Interdependence of Corruption and Poverty in Africa

Abstract

This pape/' examines the relQfiom'hip and causal linkages beMeen cormprian and
poverty. nit! effects q{ governallce on balk cormplioll and poverty are also analyzed
in Ihe sllIdy. Dala for 23 Sub·Saharan African cOllntries over Ihe years 2000 - 2009
are used in a dynamic panel model applying System-Generalized Method of Moment
Estimalion. Our results confirmed thai cornlprion affects poverty positively in a
slu ti!l'/icalJy significanr way indicating increased incidence of COrniplioll increases
poverty and vice versa, Poverty in capability as measured by the Human Poveny
Index (HPI) also affects corr/lption, with the same sign, The callsal link between
corruption and pOI'erry is found to be bidirectional running bolh from corruptioll to
poverty and from poverty to corn/ptjrln. That is. currellf ond past informal/all on
corruption helps 10 improve the prediction on poverty, similarly current and past
infonnation on poverty helps to improve {he prediction on corruption. The quality of
governance affects poverty, whereby improved governance conln'blltes to poverty
reduction and poor governance increases poverty. It is, therefore, important 10
understand fhe corn/plion-poverty nexus while developing and implementing
development policies. Policies intended for combating corruption and alleviating
poverty should be an integral component of the same stralegy and shollid not be
treated separately.