Empirical Assessment of Unemployment and Economic Growth: Evidence from Sub-Saharan Africa

By: Irene Ukamaka Nwiboko, Blessing Nancy Udenta

Pages: 267–282, Volume: 2, Number: 2

Published by: AEFUNAI Journal of Economics, Finance and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike, 9/1/2025, 2025

ISSN (Electronic): 2536-6742

DOI: 10.48028/iiprds/aefunaijefds.v2.i2.14

Empirical Assessment of Unemployment and Economic Growth: Evidence from Sub-Saharan Africa

Abstract:

Unemployment is a social problem in the global space and adversely affects the economic growth of countries. It is a situation where individuals who are capable of working and are actively seeking work are unable to find job. The economies of sub-Saharan Africa are mostly affected by the scourge of unemployment as the region has the highest unemployment rate in the global space. This study examines the effects of unemployment on economic growth in sub-Saharan Africa. The study investigates the unemployment rate and economic growth rate of twenty (20) countries in the sub-region for the period of ten (11) years (2013 – 2023). Panel Generalized Method of Moment (GMM) techniques were used to analyze the data collected from the World Development Indicators (WDI). The study variables are GDP growth rate, unemployment rate, capital formation, education investment and exchange rate. The finding of the study demonstrates that the unemployment rate and exchange rate are negative and statistically significant on the economic growth rate, while capital formation and education indicate significant positive association in the region. Based on the finding the study recommends that the governments of the sub-region adhere strictly to the economic policies and intervention programmes that are capable of addressing the high rate of unemployment in the region, especially, by increasing the region’s capital formation, committing more resources into the education sector to actualize high economic growth in the SSA region.

Keywords: Unemployment, Economic growth, Sub-Saharan Africa, Labour market, Okun’s Law