







































 
 

 

16 
© 2021 by the authors; licensee Asian Online Journal Publishing Group 
 

Economy 
Vol. 8, No. 2, 16-25, 2021 

ISSN(E) 2313-8181/ ISSN(P) 2518-0118 
DOI: 10.20448/journal.502.2021.82.16.25 

© 2021 by the authors; licensee Asian Online Journal Publishing Group 

    
 
 
 
Revisiting the Relationship between Poverty and Environmental Sustainability in 
Sub-Saharan African Countries using Dynamic Econometric Models 

 
Owusu Samuel Mensah1   
Chen Jianlin2 
Fu Chuambo3 
Hu Qio4 

 

 
 

 
1,2,3,4School of Business, Jinggangshan University, Qingyuan District, Ji'an City, Jiangxi Province, China.  
1Email: omensju15@yahoo.com  

 
( Corresponding Author) 

 
Abstract 

Sustainable development remains an important issue in the quest to achieve a safe and a better world. The 
expansion of the 8 millennium development goals into the 17 sustainable development goals is a testament of 
the conscious desire to improve the human environment to ensure better quality of life for its citizens. This 
study assembles a collection of four sophisticated econometric models to determine the impact of poverty and 
other variables on two indicators of environmental sustainability. Beside, economic development, the study 
confirmed the negative impact of poverty on both indicators of sustainable development. The results prove that 
poverty in sub-Saharan Africa is a threat to environmental quality and its consequential challenges. The call to 
promote environmentally responsible behaviours should not be focused on developed countries alone. Poverty is 
also associated with high levels of pollution and poor countries including countries in sub-Saharan Africa 
contributes must equally restrategise for effective environmental goals. The study further discloses that poverty 
is one of the strongest factors that affect environmental sustainability. This observation is not a contradiction to 
the well-established fact that prosperity or economic growth is a major precursor of unsustainable environment. 
On the contrary the evidence in this paper amplifies a consequence of a social crisis if they fester at both ends. In 
one breath, whereas economic growth or economic prosperity can compromise the quality of the environment.   
In conclusion, this result implies that African countries in their pursuit of economic growth, education and 
effective healthcare to ameliorate poverty must incorporate other aggressive strategies to hasten poverty 
reduction. 

 
Keywords: Relationship, Environment, Sustainability, Dynamic ordinary least square regression, Poverty, Sub-Saharan Africa. 

 
Citation | Owusu Samuel Mensah; Chen Jianlin; Fu Chuambo; Hu 
Qio (2021). Revisiting the Relationship between Poverty and 
Environmental Sustainability in Sub-Saharan African Countries 
using Dynamic Econometric Models. Economy, 8(2): 16-28. 
History:  
Received: 2 September 2021 
Revised: 30 September 2021 
Accepted: 22 October 2021 
Published: 15 November 2021  
Licensed: This work is licensed under a Creative Commons 

Attribution 3.0 License  
Publisher:  Asian Online Journal Publishing Group 
 

Acknowledgement: All authors contributed to the conception and design of 
the study. 
Funding: The study is funded by the National Self-finance Fund Project 
“Based on the Dual Network Embedding of Small and Micro Enterprises' Life 
Cycle Trap Breakthrough Mechanism and Path Research”Item Number: 
71563022.  
Competing Interests: The authors declare that they have no conflict of 
interests. 
Transparency: The authors confirm that the manuscript is an honest, 
accurate, and transparent account of the study was reported; that no vital 
features of the study have been omitted; and that any discrepancies from the 
study as planned have been explained. 
Ethical: This study follows all ethical practices during writing.   

 

 

Contents 
1. Introduction ...................................................................................................................................................................................... 17 
2. Methodology ..................................................................................................................................................................................... 18 
3. Empirical Results and Discussion ................................................................................................................................................ 21 
4. Conclusion ......................................................................................................................................................................................... 24 
References .............................................................................................................................................................................................. 24 
 

 
 
 

 

mailto:omensju15@yahoo.com
http://creativecommons.org/licenses/by/3.0/
http://creativecommons.org/licenses/by/3.0/
https://www.doi.org/10.20448/journal.502.2021.82.16.25
https://orcid.org/0000-0002-9931-1284


Economy, 2021, 8(2): 16-25 

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Contribution of this paper to the literature    
This study contributes to existing literature by determining the impact of poverty and other variables on 
two indicators of environmental sustainability. 

 
1. Introduction 

Globally, there is the growing concern that environmental quality is depleting at an alarming rate and has even 
reached unsustainable levels. With escalating scarcity of clean air, drying water bodies, shifting climates, and 
destructions of entire ecosystems, Asongu, Agboola, Alola, and Bekun (2020) predicts an unprecedented global 
environmental calamity if extraordinary and globally-coordinated measures are not implemented in time to arrest 
the spiralling situation. Increasingly, a number of well-established literature links economic growth and 
environmental pollution and this gratuitous environmental destruction nexus (Adedoyin, Alola, & Bekun, 2020).  

A significant number of the available research materials provide empirical evidence to support the claims that 
economically advanced countries are largely responsible for the continuous decline in environmental quality 
(Joshua & Bekun, 2020). The reason is that increasing environmental pollution may be a negative spill-over of the 
overbearing pursuit of economic growth through unsustainable means (Joshua & Bekun, 2020). Expectedly, most of 
the discontent with the provisions of the 2015 Paris Accord and its predecessor Kyoto Protocol, have come from 
developed countries such as USA, China, Japan etc that emits high carbon dioxide into the atmosphere (Adekunle, 
2020). These countries believe that some of the provisions in the protocol are unfairly targeted at them. The 
protocols are believed to impose unworkable and unrealistic carbon reduction targets on developed economies with 
recourse to the economic responsibility to less developed economies (Khan, Zhang, Kumar, Zavadskas, & 
Streimikiene, 2020).  

