients are the same as defined above. Here, as the main variable, the
CO2 − 3.22** − 3.02* − 6.74*** − 6.41*** oil price variable is decomposed, while the remaining variables function
b. Non-linear KSS Unit root test results as control variables.
Variable KSSa KSSb The bounds’ testing approach is employed for the NARDL procedure,
just as in the ARDL procedure (see Fig. 1), to confirm the null hypothesis
Algeria REI − 1.651* − 2.066*
OP 2.588 − 1.618* that there is no non-linear (asymmetric) relationship, which is repre­
RGDP − 1.917* 1.731* sented by the following: θ1 = ω+ 1 = ω1 = 0. Second, short- and long-
−

CO2 1.624* − 2.665* term symmetries are established by applying two steps. (i) The null
Angola REI − 0.765 − 1.919* hypothesis of the long-run symmetry, viz. − ω+ 1 /θ1 = ω1 /θ1 , and (ii) the
−

OP − 1.644* 1.827* ∑q− 1 + ∑q− 1 −

−
null hypothesis of the short-run symmetry, viz. i=0 π j = i=0 π j .
RGDP − 1.088* − 2.118*
CO2 3.086 − 1.733* Finally, the asymmetric cumulative dynamic multiplier effects of OP+ t− 1
∑h ∂REIt+k −
Egypt REI 0.084* − 2.118* and OP−t− 1 can be computed as the following: v+ h = k=0 ∂OP+ , vh =
t− 1
OP − 2.106 − 1.785* ∑h ∂REIt+k
k=0 ∂OP− , h = 0, 1, 2, …, where vh → − ω1 /θ1 and vh → − ω1 /θ1 when
+ + − −
RGDP 1.748* − 1.628* t− 1
CO2 − 1.733* − 1.759* h→∞.
Ethiopia REI − 1.910* − 1.830*
OP 2.053 2.584* 4. Empirical analysis
RGDP 1.877* − 2.043*
CO2 1.668* − 1.868*
Summary statistics are presented in Table 2 to provide an overview
Nigeria REI − 1.691* − 1.763* of the data used in this study. South Africa exhibits the highest mean REI
OP − 1.870* − 1.998*
among the African countries, while Algeria has the lowest mean. South
RGDP − 1.678* 1.767*
CO2 3.918 − 1.715* Africa’s REI is significantly ahead of the other countries in the analysis,
revealing significant solar and wind energy resources, making the nation
South Africa REI − 1.027* − 2.615*
OP 1.903* − 2.092*
a leader in renewable energy capacity across Africa. As of 2018, South
RGDP − 1.871* − 2.038* Africa had the highest installed capacity for renewable energy on the
CO2 2.046 1.697* continent, considering solar, wind and hydropower (Xu et al., 2019).
Note: *, **, and *** represent the significance at the 10%, 5%, and 1% levels,
respectively. The time lag order is selected based on the Akaike information 4.1. Unit root tests
criterion.
Note: KSSa represents the raw series, and KSSb represents the demeaned series. * Traditional unit root test such as Augmented Dickey–Fuller (ADF)
Indicates significance at the 10% level. (c) Critical values: for raw series (10% = and Phillips–Perron (PP) unit root tests are conducted to determine the
− 1.92) and demeaned series (10% = − 2.66).
stationary properties of the variables, and the results are presented in
Table 3a, revealing that the variables in the study comprise a mix of I(0)
γ₄ = 0. If the relationship fails the bounds test, this indicates a non-linear and I(1) processes. Furthermore, the findings of the KSS non-linear unit
linkage. In such cases, the NARDL is employed to address this issue. root test (Awodumi and Adewuyi, 2020), as illustrated in Table 3b, also
Considering the non-linear nature of macroeconomic variables, econo­ indicate that the variables exhibit stationarity either at level I(0) or at
metric studies (Shin et al., 2014) propose the (asymmetric) NARDL the first difference I(1). Accordingly, both ARDL and NARDL models can
approach, which can determine short- and long-term relationships be employed for our estimations, considering the appropriate order of
among variables and reveal the asymmetric effects of increases and integration for each variable.

