INSTITUTIONS AND INCLUSIVE GROWTH NEXUS IN SUB-SAHARAN AFRICA: AN EMPIRICAL INVESTIGATION

Abstract

Despite abundant natural resources and a growing youthful population, Sub-Saharan Africa continues to experience sluggish economic growth due to the persistent weakness of institutional structures often manifested through limited regulatory capacity, political instability, and governance deficits—which undermine policy effectiveness, investment climates, and long-term development outcomes. This study investigates the direct and interactive influence of economic institutions and governance in promoting inclusive growth in Sub-Saharan Africa (SSA).A panel data of forty-one SSA countries over a period 2007 to 2022 is analysed using system GMM technique. Country selction is based on the availability of consistent and relevant data where the use of lagged variables as instruments are valid. The key findings are: economic institutions matter for stimulating inclusive growth in SSA; the influence of economic institutions is strengthened with good governance; governance has weak direct effect; and good governance have greater impact if complimented with improved economic institutions. This study concludes that while good governance alone has a limited direct impact on inclusive growth in Sub-Saharan Africa, it plays a critical enabling role by amplifying the effectiveness of economic institutions. Hence, sustainable and inclusive development in the region is most achievable through synergistic reforms that concurrently strengthen economic institutions and enhance governance quality. Therefore, it is recommended that policymakers in SSA should undertake institutional reforms that will ensure security of private properties including intellectual property, integrity of government, open and competitive labour market, equal and fair access to finance, conducive business environment, stable prices and reliable currency. While governance should be made more participatory, effective, accountable to the people, and uphold the principles of rule of law.