In the extant literature, four main theories have emerged that links economic growth to environmental 
pollution. These are an inverted U-shaped relationship between economic growth and environmental pollution 
(Bekun, Yalçiner, Etokakpan, & Alola, 2020), a monotonically increasing relationship economic growth and 
environmental pollution (Eluwole, Saint Akadiri, Alola, & Etokakpan, 2020), a U-shaped relationship (Khan, Yu, 
Sharif, & Golpîra, 2020) economic growth and environmental pollution and an N-shaped relationship economic 
growth and environmental pollution (Ibrahim & Alola, 2020).  

Theoretically, several theories that explain the interplay between economic growth and environmental 
pollution emerged as early as the 1970s but Grossman and Krueger’s (Demissew Beyene & Kotosz, 2020) 
Environmental Kuznet Curve (EKC) theory laid the foundation of modern advances in the subject. This same 
position is well explained in the later work of Panayotou (Lan, 2021). The Environmental Kuznet Curve theory 
indicates that an inverted u-shaped relationship exists between the level of income and the environmental 
degradation and it evolves in stages. At the onset of economic growth, the increase in industrial activities 
contributes to high environmental deterioration (Asongu & Odhiambo, 2021). The deterioration at this stage 
occurs due to increase in energy intensive production that quickens the emission of pollutants. At the second stage 
of industrialisation, the service and technology-intensive knowledge-based industry begins to develop. At this 
point, the decline in environmental degradation begin to slow down correspondingly due to the changes in 
production, environmental awareness and the promulgation of stricter environmental regulations (Kirikkaleli & 
Sowah, 2020).  

Thus, the EKC theory implies that composition effect, scale effect and technique effect are the main channels 
through which environmental welfare is affected by economic growth. In this theory it is argued that growth in 
economic scale leads to proportional growth in environmental pollution whiles changes in the structure of the 
industry leads to a reduction in the intensity of the pollution. Additionally, Grossman and Krueger (Usman, 
Akadiri, & Adeshola, 2020) suggest that economic growth inspires technological progress which brings in 
enhanced, and cleaner technologies to replace obsolete ones to further improve the quality of the environment. 
Related studies on economic growth and environmental pollution have also examined the reverse effect of 
environmental pollution on economic growth.  

However, an emerging strand of literature that is receiving significant academic curiosity is the linkages 
between economic poverty and environmental pollution. According to Baloch, Khan, and Ulucak (2020)  academic 
interest that establishes the relationship between poverty and environmental pollution dates back to the early 
1980s but this area of academic specialisation failed to elicit the needed research interest and global interest due to 
the overbearing effect of economic growth on environmental pollution. Secondly, several groups have emerged at 
both national and international level to highlight, protest and finance the advocacy on the effect of economic 
growth on environmental pollution but this is not the case with how poverty affects environmental pollution. The 
imbalance in studies in this regard is explained in Baloch, Khan, Ulucak, and Ahmad (2020) when they content that 
even though global effort has been concentrated on how  to mitigate environmental stress through sustainable 
economic growth, poverty also plays a major role in environmental degradation and health related quality of life 
across the globe. This may have influenced the millennium fathers to declare the need to reduce absolute poverty as 
the first of both the millennium development goal (MDGs) and the successor Sustainable Development Goals 
(SDGs). 

 The objective of these goals is to alleviate absolute poverty by 2030.  This bias in studies about environmental 
pollution explains the paucity of studies on Africa’s contribution to environmental pollution globally as the 
continent is deprived of the large industries that emit high carbon dioxide into the atmosphere. Yet poverty can be 
a major source of environmental pollution and its reduction can further accentuate effort to reduce environmental-
led calamities in Africa. 

Generally, literature on African growth and development and poverty reduction is extensive; however, few 
have attempted to establish the link between public investment and poverty reduction in Sub-Saharan Africa. 
According to World Bank (2015) Africa for the past two decades has seen a tremendous increase in its economy 
recording an annual growth rate of 4.5 percent, however, translating these economic gains into improving the 
wellbeing of the people  has been a major concern. Sub-Saharan Africa in 2015 had 27 out of 28 poorest countries 
living in an absolute poverty in the world  and the average poverty was at 41 percent in sub-Saharan Africa as 

https://borgenproject.org/poverty-environment-done-survive/


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compare to 13 percent in the other regions in 2015 (World Bank Report, 2018b). The sub-region continues to 
record high population growth, high level of poverty, and the weak economic situation coupled with poor 
management of the Covid-19 pandemic is deteriorating and worsening socioeconomic conditions of the people. The 
continent saw its population doubled between 1990 and 2015, with significant number of people living on less than 
$1.90 a day (World Bank Report, 2018a).  Sub-Saharan Africa is among the worst regions in the world with high 
rate of poverty and their income per capita or GDP per capita fall toward the bottom of list of countries globally 
(Adeyeye, Adebayo-Oyetoro, & Tiamiyu, 2017; Baloch et al., 2020). Poverty is classified as one of the greatest 
challenges in sub-region and its eradication remains an integral part of the developmental agendas (Fombad, 2018).  

