Public Debt and Water Supply and Sanitation Infrastructure in Sub-Saharan Africa: A Panel ARDL Study with Cross-Sector Infrastructure Insights

Abstract

Water supply and sanitation infrastructure remains a critical development challenge in Sub-Saharan Africa (SSA), amid rising public debt and persistent fiscal constraints. This study examines the short-run and long-run relationships between public debt and water supply and sanitation infrastructure in SSA over the period 2005–2023, accounting for institutional quality, economic output and population growth. The study employs a Panel Autoregressive Distributed Lag (PARDL) framework, estimated using the Mean Group (MG) and Pooled Mean Group (PMG) estimators, to capture heterogeneous short-run dynamics and assess long-run relationships across countries. We measure institutional quality using an Institutional Quality Composite Index (IQI). The PMG estimates reveal a negative and statistically significant error-correction coefficient (−0.0461), indicating an annual adjustment of approximately 4.6% towards long-run equilibrium. Public debt has a positive, statistically significant long-run association with water supply and sanitation infrastructure, while its short-run effect is statistically insignificant. Population growth is positive and significantly associated with infrastructure development in the long run, whereas institutional quality exhibits a positive but statistically insignificant coefficient. The Hausman specification test fails to reject the long-run homogeneity restrictions underlying the PMG estimator. These findings suggest that the relationship between public debt and water supply and sanitation infrastructure is more pronounced over the long run, highlighting the potential importance of sustained infrastructure financing. However, the results do not establish that public borrowing directly causes infrastructure improvements. The study underscores the need to align debt management with infrastructure investment priorities through sustainable borrowing, rigorous project appraisal, transparent procurement, and adequate maintenance financing to support long-term improvements in water supply and sanitation services across SSA.