Does government education expenditure affect educational outcomes? New evidence from sub‐Saharan African countries

The human capital crisis, reflected in the weak global competitiveness of African education, has questioned the effectiveness of public spending in increasing educational outcomes on the continent. Thus, this article examines the impact of government education expenditure on educational outcomes in 31 sub‐Saharan African (SSA) countries from 2000 to 2019 based on a generalized method of moments (GMM). The study sheds light on the priorities of government education spending on the continent. Findings showed that the effect of government education spending on educational outcomes in SSA was driven by the measure of educational outcome used. Government spending in Africa had focused mainly on primary and secondary education to the detriment of tertiary education because it is convenient and generates political gains. Due to institutional rigidities that emanate from the governance structure, the inequitable allocation of government funding had made higher education in Africa less responsive to the changes in global knowledge and labour market demands. Therefore, the following policy agenda becomes imperative in SSA: (i) government education spending should equitably target all education levels to improve the aggregate human capital development indicators in the region; (ii) there is a need to enhance government institutions' capacity to increase their level of effectiveness and performance.