In the opinion of Jan and Shah (2020) poverty affects environmental quality through deforestation and other 
negative farming practices. The forest is the main source of fresh and clean air and water to enhance the quality of 
the human environment. Forest act as sinking hoes to reduce the drastic effect of climate change on human health. 
Conversely, an increase in deforestation compromises how forests play this role. Many impoverished communities 
are aware of the errant and harmful effect of deforestation but have limited choices.  

Poor communities purposely raze down forest lands to make space for agricultural activities, animal grazing 
and obtain wood for fuel. Through lumbering, quarrying, extensive road construction into regions that were once 
almost inaccessible, building and upgrading of roads into forests along with other destructive patterns further 
spirals the environmental quality downwards. Deforestation can result in more carbon dioxide being released into 
the atmosphere. That is because trees take in carbon dioxide from the air for photosynthesis, and carbon is locked 
chemically in their wood. When trees are burned, this carbon returns to the atmosphere as carbon dioxide. With 
fewer trees around to take in the carbon dioxide, this greenhouse gas accumulates in the atmosphere and 
accelerates global warming.  

According to Radosavljevic, Haider, Lade, and Schlüter (2020) due to poor environmental and sanitation 
planning at both government and domestic level, environmental pollution persists in several underdeveloped 
economies. In some of these countries human and other household waste are directly dumped into water bodies. 
These may be the same sources of farming and livestock production that increases the chances of pollution. In 
relation to air pollution, Hirons (2020) explains that poor communities lack knowledge about proper production 
techniques hence employ very crude methods which may compromise the quality of air. In essence, waste disposal 
is one of the major challenges associated with poverty. Poor communities lack efficient waste disposal systems 
which affect the health of the individuals and the health of their environment. Mnini and Ramoroka (2020) also 
explain that extreme poverty is strongly correlated with high birth rates.  

The resulting population boom in poorer communities is an additional burden on the environment. This is 
because more people will have to extract the maximum benefit from the limited primary resources available. For 
example, in some countries, water and air quality has reduced significantly due to the activities of small-scale 
miners as pertain in the case in Ghana. The effect of poverty on carbon emission is specifically addressed in the 
work of Baloch et al. (2020). Their study specifically explored the linkages between income inequality, poverty, and 
carbon dioxide (CO2) emissions for the 40 Sub-Saharan African countries over the period 2010 - 2016. Using the 
Driscoll Kray regression estimator, this study revealed that suggest income inequality was positively related to 
CO2 emissions but negatively related to environmental pollution in Sub-Saharan African countries. This together 
with related studies truly affirms the influence of poverty as a major cause of environmental pollution. Thus, if 
poverty is eradicated, it may minimize several environmental problems. That notwithstanding, the genealogy of 
the relationship between poverty and environmental sustainability is highly convoluted (Aust, Morais, & Pinto, 
2020).  

To this end, previous efforts to measure the precision of this relationship have often ended with inconclusive or 
conflicting outcomes. For example, one school of thought suggests that the linear causal link between poverty and 
environmental quality or sustainability is too simplistic. Instead, the nexus is governed by a complex web of 
factors. There are institutional and market failures factors, conflicts between different agents (income groups) and 
other compounding factors. This paper explores the relationship between poverty and environmental sustainability 
in sub-Saharan Africa. The rest of the paper is arranged as follows. Section 2 provides further information on 
poverty in the sub-region. Section 3 provides data and the empirical methodology. Section 4 presents the empirical 
findings. Section 5 concludes with suggestions  
 

2. Methodology 
This paper employs (Stock & Watson, 1993) dynamic ordinary least square regression (DOLS), the two-staged 

least square regression model and dynamic panel model using system-GMM to provide comprehensive 
understanding of the relationship between poverty and environmental sustainability in sub-Saharan Africa (Ullah, 
Awan, & ul Hasan, 2020). The DOLS is used because it allows integration of variables of alternative orders (in this 
sense, a higher order of integration). It also reduces possible simultaneity amongst the regressors. The two-staged 
least square regression model is also applied in this study as the regressor is contemporaneously correlated with 
the equation’s disturbance and consequently, the OLS estimates will be bias and inconsistent. The system-GMM 
proposed by Arellano (2003) and developed by Blundell and Bond (1998)  is adopted for the study due as it is 
widely used and affirmed in similar studies with robustness of inferences The model is formulated as follows; 
 

2.1. Panel Causality Test  
This paper adopted the panel causality test by Dumitrescu and Hurlin (2012) to understand the causal 

relationship among the variables. This form of test takes into consideration two heterogeneity classifications. 
Following, Arellano (2003) the equation is formulated as follows:   

( ) ( )
, , , ,

1 1

H H
h h

i t i i i t h i i t h i t

h h

y      − −

− −

= + + +     1,2,....... : 1,2,.....,i N t T= =                       (1) 



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From the equation above, we represented the two stationary variables used in the study by  x and y as N

individuals in T periods. 
( ) ( )( )1

,....,
h

i i i  =  along with individual effects i are fixed in the time dimension 

specification. Moreover, it is believed that the lag orders of H are homogenous for the complete cross-section of the 

panel data of the study. Besides the ( )h

i  and ( )h

i  , which are autoregressive parameters and the regression 

coefficients are permitted to be different cross groups, Equation 1.  
The test approach has the assumption that the null hypothesis have no causal relationship for the units 

available (x and y) in the panel data. If, however, the hypothesis (H0) is rejected the study can conclude that there is 
causal relationship between the x and y variables. The x and y can also be used to measure the bidirectional 
causality, which is also termed as feedback impacts. The assumption is referred to as Homogeneous Non-Causality 
(HENC) hypothesis, which can be explained as: 

0 : 0, 1,....i iH D =  =  

Under the alternative hypothesis, which is Heterogeneous Non-Causality (HENC) hypothesis only two 
categories of cross section units are allowed. The study further takes into consideration the heterogeneous 
panelised data, which constitute fixed coefficients and the alternative hypothesis is therefore, presented as follows: 

 
There is the assumption that i comes in divers ways across groups in addition to the 1D , where D represents 

the each procedure without causal relationship between the x and y variables. From the hypothesis above, it is 

assumed that the 1D cannot be identified, however it allows the condition 10 / 1D D  . 

