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This study examines whether knowledge causes economic growth in Africa's two leading economies, Nigeria and South Africa. Using the Vector Autoregressive and Vector Error Correction approaches, the findings show cointegration among the variables. The speed of convergence of the variables to their long‐term mean values is relatively higher for South Africa than for Nigeria. In the short run, it is observed that knowledge unidirectionally Granger causes growth for Nigeria, whereas bidirectional causality is observed for South Africa. The higher correlation between knowledge and growth in South Africa reflects the success of greater investment in education. Nigeria must increase investment in education and modern infrastructure to converge to South Africa's growth trajectory. Moreover, for Nigeria, (1) knowledge unidirectionally Granger cause growth, (2) evidence of bidirectional causality flow is apparent between trade, the economic incentive, and growth, and (3) health unidirectionally Granger cause knowledge. As for South Africa (1) there is bidirectional causality between knowledge, trade openness, and growth, whereas investment and economic incentive, unidirectionally Granger causes growth, (2) investment, trade openness, and health unidirectionally Granger cause knowledge, and (3) economic incentive unidirectionally Granger cause trade openness. In conclusion, this paper argues that a transformed education system can provide the knowledge base essential for promoting and sustaining economic growth. [ABSTRACT FROM AUTHOR]

The dominance of large resource‐rich hegemonic economies, most notably Nigeria and South Africa, with extensive trade and possible financial linkages, exposes other Africa countries to intra‐regional spillovers. However, this strand of empirical analysis remains largely unstudied, as extant studies are mostly devoted to investigating the implications of external (global) shocks. This paper contributes to the existing literature by investigating the extent to which shocks to economic growth in Nigeria and South Africa spillover to three regional bodies, namely Central African Economic and Monetary Union (CEMAC), Southern African Development Community (SADC) and Economic Community of West African States (ECOWAS). The paper distinguishes between trade and financial channels to identify these growth spillovers by using a two‐step FAVAR model. The results of the empirical analysis show that the trade channel is effective for growth spillovers from Nigeria and South Africa to the three regional blocs. However, we find no evidence of growth spillover from the financial channel, except between South Africa and the SADC region. The paper postulates that although the total intra‐African trade remains low, it remains an important channel for growth spillover in the continent. Thus, any initiative, such as the African Continental Free Trade Area (AfCFTA) should be encouraged, to expand trade in the continent. [ABSTRACT FROM AUTHOR]