Market-Induced factors and dynamism in carbon dioxide emissions in selected three major economies of Sub-Saharan Africa

We describe the dynamic effect of market-induced factors (energy consumption, financial development, foreign direct investment, gross domestic product growth, and industrial performance) on carbon dioxide emissions in Nigeria, Ghana, and South Africa, which are the three major economies in sub–Saharan African (SSA) countries. We apply impulse response function, variance decomposition analysis and Toda-Yamamoto causality techniques. We adopted secondary analysis wherein the quarterly time series data for the period from 1980Q1 to 2017Q1 is used. The findings from the result of impulse response for Nigeria, Ghana and South Africa indicate negative shocks of energy consumption and industrial value toward CO2 emissions. However, domestic credit and economic growth positively influence CO2 in South Africa. SSA countries are in stages of rapid development as there is substantial inflow of FDI, resulting in increased energy consumption and CO2 emissions which contribute to environmental pollution. Nonetheless, the result from forecast error variance decomposition for Nigeria, Ghana and South Africa reveals that fossil fuel use, economic growth, FDI and industrial performance forecast positively on the trend of CO2 emissions in the long-run quarter in these economies. Lastly, the outcome from the Toda-Yamamoto causality model in Nigeria shows the existence of causality between economic growth, industrial value, credit, and fossil fuel and CO2 emissions