Are Developing Countries Using Climate Funds for Poverty Alleviation? Evidence from Sub-Saharan Africa

This study seeks to analyse whether countries in Sub-Saharan Africa (SSA) are using climate finance for poverty alleviation. It investigates SSA’s readiness to apply climate finance to achieve poverty alleviation goals. Data for 44 SSA countries over the period 2006–2017 were employed and analysed, using System Generalized Method of Moment. Two poverty alleviation variables are employed; GDP per capita and social inequality. Readiness was segregated into social, economic and governance readiness. The findings show that climate finance helps poverty alleviation. However, climate finance indicated a worsening effect on social inequality when countries strengthen regulatory quality and control of corruption. The study finds evidence to support that economic readiness is relatively important in eradicating poverty compared with social and governance readiness. It is recommended that climate funds should be disbursed through channels (social and governance readiness), which would yield more poverty-reduction effects, under greater supervision.