Government Revenue, Institutional Quality and Poverty in Sub-Sahara Africa

Sub-Saharan Africa, a region characterized by vast diversity in geography, culture, and resources, has long grappled with the challenge of poverty despite being rich in natural wealth, while government revenue, consisting of taxes, grants, and various income sources, stands as a critical instrument in the implementation of poverty alleviation strategies (African Development Bank, 2018). The main objective of this study is to investigate the impact of government revenue and institutional quality on poverty level in 30 selected SSA countries. Here poverty was proxied with final consumption expenditures while government revenue with GDP. In the light of these considerations, this study empirically studied the effects of government revenue and institutional quality on poverty levels in Sub-Saharan Africa by rigorously examining the current state of poverty in the region, assessing the factors contributing to its persistence. Additionally, the study explored the role of external factors, including global economic trends like the foreign direct investment and geopolitical dynamics, in shaping the effectiveness of poverty alleviation efforts. It also interacted institutional quality variables with revenue to determine whether these institutional variables are the channel through which revenue affect poverty in the region. Modified ordinary least square technique was adopted to analyse these relationships. The findings show that increasing government revenue has not significant effect on poverty but both corruption and the interaction of corruption and government revenue were significant. The interaction of corruption and government revenue shows that corruption reduces the impact of government revenue on poverty level in Sub-Sahara Africa. Lastly, the study finds that increasing government expenditure on education would help reduce poverty in the region. The study there recommends that anti-corruption institutions be strengthened in order to curb corruption and that both the government and non-governmental organizations should invest more on education and trainings to reduce poverty in Sub-Sahara Africa.

Government Revenue, Poverty, Sub- Saharan and Institutional Quality

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