Public Expenditures and Economic Growth in Sub-Saharan Africa

Examining the nexus between public expenditures and economic growth in Sub-Saharan Africa is crucial for formulating and implementing effective policies to foster economic development, mitigate inequalities, and achieve sustainable growth across the region. The theoretical framework for this chapter was based on Keynesian Public Expenditure Theory, Wagner's Law of Increasing State Activities, and Endogenous Growth Theory. This chapter adopted an ex-post facto research design because it relied on existing data from the World Development Indicators. Data utilised for this chapter covered the period from 2004 to 2024. Panel regression analysis was applied, and the findings indicated that debt service, grant, defence, and health expenditures have insignificant effects on economic growth in Sub-Saharan Africa. Hence, among the various categories of public expenditure, only education expenditure had a significant effect on economic growth in Sub-Saharan Africa. A re-evaluation of how public funds are allocated and managed in sectors related to debt service, grants, defence, and health is warranted without jeopardising their importance, which extends beyond economic gains. This is because current investments in these sectors do not produce the expected economic benefits. An assessment of the efficacy and efficiency of government spending in these areas may be required. Improvements should be guided by establishing whether the non-significance stems from misallocation, inefficiencies, and/or other causes. Policymakers should strengthen education-economy linkages. Policies should be established to ensure the alignment of educational outputs with labour-market needs, as any mismatch between the two can undermine the effect of education expenditure on economic growth.