Greenhouse Gas Emission Widens Income Inequality in Africa

Abstract Over the past couple of decades, we have witnessed a rise in greenhouse gas emissions and widening income inequality that threaten human well-being. Addressing these challenges and ensuring sustainable economic growth becomes a pressing issue for the development policy agendas across Africa. This paper offers an answer for the impact of greenhouse gas emissions on income inequality by taking the most vulnerable region. In doing so, a panel data set from 1981–2015 across 49 countries are used and applied a panel data fixed effect regression and instrumental variable method (IV). We establish s causal relationship and show that greenhouse gas emission widens income inequality. We further cemented our baseline finding using alternative emission indicators typical to the Agrarian society. Our findings shed light on alternative development policy choices to the African continent where the traditional policy prescription does not fit the current dynamics in demography, urbanization, and agricultural practices. Hence, we emphasize the Agriculture Development Lead Industrialization (ADLI) policy that places high importance on transforming the livelihood of the people engaged in agriculture. The approach has proven to unlock the trinity challenge posed by environmental degradation, income inequality, and stagnant economic growth. Indeed, industrialization can be realized through transforming agriculture first. Adding value to agriculture reduces emission, redistributes income, and eventually maintains steady per capita income growth in Africa.