Relevance of Governance in the Nexus between Social Spending and Human Development in Sub-Saharan Africa

Social spending is crucial for improving human development, which in turn enhances productivity and economic growth, reduces unemployment, and alleviates poverty. When compared to other regions, countries in sub-Saharan Africa (SSA) have lower levels of human development as measured by the Human Development Index (HDI). This study examined the moderating role of governance on the nexus between social spending and human development for 39 countries in SSA during the period 2006-2020. Panel data from the World Bank were utilised, and social spending was composed of Government Health Spending (GHS) and Government Education Spending (GES). Estimations were based on regression with panel-corrected standard errors (PCSEs), and feasible generalised least squares (FGLS) regression was applied for results validation. The results showed that good governance (proxied by regulatory quality, rule of law, government effectiveness, and control of corruption) moderated the effectiveness of GHS on human development. GES negatively impacted the HDI. Two information and communications technology (ICT) variables (Internet use and mobile cellular subscriptions) were included in the regressions, and the results revealed a positive relationship with the HDI. From a policy perspective, ensuring good governance enhances the effectiveness of GHS on the HDI. Concerning education expenditure, the negative impact on human development points to the need to improve educational quality and deal with inequalities in access to education. Also, the use of ICTs should be promoted for human development.