Title: How do real and financial sectors in Africa respond to uncertainties from China, the USA and Europe?

Authors: Oliver E. Ogbonna; Jonathan E. Ogbuabor

Addresses: University of Nigeria, Nsukka, 410405, Nigeria ' Department of Economics, University of Nigeria, Nsukka, Nigeria

Abstract: In spite of rising cross-border propagation of uncertainty shocks occasioned by the recent COVID-19 outbreak, existing studies barely addressed cross-border uncertainty effect on real and financial sectors, especially in Africa. Thus, this study has taken the initiative to investigate how the real and financial sectors in Africa are reacting to policy uncertainties from China, the USA and Europe. The study employed the generalised method of moment procedures for 41 African economies from 2010 to 2019. We find that rising uncertainty in China and Europe have significant adverse impacts on Africa's real sector, while the impact of the USA uncertainty remains muted. Interestingly, we find that uncertainties from China and Europe have significant positive effects on Africa's financial sector, suggesting that Africa is a safe haven where investors transfer their investments away from risky environments witnessing high uncertainty. The study provides policy suggestions.

Keywords: uncertainty; real sector; financial sector; two-step system GMM; Africa; China; the USA.

DOI: 10.1504/IJSE.2025.145320

International Journal of Sustainable Economy, 2025 Vol.17 No.2, pp.200 - 220

Received: 07 Oct 2023
Accepted: 01 Jan 2024
Published online: 31 Mar 2025 *

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