Empirical Analysis of Fiscal Policy in Sub-Saharan Africa: Is There a Pro-Poor Effect

The study examined the effect of fiscal policy on poverty in a panel of 40 sub-saharan african countries (ssa) using both the fixed effect (within) iv regression model and a spatial-consistent model to control for the potential spillover effect of poverty. the empirical results show that government spending (captured by public debts, government spending on health and education) is not pro-poor, particularly in ssa’s oil-exporting countries. the results may not be unconnected with the high level of corruption in the region. the study also found that government spending (proxied by spending on health and education) does not translate to a reduction in the level of poverty. the results indicate that sub-saharan african governments should develop human capital by devoting more economic resources to the health and education sectors to meet the 26% (percentage of the total budget) as recommended by unesco; and increase the allocation to the health sector to 15% (percentage of total budget) as recommended by who.