7
I. Tambari et al.
Table 4
Bounds test results.
Panel A: ARDL F-Test
Country F-stat Degrees of freedom Conclusion
Algeria 5.30*** 3 Cointegrated
Angola 1.51 3 Not cointegrated
Egypt 6.22** 3 Cointegrated
Ethiopia 2.45 3 Not cointegrated
Nigeria 7.37* 3 Cointegrated
South Africa 0.69 3 Not cointegrated
Note: *, **, and *** represent the significance at the 10%, 5%, and 1% levels, respectively. The time lag order is selected based on the Akaike information criterion. The
critical values are obtained from Pesaran et al. (2001) (Pesaran et al., 2001).
4.2. Bounds tests
Based on the results of the unit root tests, the bounds test co-
integration approach is used to assess the long-run relationships be­
tween the variables from linear and non-linear perspectives. The bounds
test results are presented in Table 4, where panel A displays the F-sta­
tistic values for the ARDL model, and panel B presents the F-statistic
values for the NARDL model. In panel A, the F-statistic suggests the
presence of linear co-integration relationships in Algeria, Egypt, and
Nigeria; however, it is essential to explore the possibility of non-linear
co-integration in the remaining countries. In panel B, the F-statistic in­
dicates evident non-linear co-integration relationships in Angola,
Ethiopia, and South Africa. Consequently, the ARDL approach is
employed to estimate the models for Algeria, Egypt and Nigeria, while
the NARDL approach is employed for Angola, Ethiopia and South Africa.
4.2.1. Net-oil exporting countries
ARDL estimates are presented in Table 5a, primarily focusing on the
examination of symmetric and asymmetric effects of oil price on REI. To
understand the results of the key variable of oil price, it is crucial to
analyse the findings in each country individually. The long-run analysis
reveals a negative and significant relationship between oil price and REI
in Algeria, Angola and Nigeria, and the levels of significance differ
among the countries. Specifically, increased oil price has a significant
impact on discouraging REI in all three countries. For instance, in
Algeria, a 1% increase in oil price leads to a 0.048% decrease in REI, and
a 1% rise in oil price corresponds to 0.037% and 0.004%decrease in REI
for Angola and Nigeria respectively.
Examining the short-run effects, oil price has a significant positive
impact on REI in Angola and Nigeria; however, for Algeria, oil price has
a significant negative effect on REI. These results reveal the symmetric
and asymmetric effects of oil price on REI across the countries studied.
Analysing the ECM(-1) coefficients reveals that REI converges back to
equilibrium at a speed of 0.64% in Algeria, 0.74% in Angola and 0.73%
in Nigeria following the impact of oil price. This finding confirms the
existence of long-run convergence in the relationship between oil price
and REI. Considering the study’s control variables, real GDP has a pos­
itive and significant relationship with REI in the short run for all three
countries. In contrast, CO2 emissions have significant positive effects on
REI in Nigeria, in the short and long run, and negative and significant
effects on REI in Angola. A significant positive relationship is found
between REI and RGDP in the long run for Algeria. The NARDL estimates
are presented in Table 5b, revealing the relationships between the var­
iables. In the long run, Angola’s REI is significantly affected by oil price
changes, with a 1% increase in oil prices causing a 0.11% decrease in REI
and a 1% reduction in oil prices increasing REI by 0.024% in Angola. In
Angola, a positive oil price change has a significant negative impact on