The study , therefore proposed the statistics 
,

HNC

D TW linked to null Homogenous Non-Causality as bellow: 

, ,

1

1
.

D
HNC

D T i T

t

w W
D =

=                                                          (2) 

From the Equation 2, the ,i TW represents the individual Wald Statistics as regards to the
thi cross-section unit 

to have a relationship with the test hypothesis  0 : 0iH  =  on individual bases, Equation 2. 

Let  1 : :i iV Y X=  represent the ( ),2 1T H − matrix, in which shows a ( ),1T  unit vector and  

( )1 2 1 2 ' ': : ..... : , : : ..... : .H H

i i i i i i i i i i iY y y y X x x x       = = =     illustrates vectors of parameters of the framework 

and represented  0:1HF = be a  ,2 1H H + matrix.  

According to the module, for every 1,.... ,i D= the Wald statistics make an estimation of  ,i TW  to match the 

individual test 0 : 0iH  = . Thus is can be formulated as follow:  

( )
1

12

,i T i i i i iW F b F V N V V 
−

−     =
 

                                                       (3) 

With regards to the null hypothesis of non-causality, the Wild statistic value is linked up to the a chi-squared 

distribution that has H degrees of freedom for T → , Equation 3. 
 
 

 

The standardized test statistics estimate 
,

HNC

D TV for ,T D → is presented 

as:  
  
                                     (4) 

 

The study further presents the standardized test estimate 
HNC

DV  for fixed T samples outlined as:  

( )

( )
,

2 5 2 3
. . . (0,1)

2 3 2 1

HNC HNC

D D T

T HD T H
V x x W H D

H T H T H

− − − − 
= − → − − − − 

        (5) 

The Equation 4 and 5 can be simply illustrated as ( ), 1
1/

DHNC

D T iTi
W D W

−
=  . 

In short the statistics values shown above the Granger causality process output represents the values for 
W(W-bar), Z(Z-bar), and then  

( ), ( ), ( ),W W bar Z Z bar Z Z bar− − − and Z(Z-bar tilde).  

( ) ( ) ( )( ) ( ), /it itf x A Y Ln Y A Ln x A Ln Y A = − − − −  

1 1( , ) ( , ) ( , )it it it itf x x A Y f x A Y f x A Y   − −= −  

Where A is the highest possible value and B is the lowest possible value of indicator x for country i at time t 
and Ln represents the natural logarithm, Equation 5.   
 

2.2. Generalised Methods of Moments  
This paper adopted Generalised Methods of Moments (GMM) to investigate the dynamism, Heteroskedasticity 

and endogeneity found in the regression models. Following Dumitrescu and Hurlin (2012) the paper formulated 
two regression models as follows:  

2

, ( ), 1.......i T iW H D→  =

( ) ( ), , 0,1
2

HNC HNC

D T D T

D
V W K D

H
= − →



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1 2 1 3 4 5 6 7 8it it it it it it it it itEST ESD POV FIN INS EDU URB TOP        −= + + + + + + + +  (6) 

1 2 1 3 4 5 6 7 8it it it it it it it it itESD ESD POV FIN INS EDU URB TOP        −= + + + + + + + +   (7) 

where,  
i
denotes the country 

1,...i N=
while 

t
represents the time  itEST and itESD are two different indicants of 

the lagged dependent factor of environmental sustainability, whereas POV is the proxy for poverty, Equation 6 and 
7. FIN represents financial development whiles INS is the proxy for institutional quality. EDU is the proxy for 
government expenditure on education (% of GDP), while URB measures Urbanization and TOP is an indicator of 
Openness to Trade. Oseni (2016) further argues that including lagged dependent variables as an independent 
violate “orthogonality assumption”, however, when the coefficient of the interest are finite-dimensional. The GMM 
estimators are known to be consistent, asymptotically normal, and efficient in the class of all estimators that do not 
use extra information aside from that contained in the moment conditions (Edrees, 2015).   
 

2.3. Data Source and Variable Specification  
The study adopts a cross-country panel data of 15 sub-Saharan African (SSA) countries with related economic 

and poverty indicators. To enable comparative analysis based on regions, the countries were further sub-divided 
into the four regions with SSA. The countries selected from western SSA were Ghana, Senegal, Côte d’Ivoire, and 
Benin while Angola, Cameroon, and DR Congo were selected from Central African region. On the other hand, 
Ethiopia, Kenya, Rwanda, and Uganda were selected from Eastern Africa whereas South Africa, Botswana, 
Namibia, Lesotho was selected from Southern Africa. The data span the period of 2009 and 2019 as they were those 
available at the time of the study.  The entire data was selected from World Bank database, 2019. The reliability of 
the data was cross-checked with complementary data from other international and independent sources. The 
variables of study were carefully chosen to reflect previous analysis on the significant factors that affect 
environmental quality or sustainability. Table 1 shows the detailed description of variables. 
 

