This study investigates the effects of currency depreciation, inflation, and efforts to offset depreciation through foreign exchange intervention in a sample of ten Sub-Saharan African countries considered to have had the worst performing currencies from 1990 to 2023. Using dynamic ordinary least squares and error correction estimation techniques we show that depreciation and inflation have significant negative effects on growth, which cannot be offset by central bank interventions. Gross fixed investment and trade openness help promote growth. Diagnostic tests indicate that the estimates are reliable. They are also robust to the exclusion of several explanatory variables. We find a bidirectional Granger causality between currency depreciation and growth, and strong predictive capacity of the estimated model. These findings provide support for the view that greater exchange rate flexibility does not help promote exports and growth in economies with pronounced structural weaknesses and inefficient macroeconomic policies.

The role of digital transformation in financial development is investigated in this study, with the purpose of determining whether it is favourable as stipulated in the expectations of financial intermediation theory. In addition, the study seeks to determine variations in the role across emerging regions of the world. The regions under investigation are Mediterranean North Africa, Latin America Caribbean, and Sub-Saharan Africa. The investigation covers the period 2000–2023, and employs econometric techniques of generalized method of moments and panel vector error correction model, which possess the capacity to minimize bias and produce reliable results. The estimation results reveal that the role of digital transformation is significantly positive, which therefore suggest that the role satisfies the theoretical expectations. The role is strong in Sub-Saharan Africa, stronger in Latin America Caribbean, and strongest in Middle East and North Africa. The positive role is complemented by monetary and fiscal policies, institutional quality, trade, and economic growth. The results are largely consistent and useful for policy making, hence the need to fine-tune relevant policies that can enhance the role of digital transformation and other control variables in driving financial development. Such policy measures may include relaxation of tariff on imported digital equipment and amendment of corporate tax policy to enable financial institutions invest more in digital technology. In addition appropriate measures need to be taken, to support the positive role of monetary and fiscal policies, institutional quality, trade, and economic growth in fostering financial development.

The study investigates how fiscal policy burden accruing from public debt affects economic growth in Sub-Saharan African countries over the period 1990-2022. It employs the generalized method of moments and auto-regressive distributed lag methodologies, which reveal that fiscal policy burden significantly impaired economic growth during the period. The results, therefore, support the view that the growth benefits of fiscal policy are constrained by large accumulations of public debt, validating the concern raised by multilateral institutions about the economic consequences of large and excessive debt accumulation. Furthermore, the results corroborate the Classical theory prediction of stagnation in long-run growth when existing public debt is too large for fiscal policy to accommodate. Therefore, interventions are required to contain the fiscal policy burden, in order to foster economic growth. Such policy interventions should aim at reducing the level of public debt and increasing the fiscal revenue from non-tax sources.

PurposeThe study investigates the role of macroeconomic policies in driving capital market development in emerging African countries where the markets are relatively active. It aims to determine the effects of these policies in pre-pandemic period vis-a-vis the post-pandemic period.Design/methodology/approachThe generalized method of moments (GMM) and auto-regressive distributed lag (ARDL) are employed in estimating the role within the period 2012Q1-2023Q3. The panel unit root test is used to ascertain the stationary status of variables, while maximum likelihood estimator is employed to determine structural stability of the model.FindingsThe empirical results reveal that fiscal and monetary policies played significant positive role in capital market development in both pre- and post-pandemic periods. On the other hand, trade policy and investment return had significant impact in pre-pandemic period which could not be sustained in post-pandemic period. It is only exchange rate policy that remained insignificant in both periods. The findings therefore suggest that capital market development slowed in the post-pandemic period due to reduced performance of macroeconomic policies. Furthermore, the unit root test reveals that all the variables satisfy empirical properties that ensure estimation results are consistent and non-spurious. The maximum likelihood estimator showed there was long-term structural break, hence short-term impacts were used in comparative analysis.Originality/valueMacroeconomic policies are fundamental to financial market development in developing countries. The role in resuscitating capital market in the post-pandemic period has yet to be adequately investigated in African countries. This study is carried out to fill this void.

