The Moderating Role of Effective Governance in The Public Debt Servicing and Economic Growth Nexus in Sub-Saharan Africa: A Panel Autoregressive Distributed Lags Approach

The purpose of this study is to investigate the moderating role of governance quality in the public debt servicing and economic growth nexus in Sub Saharan Africa through time series data spanning from 2000 to 2023 employing a panel ARDL approach with the sample of four countries in Sub-Saharan Africa namely; Nigeria, South Africa, Kenya and Ethiopia. The results show that governance performance and economic performance are closely correlated over time, suggesting a long-term relationship. Furthermore, better governance has been found to be linked to short- and long-term economic growth, with the role of good institutions in driving economic development underscored. In the case of the control variables, the results show that inflation, population growth and trade openness are all positive and statistically significant variables for economic growth in the region, indicating that macroeconomic factors and structural integration also have an effect on performance results. The study also revealed mixed dynamic relationship in which trade openness and inflation negatively affect economic growth in the short run but positively influence growth in the long run which can be theoretically explained using recent perspectives from endogenous growth theory, structural adjustment theory, and institutional economics which implies that trade openness initially exposes developing economies to adjustment pressures because domestic industries in many Sub-Saharan African countries are relatively weak and less competitive. In the same vein, it is worthy to note that trade liberalization may initially reduce local industrial output, increase import dependence, and generate temporary unemployment due to foreign competition. These short-run disruptions can therefore suppress economic growth before long-run gains are realized. In the long run, however, trade openness enhances technology transfer, innovation, efficiency, foreign direct investment inflows, and market expansion, which eventually stimulate economic growth. The study concludes that enhancing governance capacity looks to mitigate these impacts and pave the way for a more conducive environment for continued economic development in Sub Saharan Africa.