Table-1. Variable definition and data source. 

Variables definitions  Operational definition Data Source 

EST Adjusted Net Savings, excluding particulates emission damage. 
(%of GNI) 

World Bank database   

ESD Forest Depletion is the product of unit resource rents and the 
excess of round wood harvest over natural growth. Natural 
Resources Depletion is the sum of net forest depletion, energy 
depletion, and mineral depletion etc. 

   
 
World Bank database   
 

POV Poverty headcount ratio at $1.90/ a day (2011 PPP) World Bank database   
FIN Financial Development (percentage of private sector share of 

GDP) 
World Bank database 

INS Institutional Quality (governance effectiveness and regulatory 
quality index) 

World Bank database 

EDU Government expenditure on education, total (% of GDP) World Bank database 

URB Urbanization (% of urban population/Total Population) World Bank database 
TOP Openness to Trade (% of import and export as % of GDP)  World Bank database 

Notes: n Variables are converted into their natural logarithm to ensure normal distribution of data.  

 
The extant literature presents a plethora of measures admitted as proxy for environmental sustainability or 

sustainable development. Researchers argue that the different measures are useful depending on the context of 
study. In this study, two measures of environmental sustainability were used and each of them was tested 
differently. Using the two measures of environmental sustainability is helpful as it enables the study to determine 
the impact of poverty on all aspects of environmental sustainable. The first measure of environmental sustainability 
(EST) is based on the adjusted net savings plus education expenditure and minus energy depletion, mineral 
depletion, net forest depletion, and carbon dioxide level. This measure of sustainable development was first 
introduced by Pearce and Atkinson (1998) as proxy for a weak sustainability ranking. This measure itself was an 
improvement of an earlier one introduced by Hartwick (1990).   

In this model, it is assumed that income from non-renewable resources must be reinvested in renewable 
resources to maintain the ecological balance and social wellbeing. Pearce and Atkinson (1993) is the one that saves 
more than its combined depletion of natural resources and produced capital. A country is perceived to be on an 
unsustainable path if the value of this proxy is negative. Recent studies that has used this measure of sustainable 
development has been successfully used in Arrow, Dasgupta, Goulder, Mumford, and Oleson (2012); Blum, 
Ducoing, and McLaughlin (2017); Greasley et al. (2014), and have obtained robustness of inference.  

The second proxy of environmental sustainability (ESD) is adopted from Ntow-Gyamfi, Bokpin, Aboagye, and 
Ackah (2020) which combine forest depletion, natural resource depletion, energy and mineral resources depletion, 
CO2 emissions and total greenhouse emissions. Since these variables are measured in different units (Ntow-Gyamfi 
et al., 2020). To standardize the measure and make it suitable for the estimation, the natural log of each indicant is 
taken. Since the index of environmental sustainability is made up of different variables, with different units of 
measurement, Kakwani, Wagstaff, and Van Doorslaer (1997) approach was used to reconstruct all into a unit free 
variable. The final unit free Environmental Sustainability index was constructed using the following steps. In the 
first place an achievement index was constructed for each variable. The formula for achievement index for the 
variables is mathematically expressed as; 

( ) ( ( ) ( )) ( ), , /xit B T Ln T B Ln xit B Ln T B= − − − −                                 (8) 

where T is the highest possible value and B is the lowest possible value of indicator x for country i at time t and 
Ln is the natural logarithm, Equation 8. An improvement index for indicator x which shall later feed into the 
sustainability index is therefore given as: 

), 1, , , , )1, ,( ( ) (f xit xit T B f xit T B f xit T B− = − −                                  (9) 



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We then obtained the second index of sustainable development by taking the average of the improvement 
index of the sustainability variables explained above.  With the result obtained from the equation above, a higher 
value indicates more sustainable environment, Equation 9. 

Since the effect of poverty (POV) is the focus of this study, poverty is the first explanatory variable. Again 
many different measurement of poverty have emerged with context specific factors. According to Pezzey (2004) 
increasingly, the measurement of poverty keeps changing. While some people recommend a multidimensional 
approach that comprises social, economic, natural and socio-political factors, there are those that insist on using 
only economic wellbeing. This debate has intensified the emergence of both monetary and non-monetary poverty 
theories. Further, the extant literature is inconclusive as to whether relative or absolute poverty is the best 
definition of poverty. Based on the peculiarities of Sub-Saharan Africa, we measured poverty using the existing 
poverty headcount ratio at $1.90/ a day as which was proposed by the World Bank in 2011. This measures 
economic poverty by the percentage of the population that lives on less than $1.90 a day at 2011 international 
prices.  

The other explanatory variables include the financial development (FIN) and institutional quality (INS). 
Further, education (EDU), urbanization (URB), trade openness (TOP) are included as control variables based on 
previous established studies in other parts of the world. Exploring how these affect environmental sustainability in 
Sub-Saharan Africa is critical considering the number of uneducated persons that live in this part of the world. 

 It is the belief of the authors that increase in education must positively correspond to increase in eco-system 
awareness and environmentally responsible behaviour. Conversely an illiterate community will struggle to 
understand and appreciate the futuristic benefits of preserving the eco-system in preference for immediate benefit. 
Like the other variables, measuring education lends itself to several interpretations but this study measured 
education by the number of secondary school enrolment.  

Financial development is measured by the percentage of private sector share of GDP whereas institutional 
quality is proxy by governance effectiveness and regulatory quality indexes. Urbanization is measured based on the 
percentage of urban population as proportion of the total population whiles trade openness is measured as the sum 
of imports and exports expressed as a percentage of GDP. 

