Governance and Multidimensional Poverty in Sub-Saharan Africa

Abstract

This paper investigates the impact of six governance indicators published by the World Bank on multidimensional poverty, poverty headcount ratio, intensity of poverty, vulnerability to poverty, severity of poverty, as well as inequality among the poor. Unlike previous studies, this study first considered non-monetary measures of poverty which captures various dimensions of deprivations experienced by poor people. Secondly, the paper examines the impact of different components of governance successively on six different measures of poverty. Unbalance panel data covering 43 countries in Sub-Sahara Africa (SSA) is analysed using Fixed Effect within and Random Effect GLS estimators. The most appropriate method between the two is chosen using the Hausman specification test. The findings reveal that voice and accountability is the most influential political institutional factor in reducing poverty in Sub-Sahara Africa (SSA). It is also revealed that government effectiveness is influential in reducing the intensity and severity of poverty, while the rule of law is significant in reducing inequality among the poor and improvement in regulatory quality is equally important in reducing the severity of poverty. Therefore, it is recommended that political reform should focus on making governance more participatory with sufficient freedom for the majority of the people. It is also important to improve the quality of public service to enhance government effectiveness, while judicial reforms that will augment adherence to the laws of the land should be undertaken across the SSA sub-region.