the REI in the short run, while a negative change has a significant pos­
itive impact. However, this impact is statistically insignificant. The ECM
(-1) coefficients show that REI converges back to equilibrium at a speed
of 0.34% in Angola. In Algeria and Nigeria the results are consistent with
the ARDL estimates.
8
Resources Policy 91 (2024) 104875
Panel B: NARDL F-Test
Country F-stat Degrees of freedom Conclusion
Angola 5.91*** 4 Cointegrated
Ethiopia 5.34*** 4 Cointegrated
South Africa 3.52** 4 Cointegrated
4.3. Net-oil importing countries
The ARDL estimates are presented in Table 6a. The long-run analysis
reveals a negative and significant relationship between oil price and REI
in Egypt, Ethiopia and South Africa, and the levels of significance differ
among the countries. Specifically, increased oil price has a significant
impact on discouraging REI in Egypt.For instance, a 1% rise in oil price
corresponds to a 0.004%decrease in REI for Egypt. Examining the short-
run effects, the oil price has a significant positive impact on REI in Egypt.
The NARDL estimates are presented in Table 6b, revealing the re­
lationships between the variables. In the long run, a positive change in
oil price has a significant negative impact on REI in two countries.
Specifically, a 1% increase in oil price leads to a respective decrease in
REI by 0.02% in Ethiopia and 0.005% in South Africa. Conversely, a
negative change in oil price has a positive effect on REI. For every 1%
reduction in oil price, REI increases by 0.004% in Ethiopia and 0.014%
in South Africa, with the result in Ethiopia being statistically
insignificant.
In the short run, the impact of oil price changes differs across the
three countries. A positive change in oil price is associated with a sig­
nificant negative effect on REI in all three countries; however, a negative
change in oil price has a significant positive impact on REI in Egypt
South Africa, whereas the effect is not statistically significant for South
Africa. Additionally, in Ethiopia and South Africa experienced a signif­
icant impact on REI from a negative change in oil price. The ECM(-1)
coefficients indicate that REI converges back to equilibrium at a speed
of 0.29% in Ethiopia and 0.71% in South Africa following the impact of
oil price. This suggests a long-term convergence in the relationship.
Regarding the control variables, real GDP exhibits a positive and sig­
nificant relationship with REI in the short and long run for all three
countries. In contrast, CO2 emissions have negative and significant ef­
fects on REI in South Africa in the short and long run.
4.4. Diagnostic tests
After obtaining the estimated coefficients, it is crucial to perform
diagnostic tests to evaluate the validity of the ARDL and NARDL models.
Tables 5 and 6 present the results of these diagnostic tests, indicating
that sequence correlation, nonnormality and heteroscedasticity have no
impact on the models for any of the countries studied. Stability tests are
conducted using cumulative sum of recursive residuals (CUSUM) and
cumulative sum of squares (CUSUMSQ) tests to further ensure the
robustness of the diagnostic tests. Referencing (Pesaran and Shin, 1998),
it is essential to apply CUSUM and CUSUMSQ tests to assess parameter
constancy. According to (Caporale and Pittis, 2004), the CUSUM and
CUSUMSQ1 tests are commonly used to test the null hypothesis of
parameter stability, compared with other alternatives. The CUSUMSQ
test, in particular, is preferred as it has the capability to detect changes
1
CUSUM and CUSUMSQ plots are not presented here to save space and are
available upon request.
I. Tambari et al. Resources Policy 91 (2024) 104875