 

3. Empirical Results and Discussion 
3.1. Pre-Estimation Results  

The mean and median of the variables used for the study are presented in Table 2 below and fall within the 
maximum and minimum values. The results from Table 2 further shows that 60 % of the variables are positively 
skewed, which include ESD, FIN, INS, EDU  and TOP, and EST, POV and  URB variables are negatively skewed. 
From Table 2 all the values of the kurtosis, including EST,ESD,FIN,POV,INS,EDU,URB and TOP reveal the 
leptokurtic nature of the variables used for the study (Oseni, 2016).  

Table 2 further reports the values of the Jarque-Bera and their p-values of the coefficient less than 0.01, which 
means rejecting the null hypothesis of the normal distribution. The Jarque-Bera statistic is used to test whether a 
sequence follows a normal distribution. Furthermore, the correlation among the variables was tested to detect 
whether the variables used for the study have high multicollinearity among themselves in Table 3. 
Multicollinearity among variables occurs when the correlation coefficient results is more than 0.5.  

Table 3 gives the results of the correlation coefficients among the independent variables used for the study.  
The results indicates the absence of any multicollinearity among the predictor variables. 
 

Table-2. Descriptive statistics, normality test and correlation matrix. 

Variables EST ESD FIN POV INS EDU URB TOP 

Mean 1.7245 1.0453 21.58298 15.27824 21.58298 1.88263 72.37603 1.88263 
Median 10.7 1.9483 11.10415 10.7 11.10415 1.577535 5.047062 1.577535 

Maximum 32.7 6.3821 121.7331 78.9 121.7331 7.43594 511.4585 7.43594 
Minimum -40.47 0.0381 0.08363 0.38 0.08363 0.37105 4.489647 0.37105 
Std. Dev. 13.173 0.3102 24.48723 13.4183 24.48723 1.438195 107.9503 1.438195 
Skewness -0.37253 0.8103 1.861627 -0.225505 1.861627 2.499982 -1.508621 2.499982 
Kurtosis 5.361412 0.3812 6.284153 5.361412 6.284153 8.215936 4.435162 8.215936 

Jarque-Bera 84.9473 43.523 180.754 84.9473 180.754 382.8412 81.86523 382.8412 
Probability 0.1924 0.1749 0.0000 0.1924 0.0000 0.0000 0.0168 0.0000 

Sum 2688.97 1742.10 3798.604 2688.97 3798.604 331.3429 12738.18 331.3429 
Sum Sq. Dev. 31508.88 2841.90 104934.3 31508.88 104934.3 361.9711 2039323 361.9711 
Observations 176 176 176 176 176 176 176 176 

 
Table-3. Correlation Matrix. 

Variables EST FIN POV INS EDU URB TOP ESD 

EST 1 
       

FIN 0.02765 1 
      

POV -0.13224 -0.06313 1 
     

INS 0.207613 0.024357 -0.29576 1 
    

EDU 0.06463 0.233936 0.023083 -0.14467 1 
   

URB -0.20761 0.024357 -0.29576 0.03432 0.3286 1 
  

TOP 0.06463 0.233936 0.023083 -0.14467 0.6532 0.5432 1 
 

ESD 0.3201 0.4621 0.9407 0.64301 0.4593 0.9482 0.4588 1 

 
 
 
 
 
 



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Table-4. Unit root test result. 

Variables Levin 
Level 

First 
Difference 

Hadri 
Level 

First 
Difference 

Order of 
Integration 

Autocorrelation 

EST 4.1733*** 10.6220* 9.2497* 1.7418 I(1) No 
ESD 1.220.321 9.09250* 8.5012 0.4473** I(1) No 
FIN 3.1092** 3.7987 13.7611*** 0.8540 I(1) No 
POV -4.1733*** -10.6220* -9.2497* -1.7418 I(1) No 
INS 3.1092** 3.7987 -13.7611*** 0.8540 I(1) No 

EDU 20.321 21.0925*** 11.5012 0.7046** I(1) No 
URB -2.5662*** -3.8131 -7.7809*** -2.7355 I(1) No 
TOP 1.9064 0.0283*** 15.2917 2.3223* I(0) No 

Notes: ***, ** and * denote significance at the 1%, 5% and 10% levels, respectively. 

 
Table-5. Result of Lag length selection Criterions. 

Lag LogL LR FPE AIC SC HQ 

0 -3458.71 NA 1.69E+11 40.04288 40.13402 40.07985 
1 -2932.18 1016.529 5.13E+08 34.2449 34.79171* 34.46674 
2 -2868.26 119.7155 3.27E+08 33.79493 34.79743 34.20164* 
3 -2842.44 46.86218* 3.25e+08* 33.78547* 35.24364 34.37704 

Note: * indicates lag order selected by the criterion 
LR: sequential modified LR test statistic (each test at 5% level) 
FPE: Final prediction error. 
AIC: Akaike information criterion. 
SC: Schwarz information criterion. 
HQ: Hannan-Quinn information criterion. 
 

The study adopted Levin-Lin-Chu and Hadri tests to test for the presence of the unit roots in the panel data, 
Table 4. The results disclosed that the variables adopted for the study. The autocorrelation from results from 
Table 4 shows no serial autocorrelation problem among the variables used for the study.  

To determine the appropriate lag length to be used for the study, we adopted lag selection used the VAR for 
the variable in levels for the analysis adopted by Akalpler and Hove (2019).  The results presented in Table 5 show 
that all the lag selection criterions including sequential modified LR test statistic (LR), Final prediction error 
(FPE), and the Akaike’s Information Criterion (AIC) suggest lag 3 for the study.  

