THE ROLE OF PRIVATE INVESTMENT IN POVERTY REDUCTION IN SELECTED SUB-SAHARA AFRICAN COUNTRIES

Abstract

The transformation of sub-Sahara African (SSA) countries from the poorest to the richest in the world is desirable. Therefore, this study examined the impact of private investment on poverty reduction in selected SSA economies (Ghana, Nigeria and South Africa) using annual time series data from the World Development Indicators (2020); covering 1981 to 2020. Based on the Marxian theory, correlation and autoregressive distributed lag techniques were employed. Domestic private investment (DPI) was positively and strongly associated with poverty reduction in the three countries. Foreign direct investment (FDI) was positively and strongly associated with poverty reduction in Ghana, though positively but weakly associated with poverty reduction in Nigeria and South Africa. In the short-run, DPI positively and significantly impacted poverty reduction in Ghana, Nigeria and South Africa, while FDI positively and significantly impacted poverty reduction in Nigeria and South Africa only. In the long-run, DPI positively and significantly impacted poverty reduction only in South Africa. FDI negatively impacted poverty reduction in the three countries. Therefore, it was recommended that Nigeria and Ghana should encourage DPI by maintaining conducive macroeconomic environment, which will also attract FDI.