Energy poverty in an era of geopolitical instability: The role of Chinese FDI and south–south cooperation in Africa

The rising geopolitical fragmentation, driven by geopolitical tensions, conflicts and wars, has reshaped the global energy landscape, increasing uncertainty and vulnerability in energy markets. These disruptions present serious challenges for different economies in the Global South, where countries already face significant difficulties in facilitating energy transition and mitigating energy poverty. In this context, South-South cooperation may represent an important tool to address energy challenges, particularly through foreign investment. This study investigates the contribution of Chinese FDI to reducing energy poverty in Africa through different channels and whether conflict conditions influence the extent to which Chinese FDI contributes to improving energy outcomes. Our study contributes to the literature on the role of Chinese foreign capital in reducing energy poverty in Africa by examining both the underlying mechanisms and the potential role of conflict conditions in shaping these effects. To empirically explore this complex nexus, we rely on Structural Equation Modelling using a set of energy and socioeconomic variables from 2005 to 2022. The findings reveal a significant positive association between Chinese FDI and energy performance, with the prosperity channel representing the main mechanism. This association appears weaker in conflict-affected contexts, suggesting that geopolitical stability conditions the extent to which foreign investment is associated with improved energy outcomes. Policymakers in the region should consider creating a more attractive and stable investment environment to promote trade ties with Chinese companies, as these ties could be used as a tool to alleviate energy poverty.