Table 5
Estimates for net-oil exporting countries.
a. ARDL estimation results

Algeria Angola Nigeria

Long-run estimates Coeff. Std. Error Coeff. Std. Error Coeff. Std. Error
OP − 0.048** 0.023 − 0.037*** 0.019 − 0.004** 0.002
RGDP 2.933** 1.018 0.918** 0.425 0.062 0.063
CO2 0.321 2.195 − 0.619*** 0.199 0.257* 0.144
C − 15.687 7.394 0.677 4.49 8.645*** 0.458
Short-run estimates
D(OP) − 0.017* 0.009 − 0.012*** 0.004 0.041*** 0.001
D(OP(-1)) − 0.017** 0.006 − 0.006** 0.003
D(RGDP) 1.877*** 0.642 0.198** 0.099 0.201* 0.111
D(RGDP(-1))
D(CO2) 3.307** 1.418 − 0.416** 0.209 0.118 0.116
D(CO2 (− 1)) 2.853* 1.493 0.853* 1.493 0.400** 0.158
ECM(-1) − 0.640*** 0.177 − 0.737*** 0.134 − 0.731*** 0.166

Diagnostics Stat. Prob. Stat. Prob. Stat. Prob.

Adjusted R2 0.925 0.813 0.975
F-statistics 28.913 0.000 26.187 0.000 17.379 0.000
Serial correlation for
the LM Test 2.070 0.118 0.198 0.113 0.225 0.853
Normality for the
Jarque–Bera Test 0.059 0.996 0.762 0.898 0.042 0.983
Heteroscedasticity for
Breusch–Pagan– 0.362 0.858 0.762 0.188 0.408 0.631
Godfrey Test
Ramsey RESET test 0.273 0.608 1.351 0.608 0.082 0.784

b. NARDL estimation results

Long-run estimates Algeria Angola Nigeria

Coeff. Std. Error Coeff. Std. Error Coeff. Std. Error

OP+ − 0.031*** 0.019 − 0.011*** 0.003 − 0.006** 0.003

OP- 0.56 0.31 0.024** 0.01 0.01 0.006
RGDP 2.815* 2.004 0.818* 0.441 0.069 0.034
CO2 0.576** 3.109 − 0.683*** 0.166 2.113** 0.126
C 9.945 4.98 0.949 3.1 7.108*** 2.98
Short-run estimates
D(OP+) − 0.016** 0.007 − 0.005* 0.003 0.005** 0.002
D(OP+ (− 1)) − 0.017 0.009 0.003* − 0.012 0.007
D(OP-) 0.005 0.003 0.002 0.002 0.001
D(OP-(-1)) 0.001 0.001 0.001 0.002 0.004 0.003
D(OP- (− 2)) 0.003 0.002 0.003* 0.002 − 0.001 0.001
D(RGDP) 1.207** 0.119 0.277** 0.113 0.149 0.133
D(CO2) 3.211** 1.316 − 0.256** 0.116 0.498*** 0.161
ECM(-1) − 0.224** 0.109 − 0.338** 0.157 − 0.718*** 0.175
Diagnostics
Adjusted R2 0.787 0.887 0.886
F-statistics 29.103 0.000 19.263 0.000 12.856 0.000
Serial correlation for
the LM Test 0.282 0.71 0.244 0.71 0.067 0.841
Normality for the
Jarque–Bera Test 0.517 0.752 0.686 0.752 0.67 0.841
Heteroscedasticity for
Breusch–Pagan– 1.307 0.245 0.812 0.79
Godfrey Test 0.711 0.624
Ramsey RESET test 1.378 0.206 1.477 0.206 2.252 0.114

Note: *, ** and *** represent significance at the 10%, 5% and 1% levels, respectively. Time lag order is selected based on Akaike information criterion. D is the first-
difference operator. OP+ and OP− are the long-run estimates for positive and negative changes in oil price.

in the conditional model parameters, regardless of whether the variance
of the regression error is included in the shifting parameters. In this
study, the CUSUM and CUSUMSQ plots indicate that the recursive re­
siduals remain within their boundaries.1 The plots of CUSUM and
CUSUMSQ do not exceed the critical 5% bounds, confirming the exis­
tence of long-run relationships among the variables and confirming the
stability of the coefficients. These findings indicate that the models and
their estimates are robust and stable at a 5% level of significance.
4.5. Long-run multipliers and symmetry tests
The NARDL model is applied to assess the asymmetric cumulative
dynamic multiplier effects of oil price on REI and determine whether
there is asymmetry or symmetry in the short and long run. The results
are presented in Table 7. In the case of the net oil-exporting countries
(Algeria and Nigeria), and net oil-importing country (Egypt), the
asymmetric effects are not significant. In the case of Angola and
Ethiopia, the value of OP+ is greater than OP− , indicating that oil price
has asymmetric effects on REI. Specifically, the impact of increasing oil
price on REI is higher than that of decreasing oil price. This suggests that

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I. Tambari et al. Resources Policy 91 (2024) 104875

