Abstract

The objective of this paper is to examine the relationship between macroeconomic variables and poverty alleviation in Sub-Saharan Africa, by applying descriptive illustration and weighted least square (WLS) regression econometric analysis using the multidimensional poverty index (MPI) taken from the oxford poverty and human development initiative (OPHI) as dependent variable. Furthermore, principal component analysis (PCA) was performed to avoid multicollinearity problems and to improve the estimation power of the regression. Long-term annual gross domestic product (GDP) growth trends were analysed by dividing countries into four groupings, namely upper income, lower middle income, lower income and conflict countries. The results show that post-conflict nations experience good progress in economic growth. With the exception of the ratio of government expenditure to GDP (GEXPGDP), foreign direct investment, net inflows (% of GDP) (INFGDP), agriculture, value added (% of GDP) (AGR.GDP) and the Gini coefficient (GINICOEF) (not significant and not reported), all other variables were found to be statistically significant at the specified significance level. Furthermore, population growth (annual %) (POPGRWTH) holds greater positive magnitude, and shows that economic growth is moving at a slower pace compared to population growth, which complicates the economic development agenda on this continent. The major factors limiting growth are restrictive fiscal policy, contractionary monetary policy in most countries, and balance of payments constraints. Furthermore, it is important to improve local capabilities and inter-firm linkages, thus achieving well-managed privatisation, while it is equally important to have subsidies reaching the poor.

Key words: Sub-Saharan Africa, multidimensional poverty index (MPI), macroeconomic variables, poverty alleviation.