From Fragmentation to Sustainability: Institutional Quality, Ethnic Diversity, and SDGs Performance in Sub‐Saharan Africa

Ethnic diversity is a defining structural feature of Sub‐Saharan Africa (SSA), simultaneously offering opportunities for innovation and posing challenges for governance and collective action. Yet empirical evidence remains fragmented regarding whether ethnic diversity constitutes a liability or an asset for sustainable development, particularly across its economic, social, and environmental dimensions. This study examines how institutional quality conditions the relationship between ethnic diversity and progress toward the Sustainable Development Goals (SDGs) in SSA, with specific focus on SDG 8 (economic growth), SDG 10 (reduced inequality), and SDG 13 (climate action). Using a balanced panel of 45 SSA countries from 1996 to 2023, we employ a battery of second‐generation econometric techniques—including Dynamic Common Correlated Effects Mean Group (DCCEMG), Method of Moments Quantile Regression (MMQR), marginal‐effects analysis, and Quantile Granger Causality—to account for cross‐sectional dependence, heterogeneity, and distributional asymmetries. The results reveal a clear fragmentation–sustainability transition. Ethnic diversity is associated with higher economic performance but also exacerbates income inequality and carbon emissions under weak institutional settings, indicating a fragmentation pathway. However, institutional quality exerts a strong moderating role: above identifiable governance thresholds, the adverse social and environmental effects of ethnic diversity are neutralized, transforming pluralism into a driver of inclusive and environmentally sustainable development. Distributional and causal analyses further show that these conditioning effects intensify across higher development quantiles, underscoring the nonlinearity of the diversity–sustainability nexus. The study offers policy‐relevant insights for strengthening governance frameworks in ethnically diverse societies to accelerate progress toward the 2030 SDG Agenda and Africa's Agenda 2063.