The relationship between poverty, income inequality and inclusive growth in Sub-Saharan Africa

The Global Financial Crisis and the recent COVID-19 pandemic have devastated Sub-Saharan Africa (SSA), leading to increased poverty and income inequality. Consequently, there has been renewed interest in the relationship between poverty, inequality and economic growth. In this paper, we empirically tested the PovertyGrowth-Inequality triangle (PGIT) hypotheses using comprehensive panel data from 35 SSA countries between 1990 and 2018. Our models were estimated using the Two-Step Instrumental Variables Generalised Method of Moments (2SIV-GMM) estimator. Our findings suggest that income inequality adversely impacts poverty and worsens inclusive growth. We also found that inclusive growth can help reduce poverty, but its impact on income inequality depends on the type of inclusiveness. Inclusive growth moderates the adverse effect of income inequality on poverty. From a policy perspective, our results highlight the importance of promoting inclusive growth, demonstrating that it is critical for mitigating the adverse effect of poverty and income inequality on livelihoods in Sub-Saharan Africa.

Automated summary

The Global Financial Crisis and the recent COVID-19 pandemic have had a devastating impact on Sub-Saharan Africa (SSA), resulting in increased poverty and income inequality. This study empirically examined the relationship between poverty, inequality, and economic growth in 35 SSA countries from 1990 to 2018 using comprehensive panel data. The findings suggest that income inequality negatively affects poverty and exacerbates inclusive growth.