Does Governance Matters in Infrastructure: Evidence from Sub-Saharan Africa

DOI: 10.5176/2251-2055_MME1220

Authors: Olusegun Ayodele Akanbi

Abstract: This study empirically examines the pattern of physicalinfrastructure that would unlock the productivepotential of sub-Saharan Africa. The estimations arecarried out with a panel of 21 selected sub-SaharanAfrican countries over the period 2000 to 2009 using theTwo-Stage Least Square (TSLS) estimation techniques.The infrastructure variable is constructed based on thethree physical infrastructure stock (roads,telecommunication and electricity) using the PrincipalComponent Analysis (PCA). Whilst governance ismeasured using the worldwide governance indicators.The results conform to the findings of existing literaturethat real output, government capital expenditure,external balance, and inflation are significantdeterminants of physical infrastructure in sub-SaharanAfrica. The distinctive feature of the study is thesignificant role played by governance in explainingphysical infrastructure. The results from the panelestimations revealed that investment ingovernance/institutional structures is a necessary firststep in providing quality infrastructure stock andhence, a pro-poor long-term economic growth for theregion. Therefore, in modelling physical infrastructure,it is imperative to incorporate the important role playedby governance.

Keywords: Infrastructure; Governance; EconomicGrowth; Sub-Saharan Africa