Pathways to poverty reduction in Somalia: an empirical study from the ARDL model

Poverty is a severe deprivation of essential needs and opportunities, affecting more than 70% of Somalia’s population due to prolonged conflict, political instability and recurrent climate shocks. Hence, this study investigates the impact of foreign aid, agricultural output, economic growth, and population growth on poverty in Somalia using annual time-series data from 1991 to 2022. The study employs the Autoregressive Distributed Lag (ARDL) model. The results indicate that food aid, humanitarian aid and economic growth statistically significantly reduce poverty. While agricultural output exhibits an insignificant impact. In contrast, population significantly increases poverty, emphasizing its role in worsening living conditions. The Granger causality tests reveal a unidirectional causality from poverty to food aid, a bidirectional relationship between agricultural output and poverty, and a two-way causality between population growth and poverty. Policymakers should enhance aid targeting, support agriculture, strengthen productive sectors and manage population growth effectively.