Revisiting the nexus between governance and poverty in Sub‐Saharan Africa

Abstract

The aim of this study is to investigate the influence of different components of governance on poverty. Hence, the study investigates the direct impact of four pillars of governance and 16 subindicators of governance on poverty in Sub‐Saharan Africa (SSA). This is unlike most previous studies that use a composite index of governance which does not have a bearing on specific policy variables. A panel data set of 41 SSA countries over a period from 2012 to 2022 is analyzed using the System GMM (Generalised Method of Moment) estimation technique. The findings show that improvement in the four pillars of governance (security and rule of law; participation, rights and inclusion; foundation for economic opportunity; and human development) would yield significant reduction of poverty in SSA. However, not all the sub‐indicators have a direct impact on poverty, those that show significant effects are: (a) rule of law and justice, (b) accountability and transparency, (c) anticorruption, (d) public administration, (e) infrastructure, (f) rural development, (g) social welfare, and (h) sustainable environment. All the significant indicators have bearing on the creation and protection of an enabling environment and opportunity for productive activities. Hence, it is recommended that policymakers should undertake judicial system reforms including reforms of the police services. Civil service reform is also recommended, while the business of government should be carried out transparently with zero tolerance for corruption.