The role of ICT use to the economic growth in Sub Saharan African region (SSA)

Abstract

Purpose This paper aims to examine the long run impact of information and communication technology (ICT) on economic growth in the Sub Saharan African (SSA) region. The direct impact of ICTs use was examined for a 27-year period (1990-2014), before the Millennium Development Goals (MDGs) era (1990-1999) and during the MDGs era (2000-2014). Second and third objectives examined the nonlinear effect of ICT in the economic growth and their threshold values, respectively. The main growth enhancing transmission channels of ICT use were also looked at. Design/methodology/approach The study uses panel method technique of system generalist method of moment. The data period was collected from the years 1990-2014 from 45 SSA countries. The three main proxies of ICT are fixed telephone lines, mobile phone users and internet users per 100 inhabitants. Findings For the direct impact analysis, mobile phone and internet were found to have triggered economic growth. However, for nonlinear effect analysis, mass penetration of ICT proxies seems to slow economic growth. The threshold analysis showed a penetration rate threshold of 4.5 per cent for both mobile phone and internet, and 5 per cent for fixed telephone line before economic growth gets triggered. Finally, the results indicated that, except for financial development, human capital, institutional quality and domestic investment were the main growth enhancing transmission channels of ICTs use in the economy. Practical implications From a policy perspective, results suggest SSA region to open more doors for investment in technology to ensure sustainable development. Such policy has to focus on investment into main transmission channels of ICT, namely, human capital, institutional quality and domestic investment. The policymakers have to ensure that penetration of mobile phone, fixed telephone and internet is met by improvement in human capital, institutional quality and domestic investment. Moreover, to fully use the potential of ICT, improving the financial sector is highly recommended. Originality/value In SSA, studies that address the impact of ICT on economic growth was almost non-existent, especially on its nonlinear effect and main transmission channels. While few studies have examined the direct impact of ICT, this study extended the scope by including the main growth enhancing transmission channels and nonlinear effect of ICT on SSA economies using recent data.