Abstract
This paper examines the impact of monetary expansion and industrialization on CO2 emissions in nine SADC and twelve West-Central African countries over the period 2003-2023. Monetary policy, proxied by money supply growth (MSG), affects emissions by stimulating aggregate demand, production, and energy consumption, while industrialization influences emissions through both energy-intensive and cleaner production processes. Using a Spatial Durbin Model with fixed effects and multiple spatial weight matrices (geography, trade, foreign direct investment, and inflation), the study finds that MSG increases CO2 emissions both domestically and via regional spillovers. These spillovers arise as heightened liquidity in one country amplifies trade, investment, and production linkages, thereby spreading energy demand and emissions across borders. In SADC, GDP has a modest positive effect on emissions, while industrialization significantly reduces emissions, suggesting cleaner and more efficient production processes. Conversely, in West-Central Africa, both MSG and GDP strongly increase emissions, consistent with the early stage of the Environmental Kuznets Curve, whereas industrialization shows negative but statistically insignificant effects, reflecting limited structural and technological capacity. These results demonstrate that monetary expansion transmits to emissions through both domestic activity and regional economic integration channels. The findings underscore the need for coordinated green monetary policies, sustainable industrialization strategies, and regional integration initiatives to support Africa's transition toward low-carbon growth while maintaining macroeconomic stability.