Table 6
Net oil-importing countries.
a. ARDL estimation results

Long-run estimates Egypt Ethiopia South Africa

Coeff. Std. Error Coeff. Std. Error Coeff. Std. Error

OP − 0.004*** 0.001 0.021*** 0.009 − 0.007** 0.003

RGDP 0.58 0.072 0.317** 0.171 0.541* 0.358
CO2 0.898*** 0.192 − 0.095 0.119 − 2.510** 0.913
C 8.661*** 0.426 8.672*** 1.478 8.016*** 2.257
Short-run estimates
D(OP) 0.007*** 0.002 0.020*** 0.005
D(OP(-1)) 0.011*** 0.001 0.004** 0.002 0.007** 0.003
D(RGDP) 0.073 0.144 0.087* 0.042 0.421* 0.217
D(RGDP(-1)) 0.253** 0.12
D(CO2) 0.012 0.136 − 0.014 0.037 − 1.313** 0.613
D(CO2 (− 1)) 0.336* 0.17 0.023** 0.011 0.412** 0.192
ECM(-1) − 0.779*** 0.174 − 0.562*** 0.109 − 0.934*** 0.183

Diagnostics Stat. Prob. Stat. Prob. Stat. Prob.

Adjusted R2 0.964 0.903 0.976
F-statistics 19.916 0.000 29.896 0.000 20.36 0.000
Serial correlation for
the LM Test 0.221 0.718 0.118 0.695 0.347 0.908
Normality for the
Jarque–Bera Test 0.787 0.643 1.824 0.514 0.821 0.794
Heteroscedasticity for
Breusch–Pagan–
Godfrey Test 0.628 0.506 0.962 0.72 0.818 0.861
Ramsey RESET test 0.545 0.411 2.535 0.213 2.287 0.148

b. NARDL estimation results

Long-run estimates Egypt Ethiopia South Africa

Coeff. Std. Error Coeff. Std. Error Coeff. Std. Error

OP+ 0.002 − 0.006** − 0.016*** 0.004 − 0.005* 0.003

OP- 0.013 0.01 0.004 0.003 0.014*** 0.002
RGDP 0.099 0.069 0.358** 0.148 0.565* 0.347
CO2 0.186 2.113** − 0.04 0.116 − 2.102** 0.905
C 1.211 7.108*** 8.923*** 1.24 9.418*** 2.072
Short-run estimates
D(OP+) 0.002 0.005** − 0.004** 0.002 − 0.006** 0.003
D(OP+ (− 1)) 0.003 − 0.012 − 0.010* 0.006
D(OP-) 0.002 0.002 0.001 0.001 0.008*** 0.002
D(OP-(-1)) 0.001 0.004 − 0.002** 0.001 0.006* 0.003
D(OP- (− 2)) − 0.001 − 0.002 0.002
D(RGDP) 0.15 0.149 0.105* 0.057 0.447* 0.233
D(CO2) 0.13 0.498*** − 0.012 0.035 − 1.490** 0.678
ECM(-1) 0.187 − 0.718*** − 0.294*** 0.098 − 0.709*** 0.135
Diagnostics
Adjusted R2 0.925 0.932 0.956
F-statistics 24.601 0.000 26.658 0.000 17.867 0.000
Serial correlation for
the LM Test 0.018 0.912 0.01 0.967 0.054 0.945
Normality for the 1.447 0.48 1.506 0.498 0.782 0.773
Jarque–Bera Test
Heteroscedasticity for
Breusch–Pagan–
Godfrey Test 0.715 0.542 0.88 0.567 0.705 0.740
Ramsey RESET test 2.752 0.139 2.905 0.143 2.320 0.166

Note: *, ** and *** represent significance at the 10%, 5% and 1% levels, respectively. Time lag order is selected based on Akaike information criterion. D is the first-
difference operator. OP_POS and OP_NEG are the long-run estimates for the positive and negative changes in oil price.
Note: *, ** and *** represent significance at the 10%, 5% and 1% levels, respectively. Time lag order is selected based on Akaike information criterion. D is the first-
difference operator. OP+ and OP− are the long-run estimates for positive and negative changes in oil price.

