Impact of climate change on food security in Sub-Saharan Africa: Can financial development offset the damages?

Sub-Saharan Africa (SSA) is one of the least carbon emitter regions in the world; nevertheless, this region is not immune to the effects of climate change. While SSA has not yet fully recovered from the socioeconomic effects of the recent coronavirus (COVID-19) pandemic, the crisis in Russia and Ukraine has further affected several SSA nations by driving up already high food prices even higher and limiting people's access to food. To address these challenges, this study explored the moderating role of financial development (represented by domestic credit) in the climate change (represented by carbon dioxide emissions) and food security (represented by cereal production) nexus using a panel of 27 SSA countries and data ranging from 1990 to 2019. The study applied Lewbel's two-stage least squares and the outcomes showed that carbon dioxide emissions hamper cereal production in SSA; however, financial development mitigates the negative effects of carbon dioxide emissions on cereal production. The study found that beyond the threshold value of 2.698 financial development will help SSA mitigate the negative impact of carbon dioxide emissions on cereal production. The study proposed the establishment of a proper financial reform to assist the banking industries expand their credit supply to farming communities in a flexible manner to support cereal production in SSA.