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Regulatory impediments to carbon emission mitigation in Sub-Saharan Africa: the impact of a hostile business environment and high tax burden

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 Abstract

Sub-Saharan Africa’s regulatory environment ranks amongst the least business friendly in the world. The difficulty of starting and operating businesses and the high tax burden are amongst the major conditions that make the regulatory environment hostile. This study examines how these business regulatory conditions explain the growing challenges in mitigating CO2 emissions in the sub-region. For this purpose, data from 1997 to 2018 are used to analyse an extended environmental Kuznets curve (EKC) equation for thirty (30) Sub-Saharan African countries. The results of the Method of Moments Quantile Regression analysis show that the inverted U-shaped curve of the EKC hypothesis is statistically not valid across the entire quantile distributions. The impact of increasing tax burden on CO2 emissions is positive and increases across the entire quantile distributions. Business regulatory efficiency has a negative (i.e. decreasing) impact on CO2 emissions across the entire quantile distributions and shows a stronger impact in countries at the upper quantiles, such as in South Africa, Botswana, Gabon, and Nigeria. Conclusively, policy choices that seek to reduce tax burden on households and firms and foster greater economic freedom for businesses are needed to break the growing trend in Sub-Saharan Africa’s CO2 emissions.

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Data availability

The dataset used for the empirical analysis are available in Global Carbon Budget (Friedlingstein et al. 2020) available at https://doi.org/10.5194/essd-12-3269-2020;

The World Development Indicators https://databank.worldbank.org/source/world-development-indicators#advancedDownloadOptions;

The Heritage Foundation at https://www.heritage.org/index/explore

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Authors and Affiliations

  1. Department of Business Administration, Alex Ekwueme Federal University, Ndufu-Alike, Abakaliki, Nigeria

    Joy N. Ugwu

  2. Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike, Abakaliki, Ebonyi State, Nigeria

    Chinazaekpere Nwani & Tobechi F. Agbanike

  3. Department of Economics, Banking and Finance, Gregory University, Uturu, Abia State, Nigeria

    Kingsley Ikechukwu Okere

Authors
  1. Joy N. Ugwu
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  2. Chinazaekpere Nwani
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  3. Kingsley Ikechukwu Okere
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  4. Tobechi F. Agbanike
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Contributions

All authors contributed to the development of this study. The initiation of the research project, initial draft of the manuscript, model specification, variable definition, interpretation and discussion of the results and policy remarks were written by NC. Review of related literature, data collection and verification and conclusion of the study were written by JNU. Preliminary analysis and overall supervision were provided by TFA. Econometric analysis was performed by KIO. All authors read and approved the final version of the manuscript.

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Correspondence to Joy N. Ugwu.

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Ugwu, J.N., Nwani, C., Okere, K.I. et al. Regulatory impediments to carbon emission mitigation in Sub-Saharan Africa: the impact of a hostile business environment and high tax burden. Environ Sci Pollut Res 29, 43845–43857 (2022). https://doi.org/10.1007/s11356-022-18694-1

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