positive changes in oil price have a stronger influence on REI compared
with negative changes. In contrast, the results for South Africa exhibit a
converse pattern, revealing that the effect of declining oil price on REI is
higher than the effect of increasing oil price. This implies that negative
changes in oil price have a more significant impact on REI in South
Africa compared with positive changes.
A Wald test is conducted to differentiate long-run effects from short-
run effects and further validate the above conclusion. In the case of the
net oil-exporting countries (Algeria and Nigeria), and net oil-importing
country (Egypt), the test further confirms that the asymmetric effects are
not significant. Conversely, the test confirms that the effect of oil price
on REI in South Africa is symmetric in the short run but asymmetric in
the long run. The effect in Angola and Ethiopia remains asymmetric for
the long and short run. The size of the coefficients of the long-run dy­
namic multipliers of oil price indicates that Ethiopia and South Africa’s
REI are more susceptible to positive and negative changes in oil price
than Angola; however, Angola is relatively less influenced by negative
changes in oil price.

10
I. Tambari et al.
Table 7
Long-run multipliers and symmetry tests results.
Algeria Egypt
OP +
− 0.418*** − 0.871***
OP− 0.065 0.031
WaldLong-run 1.758 2.025
WaldShort-run 2.103 1.629
Note: *, **, and *** represent the significance at the 10%, 5%, and 1% levels. The time lag order is selected based on AIC. D is the first-difference operator. OP_POS and
OP_NEG are the long-run estimates for the positive and negative changes in oil prices. Wald refers to the Wald test for the null of symmetry in the price of oil.
5. Discussion
This study examines the relationship between oil price and REI in the
six largest economies in Africa, which share similar climatic and energy
security conditions. The findings align with the existing literature,
allowing researchers in the field to gain a more comprehensive under­
standing of the symmetric and asymmetric effects of oil price on REI in
Africa. Using the ARDL bounds testing approach, the results indicate the
presence of symmetric relationships in Algeria, Egypt, and Nigeria.
Conversely, the NARDL approach reveals asymmetric relationships in
Angola, Ethiopia, and South Africa.
The outcomes of the study demonstrate that oil price have statisti­
cally significant effects on REI in all six countries investigated at varying
levels of significance. Regarding symmetric relationships, oil price has
significant effects on REI only in the long run for Egypt and Nigeria.
Conversely, for Algeria, oil price has a significant impact in both the
short and long run. Additionally, examining asymmetric relationships
reveals that a positive change in oil price has a significant negative
impact on REI in the long run for Angola, Ethiopia, and South Africa,
while a negative change in oil price has a positive effect on REI; how­
ever, no statistical significance is observed for Ethiopia. These findings
underscore the substantial heterogeneity among the countries. Conse­
quently, South Africa should prioritise policies related to oil price trends
to leverage REI, while Angola should consider periods of declining oil
price and Ethiopia should focus on periods of rising oil price.
As noted, the findings of this study align with several previous
studies exploring the relationship between oil price volatility and
renewable energy generation (Sadorsky, 2012). These studies indicate a
positive and significant correlation between oil price and renewable
energy adoption. For instance, the evidence of this study supports the
findings (Kumar et al., 2012), which demonstrates that the profitability
of substituting renewable energy is influenced by oil price changes
(Schmitz, 2009). The literature also supports this study’s findings
regarding the statistical significance between oil price volatility and REI,
as it indicates that an increase in oil price significantly and directly af­
fects the returns of renewable energy stocks. Moreover, (Brini et al.,
2017) reveals a direct relationship between oil price and renewable
energy consumption, suggesting that an increase in oil price may lead to
a corresponding increase in renewable energy consumption, contrary to
the findings of this study. Several authors also emphasis how increased
oil revenue, driven by oil price, supports the economic growth of
oil-exporting countries, which facilitates REI (Shahbaz et al., 2018).
Furthermore, evidence from (Reboredo, 2015) suggests that the dy­
namics of oil price volatility contribute significantly to the risk faced by
renewable energy firms, which hinders renewable energy initiatives.
The literature also emphasises policy implications, suggesting that the
dynamics between oil price and renewable energy can influence in­
vestment decisions (Shahbaz et al., 2018; Aydin and Acar, 2011).
