Achieving Inclusive Growth in Sub-Saharan Africa: Exploring the Synergistic Role of Insurance and Institutional Quality

Abstract

The growing importance of inclusive growth has garnered considerable attention in contemporary times. Its importance is further underscored by Sustainable Development Goal 8, which advocates for inclusive and sustainable economic growth, employment, and decent work for all. Achieving inclusive growth requires several key developments, including high institutional quality and a strong insurance industry. This study contributes to knowledge by examining the direct and interactive effects of insurance and institutional quality on inclusive growth. Using the generalised method of moments based on 30 Sub-Saharan African countries between 2005 and 2019, the study presents the following findings: (1) insurance, including life and nonlife penetration, positively impacts inclusive growth; (2) institutional quality, including its components presents a positive influence on inclusive growth; (3) Further, the interaction between insurance and institutional quality stimulates inclusive growth. This implies that quality institutions matter in the drive towards developing the insurance market, thereby fostering inclusive growth. Based on these findings, the study suggests that governments harness insurance's potential to promote inclusive growth and alleviate poverty. Further, the study highlights the urgent need for institutional reforms and policies to unlock the full potential of insurance in driving inclusive growth. This calls for efforts to strengthen the business and institutional environment for sustainable development.