Natural resource wealth and poverty outcomes: A panel data approach for Sub-Saharan Africa

This paper examines the relationship between natural resource rents and poverty in 45 Sub-Saharan African (SSA) countries from 2011 to 2020. The measure of poverty used is the percentage of the population living below income thresholds of $3.65 and $2.15 per day, which are commonly used by the World Bank to measure poverty in low-income countries. Data for the analysis are drawn from international sources, including the World Bank’s Poverty and Inequality Platform, World Bank Development Indicators, Global Financial Development Indicators, IMF Direction of Trade Statistics, and the Political Regimes of the World dataset (Herre & Roser, 2023). The econometric results, derived from fixed-effects regression models, account for unobserved heterogeneity across countries. The findings indicate that, in aggregate, natural resource rents (from oil, minerals, natural gas, coal, and forests) do not have impact on poverty at any threshold. However, when disaggregating by resource type, the results show that natural gas rents and mineral rents are positively and significantly associated with poverty at all poverty thresholds. These findings strongly support the resource-curse hypothesis, which posits that resource wealth, if not effectively managed, can increase poverty and hinder long-term economic growth. Policymakers in SSA should focus on improving governance and directing resource rents into productive sectors to ensure that resource wealth contributes positively to broader economic development.