Examining the heterogeneous and dynamic effect of fiscal policy and governance on inclusive development in Sub-Saharan Africa

The essential global discussion on growth and development prospects focuses on inclusivity, fiscal policy, and robust governance systems, as this is rooted in the quest to achieve the Sustainable Development Goals (SDGs) by 2030. However, the existing literature supporting this discussion is limited and mostly circumstantial, especially within the context of sub-Saharan Africa (SSA), which has varying levels or degrees of inclusiveness. This study examined the heterogeneous direct and indirect effects, as well as the time-dependent impacts of fiscal policy and robust governance on inclusive development ( IHDev) in SSA, with a limitation to human development (education, healthcare and wellbeing). The study compiled a panel dataset of 33 SSA economies covering 2012–2023, employing the method of moment quantile regression (MMQREG) and panel VAR. The key findings show that first, fiscal general expenditure indirectly promotes IHDev significantly, at the lower levels of IHDev , through a robust governance system. Second, the threshold effect analysis shows that fiscal general expenditure has a monotonic decreasing relationship with higher levels of IHDev , significantly. Third, a robust governance system shows a monotonic increasing relationship across all the levels of IHDev. Fourth, a ten-year projection from the panel VAR suggests that a strategic blend of fiscal general expenditure and governance system can strongly determine IHDev in SSA. Policy and practice recommendations focus on governance reforms, institutional capacity-building, policy implementation strategies, and sustainable development towards the achievement of the SDGs, specifically Goal 8, sustained economic prospects.