FISCAL DECENTRALISATION AND ECONOMIC GROWTH IN SUB-SAHARAN AFRICA

Abstract

Fiscal decentralisation is often considered a vital policy tool, but its applicability and 
effectiveness across different economic frameworks remain an open question. Yet, 
empirical findings have failed to provide a consistent guide due to a lack of consensus. 
Hence, the study examined the effects of fiscal decentralisation on economic growth in 
sub-Saharan countries for the period 2000-2023. In this context, 45 sub-Saharan African 
countries were analysed, employing the panel OLS estimation method on data from the 
IMF, CBN, World Bank, ILO and UNI-WIDER data sources. The study found that sub
national expenditure and revenue have positive economic growth effects while the federal 
government components have nil economic growth effects. The fiscal deficits have no 
economic growth effects. This implies that sub-national government expenditure and 
revenue are more pro-growth than the federal government counterpart. In this context, 
the study concludes that fiscal decentralisation on income and expenditure could be one 
of the key policy choice for sub-Saharan economies that are considering experimenting 
with or deepening their decentralisation processes for economic growth. Accordingly, 
this study recommends that policymakers encourage increased fiscal autonomy for the 
sub-national government to exercise their responsibilities to promote economic growth.