Empirical Analysis of Fiscal Policy in sub-Saharan Africa: Is There A Pro-Poor Effect?

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Authors

1 Department of Economics, Management and Social Sciences, Thomas Adewunmi University, Oko, Nigeria.

2 Business Administration, Management and Social sciences, Thomas Adewunmi University, Oko, Nigeria.

3 Department of Economics, Landmark University, Nigeria

4 Department of Accounting and Finance, Management and Social Sciences, Thomas Adewunmi University, Oko, Nigeria.

5 Business Administration, Management and Social Science, Thomas Adewunmi University, Oko, Nigeria.

6 Department of Economics, Faculty of Social Sciences, Landmark University, Omu-Aran, Nigeria.

Abstract

The study examined the effect of fiscal policy on poverty in a panel of 40 sub-Saharan African countries (SSA) using both the fixed effect (within) IV regression model and a spatial-consistent model to control for the potential spillover effect of poverty. The empirical results show that government spending (captured by public debts, government spending on health and education) is not pro-poor, particularly in SSA’s oil-exporting countries. The results may not be unconnected with the high level of corruption in the region. The study also found that government spending (proxied by spending on health and education) does not translate to a reduction in the level of poverty. The results indicate that for sub-Saharan African governments should develop human capital by devoting more economic resources to the health and education sectors to meet the 26% (percentage of total budget) as recommended by UNESCO; and increase the allocation to health sector to 15% (percentage of total budget) as recommended by WHO.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 17 January 2023

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