 
Table-6. Wald test. 

Variable ESD EST FIN POV INS EDU URB 

Value 1.46123 1.6404 3.60505 18.31570 5.14551 18.31570 5.14551 
P-values 0.001 0.009 0.049 0.0081 0.026 0.0081 0.0163 

 

 
Table 6 presents the Wald Test framework in Eviews 10. We restricted the respective coefficients of the 

independent variables to zero after running the ordinary least square regression. The Wald test statistics, 
presented in table 6 show statistically significant contributions of EST, ESD, FIN, POV, INS, URB and TOP to 
the model so all the variables were adopted for the study.  
 

Table-7. Results of model analysis of effect of explanatory variables of environmental sustainability (EST). 

Variables DOLS 2SLS GMM Fixed Effect 

Constant 1.2609** 1.0238** 1.5107** 2.3484** 
  (0.0378) (0.0285) (0.0279) (0.0465) 
FIN 0.6278 -0.5400 0.5816 0.6037 
  (0.0689) (0.0759) (0.0652) (0.0859) 
POV -0.5278** -0.6400** -0.2861** -0.4047** 
  (0.0289) (0.0415) (0.0495) (0.0379) 
INS 0.2804** 0.1843** 0.0505** 0.0908** 
  (0.0040) (0.0395) (0.0073) (0.0218) 
EDU 0.3263 0.7600 0.3789 0.7559 
 (0.1297) (0.9231) (0.0635) (0.0559) 
URB -0.0275* -0.0356* -0.0045* -0.0143* 
 (0.0058) (0.0017) (0.0092) (0.0383) 
TOP 0.0275* 

(0.0058) 
0.0356* 
(0.0017) 

0.0045* 
(0.0092) 

0.0143* 
(0.0383) 

R2 0.6775 0.7983 0.7337 0.8746 
F-test F= 11.65 

(0.0000) 
F=11.13 
(0.0000) 

F=10.76 
(0.0000) 

F=10.43 
(0.0000) 

DW-Stat 2.102 2.053 2.0431 2.0183 
J-B-Stat (Normality) 0.738 

(0.262) 
0.539 

(0.247) 
0.722 (0.573) 0.705 (0.602) 

Breusch Pagan LM test χ2=0.052 
(0.5533) 

χ2=0.047 
(0.5021) 

χ2=0.054 
(0.5532) 

χ2=0.045 
(0.5092) 

Hausman Test χ2=18.42 
(0.0000) 

χ2=17.13 
(0.0000) 

χ2=17.77 
(0.0000) 

χ2=18.06 
(0.0000) 

Note: EST  is dependent variable, given the results from the various tests conducted (F-test, DW-Stat, J-B-Stat, Breusch 
Pagan LM test and the Hausman Test); the fixed effects model has been chosen and consequently reported. *, ** means 5% 
and 1% significant levels respectively, and t –values are reported in parenthesis.  

 
 



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3.2. Empirical Results  
Table 7 presents the results of the analysis conducted to determine the effect of explanatory factors on 

environmental sustainability (EST). All models affirm the positive effect of financial development on environmental 
sustainability. The table however reveals that the effect is stronger based on the DOLS model. This finding is 
consistent with the established position in the extant literature that economic growth is a major contributing factor 
to environmental sustainability. 

Significantly, the association between poverty and environmental sustainability is negative. This implies that 
an exacerbating level of poverty has the potential to mutilate gains made in environmental sustainability. This 
observation is the most important in the case of this study that seeks to affirm the importance of reducing poverty 
to support environmental quality agenda. The results of the other variables namely trade openness, education and 
institutional quality returned a positive association with environmental sustainability. When these attributes are 
high in a country or region, it promotes environmentally responsible behaviours. Regarding the impact of 
urbanisation, the table discloses similar expectation as a negative association exits between urbanisation This 
results is not surprising as they affirm previous findings (Hafeez et al., 2020) of regression of the effect of health 
expenditure on environmental sustainability. 
 

Table-8. Results of model analysis of effect of explanatory variables of environmental sustainability (ESD) 
Variables DOLS 2SLS DOLS 2SOLS 

Constant 1.3744 1.0955 1.5862 1.4189 
 (0.0412) (0.0305) (0.0293) (0.0479) 

FIN 0.3056 0.1972 0.0530 0.0935 
 (0.0044) (0.0423) (0.0077) (0.0225) 

POV -0.3557 -0.8132 -0.3978 -0.7786 
 (0.1414) (0.9877) (0.0667) (0.0576) 

INS -0.0300 -0.0381 -0.0047 -0.0147 
 (0.0063) (0.0018) (0.0097) (0.0394) 

EDU -0.5659 -0.6838 -0.0431 -0.0082 
 (0.0471) (0.0524) (0.0076) (0.0187) 

URB -0.0427 -0.0419 -0.0412 -0.1997 
 (0.0485) (0.0476) (0.0467) (0.0897) 

TOP -0.1758 0.2173 -0.2220 -0.1731 
 (1.0110) (0.8960) (0.8542) (0.6921) 

R2 0.6775 0.7983 0.7337 0.8746 
F-test F= 11.65 

(0.0000) 
F=11.13 
(0.0000) 

F=10.76 
(0.0000) 

F=10.43 
(0.0000) 

Note: ESD is dependent variable, *, ** means 5% and 1% significant levels respectively, and t –values are reported in parenthesis. 

