Effect of external public debt on inclusive growth in sub-Saharan Africa

Fut, Roland Ngwa; Tchicthoua, Jean; Bita, Charles Alain

Revue d'ECONOMIE et de MANAGEMENT
Volume 24, Numéro 2, Pages 47-67
2026-01-16

Effect Of External Public Debt On Inclusive Growth In Sub-saharan Africa

Authors : Fut Roland Ngwa . Tchicthoua Jean . Bita Charles Alain .

Abstract

Abstract : This paper aims to analyze the effects of external public debt on inclusive growth in twenty-seven Sub-Saharan African countries between 1996 and 2021. Using the smooth transition panel regression models developed by Gonzales and al.( 2005), this study provides new evidence on the threshold value of the external public debt-to-GDP ratio. The results indicate that external public debt has a non-linear effect on inclusive growth in these countries. A threshold of 47.29% of GDP is estimated using smooth transition panel models. When external public debt exceeds this level, it exerts a negative and statistically significant impact on inclusive growth. This finding remains robust when applying the dynamic threshold panel model of Seo and Shin (2016), which estimates a threshold of 45.52% of GDP. Furthermore, our regression results reveal that external public debt exhibits a non-linear relationship with various dimensions of inclusive growth. However, the relationship between external public debt and the environmental perception index is linear. These findings underscore the need for Sub-Saharan African countries to reform taxation and strengthen external public debt management to foster more inclusive growth.