Illicit Financial Flows and Polio Vaccination Coverage in Sub-Saharan Africa: A Longitudinal Panel Analysis

Abstract

Illicit financial flows (IFFs) are a major drain on Africa's economic potential, with losses hitting around $88.6 billion each year. These unrecorded and illegal capital outflows seriously undermine public sector investments, especially in healthcare. Recent evidence suggests that IFFs might also be a roadblock for immunization programs, like polio vaccination, in Sub-Saharan Africa. This study uses a longitudinal panel dataset that includes 200 observations from 10 Sub-Saharan African countries spanning from 2000 to 2020. By applying a Fixed Effects Regression model, the research delves into the causal link between polio vaccination coverage and IFFs. The dataset's stationarity was confirmed through the Levin-Lin-Chu (LLC) unit root test and the Augmented Dickey-Fuller (ADF) test for added reliability. Key independent variables in the study include polio vaccination coverage, government health expenditure, the percentage of the urban population, and physician density. The model selection was informed by the Hausman specification test, which preferred Fixed Effects over Random Effects, ensuring the estimators accurately captured country-level differences. The regression analysis shows that a 1$8.55 million drop in IFFs. Although this relationship isn't statistically significant (p-value = 0.742), it suggests a negative correlation between enhanced public health initiatives and the scale of IFFs. Furthermore, the findings indicate that a higher density of physicians and urban population coverage positively impacts public sector accountability. These results resonate with existing literature that points out how a functional health infrastructure can both deter and serve as a diagnostic marker for illicit capital outflows. This study adds to the limited empirical research connecting IFFs with sectoral development outcomes, particularly in public health. The findings highlight an urgent call for integrated policy responses that tackle illicit financial flows (IFFs) by investing in the health sector and ensuring fiscal transparency. It's crucial for governments to implement strong anti-money laundering measures, enhance tax collection processes, and encourage regional collaboration to combat these illegal outflows. By improving public health outcomes-like increasing polio immunization rates-we can not only boost human capital but also minimize financial leakages, ultimately paving the way for sustainable development in Sub-Saharan Africa. JEL Classifications: E6, N17, N27, C23, C3