INSTITUTE OF AGRICULTURAL AND DEVELOPMENT STUDIES DEPARTMENT OF DEVELOPMENT ECONOMIC

Abstract

This study attempts to examine the relationship between corruption, governance and poverty in sub-Saharan Africa (SSA). The study applies SYS-GMM dynamic panel data models for a sample of 23 sub-Saharan Africa countries over the period from 2011 to 2020. The findings of the study show that the relationship between corruption and poverty is bidirectional, meaning corruption has a statistically significant effect on poverty and poverty also has a significant effect on corruption. Causality test results also show that bidirectional causality exists between them. It is shown that corruption Granger-causes poverty, and poverty also Granger-causes corruption. That is, current and past information on corruption helps to improve the prediction on poverty as well as current and past information on poverty helps to improve the prediction on corruption. Governance quality affects poverty where improved governance contributes to poverty reduction and poor governance increases poverty. All of the governance indicators: political stability and absence of violence, voice and accountability, government effectiveness, regulatory quality, and rule of law are also found to affect corruption level when considered independently. The policy implications of the study are that governments in SSA could understand corruption-poverty nexus while developing and implementing development policies and strategies. Policies of combating corruption and alleviating poverty should be integral parts of this strategy.