The findings of this study also contradict those of other studies that
indicate no statistical significance between oil price volatility and REI
(Sadorsky, 2009a; Henriques and Sadorsky, 2008). For example, the
results oppose the conclusions of (Awerbuch and Sauter, 2006), who
argue that oil price has no impact on REI such as solar and wind energy.
Similarly, (Inchauspe et al., 2015) finds minimal deviations of only 10%
in the stock returns of renewable energy firms during oil price increases,
Resources Policy 91 (2024) 104875
Nigeria Angola Ethiopia South Africa
− 0.575*** − 0.330** − 0.982*** − 0.491***
0.203 0.171 0.239*** 0.988***
2.804* 9.905*** 20.492*** 40.888***
1.086 11.336*** 14.601*** 0.153
indicating a lack of significance. These contrasting findings highlight the
significant relationship between oil price and REI in the six African
countries studied.
The significant relationship observed between GDP and REI in this
study is consistent with the broader literature (Inchauspe et al., 2015;
Omri and Nguyen, 2014; Sebri and Ben-Salha, 2014). The results align
with (Awerbuch and Sauter, 2006), determining that economic in­
dicators, including GDP, have a crucial role in determining renewable
energy growth. (Awerbuch and Sauter, 2006) also explores the corre­
lation between GDP, oil price, renewable energy consumption and REI,
finding that renewable energy adoption can avoid GDP losses during
periods of increased oil price. The connection between GDP and REI is
also evident (Bilgili et al., 2016), which concludes that advancements in
renewable energy technologies significantly contribute to both miti­
gating global warming and increasing GDP. As highlighted in the liter­
ature review (Awerbuch and Sauter, 2006) note that REI can prevent
GDP losses, reduce oil price and promote further economic growth and
renewable energy adoption (Fang, 2011). Similarly, emphasises the
importance of improving economic conditions while accelerating
renewable energy development and increasing the share of renewable
energy in the energy mix.
Considering these findings, it is essential to consider how they
compare to expectations. Given that renewable energy presents an
alternative to crude oil for both consumption and output, a positive
relationship is expected between oil price and REI. Increasing oil price
should theoretically incentivise firms and households to reduce con­
sumption and transition to renewable energy (Henriques and Sadorsky,
2008). Consequently, higher oil price would be expected to lead to
increased investment in renewable energy. Surprisingly, this study re­
veals the opposite result, indicating that oil price has a negative effect on
REI. The negative impact of oil price increases on REI suggests that the
countries studied are grappling with rising oil price, which hinders the
transition from fossil fuels to renewable energy.
The African countries examined in this study have significant po­
tential for renewable energy generation and fossil fuel production. The
increase in oil price in 2022 has necessitated the exploration of lower-
cost alternative energy sources. The literature suggests that oil price
volatility is a primary driver for the attractiveness of green energy,
making it susceptible to price shocks (Dutta, 2017). Both oil-importing
and oil-exporting countries should consider reducing oil dependence
and increasing REI; however, for some oil-exporting countries in the
sample, a substantial portion of national income is earned from fossil
fuel export revenue. During periods of increasing oil price, such coun­
tries tend to provide subsidies, which leads to higher consumption of
conventional energy sources. Conversely, these countries could invest
oil revenue in renewable energy projects to increase the adoption of
renewable energy. For these countries, the depletion of fossil fuels and
subsequent decline in demand may erode this advantage, highlighting
the need for increased investment in renewable energy.
In summary, the findings of this study indicate that oil price has a
negative effect on REI, whereas GDP has a positive effect, suggesting
that higher GDP promotes REI by reducing dependence on crude oil for
power generation and decreasing non-renewable energy consumption.
Therefore, significant efforts to boost GDP across these African econo­
mies could drive the transition to renewable energy and enhance REI.
11
I. Tambari et al.
6. Conclusion and policy implications
Increasing interest in alternative energy development within envi­
ronmental conservation policies necessitates quality information
regarding the effectiveness of renewable energy policies and strategies.
However, the majority of the existing literature on REI is based on ex­
periences from Western countries, which may not apply to developing
countries in Africa. This study expands our understanding of the impact
