Poverty eradication in sub-Saharan Africa: a government-led or private sector-driven approach?

PurposeThe paper contributes to the literature on investment and poverty in sub-Saharan Africa (SSA). Specifically, the study examined the separate role of private and public investment in poverty reduction in a panel of 40 sub-Saharan African countries.Design/methodology/approachFor robustness, the study adopts a variety of estimation techniques. These include the fixed effect (within) regression model, the two-step system generalised method of moments (GMM) and the pooled OLS with Driscoll-Kraay robust standard errors to account for the well-known problems of endogeneity, heterogeneity and cross-sectional dependence inherent in panel data.FindingsThe empirical results show that the reducing impact of public investment on poverty is marginal, while private investment has a significant reducing impact on poverty. The study also found that access to social services, such as water and sanitation, and credit are important determinants of investment in SSA. The research and policy implications are discussed.Originality/valueThe study investigated the separate effect of private and public investments on poverty in SSA, unlike the existing studies that adopted total investment.