Analysing governance‐led infrastructural development nexus in sub‐Saharan Africa : Does the moderating role of institutional quality matter?

Abstract

Governments engage in infrastructural developments across the globe, and the level of success often colligates with institutional quality levels. However, despite the presence of governance, the lack of well-developed infrastructure has bedevilled sub-Saharan African (SSA) countries for decades. Therefore, this study investigates the governance-led infrastructural development hypothesis for the SSA region from an institutional quality perspective towards addressing the infrastructural deficit challenges of the region. A combination of advanced panel econometric techniques was applied to data collected from the African Development Bank, World Bank World Development Indicator, and International Monetary Fund (IMF) to investigate the governance-led infrastructural development hypothesis in SSA while controlling for financial development, economic growth, and industrialization in the region. The findings show that the interaction of institutional quality measures and governance indicators significantly and positively induces infrastructure in sub-Saharan Africa (SSA). Additionally, while economic growth and financial development yield no expected significant influence on infrastructural developments, industrialization plays a crucial role, as its spillover effects are not confined to boosting economic growth alone but also to infrastructural transformations. Thus, the provision of policy frameworks by authorities to strengthen institutions and promote good governance is vital for articulating and facilitating infrastructural development plans for SSA.