of oil price on REI in selected African countries that rely on fossil fuels
for electricity generation. The findings provide valuable insights into the
relationship between oil price and REI, highlighting both symmetric and
asymmetric effects.
The policy implications of this study are significant. Increasing oil
price leads to decreased REI; however, the suggestion is limited to
countries for which oil price fluctuations significantly influence REI.
Therefore, policymakers should consider providing subsidies to incen­
tivise REI during periods of high oil price. Countries where oil price
fluctuations significantly influence REI should closely monitor these
changes during booms and slumps in oil price to ensure stability in REI.
Governments must implement policies that encourage renewable energy
development and diversify the production and use of renewable energy
to promote energy efficiency and environmental protection.
Various governmental efforts across Africa provide incentives for
REI. For instance, the African Development Bank supports green mini-
grid projects in different countries. Additionally, the Africa Renewable
Energy Fund and Facility for Energy Inclusion serve as financing plat­
forms for small-scale renewable projects (IRENA, n.d, Beyond the Grid
for Africa, n.d)Nevertheless, these efforts are insufficient, and donors
and other stakeholders interested in increasing renewable energy pro­
duction in Africa should collaborate with governments to strengthen the
implementation of renewable energy policies, providing financial sup­
port and capacity building, either directly or through conventional aid
channels.
Another policy implication of this study relates to the positive cor­
relation between real GDP growth and REI. Policymakers should pri­
oritise economic growth to stimulate REI. A strong economy establishes
a conducive environment for implementing renewable energy genera­
tion policies and attracting investment, including private sector partic­
ipation. This study also emphasises the importance of transitioning from
fossil fuels to increase REI and reduce CO2 emissions. The potential
introduction of carbon markets in Algeria, Angola, Egypt, Ethiopia,
Nigeria and South Africa has the potential to incentivise a shift from
fossil fuels to renewable energy sources. By establishing a price for CO2
emissions, carbon markets can create economic incentives for REI and
foster the development of cleaner and more sustainable energy tech­
nology. Implementing carbon markets aligns with the findings of the
study by providing a policy framework to support the transition to
renewable energy and contribute to the reduction of greenhouse gas
emissions. Policymakers should strategically promote policies to facili­
tate this transition.
The main limitation of this study is the use of total renewable energy
generation as a proxy for REI. Future research should consider firm-
based analysis using actual investment costs and national conditions
to gain a better understanding of REI. In addition, expanding the
research to include high- or middle-income countries could allow for
comparative analysis. Furthermore, it is essential to consider other
factors that may influence investment in renewable energy besides GDP,
oil price and CO2 emissions. The technological, social, economic and
regulatory barriers (Seetharaman et al., 2019) identified should be
explored in future studies. Variables such as industrialisation, financial
development, urbanisation, globalisation and foreign direct investment
should also be considered as potential influences on energy consumption
and REI.
12
Resources Policy 91 (2024) 104875
CRediT authorship contribution statement
Ishaya Tambari: Conceptualization, Data curation, Formal analysis,
Investigation, Methodology, Resources, Software, Writing – original
draft, Writing – review & editing. Pierre Failler: Resources, Software,
Supervision, Writing – review & editing. Shabbar Jaffry: Methodology,
Resources, Supervision, Writing – review & editing.
Declaration of competing interest
The authors declare that they have no known competing financial
interest or personal relationships that could have appeared to influence
the work reported in this paper.
Data availability
Data will be made available on request.
Table I. Nomenclature
Abbreviation Description
ARDL Autoregressive distributed lag
REI Renewable energy investment
OP Oil price
RGDP Real gross domestic product
CO2 Carbon dioxide
C Constant
D First-difference operator
ECM Error correction model
AIC Akaike information criterion
NARDL Non-linear autoregressive distributed lag
CUSUM Cumulative sum of recursive residuals
CUSUMSQ Cumulative sum of squares
Wald Wald test
Note: The abbreviations and symbols used in this manuscript are
defined above for the readers’ convenience.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://doi.
org/10.1016/j.resourpol.2024.104875.
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