The political economy of energy access and institutional mediation in climate finance for sustainable development in Sub-Saharan Africa

This study investigates how institutional quality and the political economy of energy access mediate the impact of climate finance on sustainable development in Sub-Saharan Africa (SSA) from 2000 to 2022. Using a dynamic System Generalized Methods of Moment (GMM) model complemented by a Panel Auto Regressive Distributed Lag –Error Correction Model (Period SUR) robustness check, the analysis captures both short-run dynamics and long-run equilibrium relationships. The results reveal that mitigation-related finance (MRF) significantly enhances sustainable development when supported by sound institutional and energy governance frameworks, whereas climate-related finance (CRF) exerts a negative effect in weak governance contexts, reflecting absorptive capacity constraints and fragmented implementation systems. Mediation analysis further shows that institutional quality and energy access jointly transmit the effects of climate finance: CRF weakens sustainable outcomes indirectly through poor institutional and energy governance linkages, while MRF reinforces them via stronger institutions and efficient energy systems. The ARDL–ECM results corroborate these findings, with a significant and negative error-correction term (ECT = – 0.257, p < 0.001) confirming a stable long-run adjustment toward equilibrium. Overall, the evidence underscores that the developmental effectiveness of climate finance in SSA depends not only on the magnitude of financial inflows but on the quality of governance and energy access systems that channel them. Redesigning CRF mechanisms with stronger fiduciary safeguards and expanding MRF through performance-based financing are crucial for transforming climate finance into sustained, inclusive, and low-carbon development outcomes.