 
Table 8 on the other hand presents the effect of the explanatory variables on the second measure of 

environmental sustainability (ESD). The results again confirm the previous findings in Table 7 regarding the effect 
of poverty on environmental sustainability. In this particular case, the analysis indicates that all the models 
confirms the existence of a negative influence of poverty on the improvement in environment. 

Sustainable development remains an important issue in the quest to achieve a safe and a better world. The 
expansion of the 8 millennium development goals into the 17 sustainable development goals is a testament of the 
conscious desire to improve the human environment to ensure better quality of life for its citizens. To that extent 
the findings of this research adds to the stock of studies that attempts to unveil some of the key challenges that 
confronts todays and how they can be controlled. Specifically, the results of this study confirm the impact of 
poverty on both indicators of sustainable development. The results prove that poverty in sub-Saharan Africa is a 
threat to environmental quality and its consequential challenges. This therefore calls for the need to promote 
sustainable development. Previous findings have attested to the fact that strong financial development is necessary 
to enhance sustainable development. Additionally, the idea that good institutional and governance quality as well 
as education are important factors that can affect the sustainability war in Africa have all been affirmed in the 
findings of this research. There is an inalienable responsibility on the part of African governments and their 
development partners to promote both formal and non-formal education at all levels to give its citizens the greater 
understanding of the challenges that unsustainable development can impose.   

Fortunately Africa has been spared the challenges of urbanisation on sustainability with the slow pace of 
urbanisation in the region. That notwithstanding the evidence adduced in this research supports and reinforces the 
outcome of prior studies that increase urbanisation will invariably affect sustainability negatively. There is 
therefore the need for African countries to brace up with more sustainable urban development measures as the 
region increases its urbanisation drive with economic growth.  

Most importantly, this paper explored the effect of poverty on the environmental sustainability in sub-Saharan 
Africa. This result reflects earlier findings and suggestions made in the extant literature. In the works of Ansari, 

Haider, and Khan (2020); Pirgaip, Ertuğrul, and Ulussever (2021) they contend that while mankind, in general, 
places stress on the environment, poverty in particular has played a major role in environmental 
sustainability across the world. The results of this paper support this position. The analysis indicates that a unit 
increase in poverty corresponds to a massive decline in environmental sustainability. This places the burden to 
promote environmental sustainability equally at the door step of African leaders and private sector activities whose 
responsibility it is to support poverty eradication in Africa. Again the results give evidence to assert that private 
sector participation can significantly promote environmental sustainability. This is supported by the fact that 
financial development which was proxy by percentage of private sector share of GDP improves sustainability 

Previous studies provide several ways by which sub-Saharan economies can improve poverty reduction to 
enhance sustainable development. The study notes that poverty is one of the strongest factors that affect 
environmental sustainability. This observation is not a contradiction to the well-established fact that prosperity or 
economic growth is a major precursor of unsustainable environment. On the contrary the evidence in this paper 



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amplifies a consequence of a social crisis if they fester at both ends. In one breath, whereas economic growth or 
economic prosperity can compromise the quality of the environment, in like manner can abject poverty also reduce 
the quality of environment through environmentally irresponsible behaviors. This result implies that African 
countries in their pursuit of economic growth, education and effective healthcare to ameliorate poverty must 
incorporate other aggressive strategies to hasten poverty reduction.  

According to Fan, Zhang, and Zhang (2002), poverty problem can be better solved through welfare 
redistribution but few developing countries have been able to reduce poverty through direct income transfer. For 
example, promoting income-generation capacity of the poor through effective public spending policy can lead to 
poverty alleviation and reduction in inequality among the poor. This will help them to alter their methods of 
production which can effectively stimulate pro-environmental behaviours. In other areas where aggressive poverty 
reduction strategy has already been initiated, this study calls for greater support to consolidate the gains made. For 
example, according to Mensah and Benedict (2010) entrepreneurship training has reduced  poverty alleviation 
through the empowerment of the poorer people in the Eastern Free State of South Africa. This effectiveness of this 
policy is further demonstrated in Kolade (2018) who noted that entrepreneurship education (EE) intervention in 
Nigeria is transforming lives of poor communities. This is because such EE programme generates awareness and 
facilitates skills development, which has consequential effect on poverty reduction. The long-term effect is 
enhanced environmentally responsible behaviours of the beneficiaries.  Thus, the findings of this research support 
the established view that the path to environmental sustainability is not through slower economic growth but 
rather through slower poverty levels.  
 

4. Conclusion 
The objective of this study was to examine the relationship between poverty and environmental sustainability 

in sub-Saharan Africa. Previous findings have shown the environmental pollution is associated with higher 
economic growth. Thus, rich countries are believed to pollute the environment more than poor countries. The 
findings of this research however disagree with this notion. On the contrary the findings reveal that poverty is also 
associated with high levels of pollution and poor countries including countries in sub-Saharan Africa contributes to 
reduction in sustainability in its two folds as used in this study. While the finding of this research is important 
contribution to the subject, there are some limitations. Firstly, the measurement of environmental sustainability 
takes many forms. This study adopted just two definitions of sustainability and that limits the concept of 
sustainability in this research. Moreover, the measurement of education, urbanisation, financial development, 
institutional quality and trade openness has all been measured by many different indicants. These varying 
differences in measurement limits the extent to which the generalisability of the findings of this research. Future 
research should compare the case in Sub-Saharan African with emerging economies especially the BRICS to better 
appreciate the development gap in terms of how different factors affect environment especially poverty.  
 

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