It is argued that government institutions are saddled with the responsibility of planning, executing and managing infrastructure, hence the interaction between institutional quality and infrastructure development matters for economic growth, particularly in developing countries. However, this issue has yet to be given adequate attention by researchers in previous empirical studies. Therefore, this study attempts to build on the previous studies by investigating the direct and interactive effects of both factors on economic growth in sub-Saharan Africa. The model of generalized method of moments is employed in investigating this issue, within the period 1980–2021. The direct impact of institutional quality on growth is found to be positive but insignificant, while that of infrastructure development is positive and significant. In spite of the poor impact of institutional quality, the results show that it interacted with infrastructure development to produce significant positive effect. It suggests that the quality of public institutions may be low, but the infrastructure provided and maintained by such institutions contributed fairly well to economic growth. The results, therefore, validate the postulation that institutional quality and infrastructure development are interconnected in facilitating economic growth. This positive effect on growth is complemented by public debt, foreign investment and human capital. Therefore, appropriate policies are required to enhance the positive effects, in order to accelerate economic growth in sub-Saharan Africa.

Purpose The purpose of this study is to empirically investigate how external debt vulnerability has affected the economy of emerging countries over time, with particular reference to Sub-Saharan African countries. It also deals with the policy issues associated with the economic effects. Design/methodology/approach The techniques of dynamic ordinary least squares and fully modified ordinary least squares are used in this investigation, covering the period 1990–2022. A panel of 43 Sub-Saharan African countries is used in the study. Findings The estimation results reveal that external debt vulnerability impacted negatively on economic growth, thus validating the concerns raised about the debt problem in Sub-Saharan Africa. Furthermore, the results revealed that domestic credit and openness of economy played a passive role and were therefore unable to cushion the adverse effect of debt vulnerability. Capital stock, however, stands out as the only variable that played a significant positive role in facilitating economic growth. The results are considered to be highly reliable for short-term forecast of economic growth and formulation of relevant policies. Originality/value Over the years, economic analysts and stakeholders have expressed concern about the inadequate ratio of foreign reserves to external debt in developing countries. The effect of this external debt vulnerability on the economy of these countries has yet to be given sufficient attention by researchers. In view of this perceived void, this current study is carried out to determine the economic and policy consequences of the problem.

In the last four decades, sub-Saharan African countries have witnessed a substantial increase in trade openness and sovereign debt (foreign public debt and domestic public debt). The direct and interactive effects of these factors on economic growth are investigated in this study. The investigation covers the period 1980–2020 and employs the generalised method of moment methodology. The estimation results reveal that the direct effect of trade openness and domestic public debt is significantly favourable. The direct effect of foreign public debt is, however, found to be unfavourable. The results also reveal that the interactive effect of trade openness and domestic public debt is significantly favourable, whereas the interactive effect of trade openness and foreign public debt is fairly favourable. The estimation results thus imply that trade openness and sovereign debt are complementary drivers of economic growth in sub-Saharan African countries. In spite of the favourable role of trade openness and sovereign debt, economic growth has yet to achieve the desired level, which does not augur well for employment and welfare. The prospects of growth could be enhanced by strengthening the impact of trade openness and sovereign debt. However, policy makers should be aware of the direct negative impact of foreign public debt on economic growth, and the need to put measures in place to manage it. JEL Codes: F23, H63, F43, O55

This study investigates how digital payment affects industrial sector activity in selected Sub-Saharan African countries. The selected countries are Nigeria and South Africa, which are the largest economies in the sub-region with rapid adoption of digital payment. The investigation is motivated by the strategic importance of the payment system in facilitating industrial production and turnover. The methodologies of unrestricted error correction model (UECM) and dynamic ordinary least squares model (DOLS) are employed in the study. The UECM results show that the adoption of digital payment impacted significantly on industrial sector activity in both countries. The impact is, however, lower than the impact of physical capital, human capital, and personal income. The positive role of digital payment is, therefore, strongly complemented by the three variables. On the other hand, trade openness has an insignificant effect, which indicates a relatively weak role in facilitating industrial activity. The DOLS results are not significantly different from the UECM results, which indicates that the estimated impacts on industrial activity are consistent. The findings suggest the need to deepen the digital payment system, in order to sustain its role in industrial production and expansion. This could be done by strengthening the internet technology that is used in digital payment. Furthermore, the role of physical and human capital needs to be sustained by encouraging capital investment, while that of personal income may be sustained by reducing income tax. The low effect of trade openness could be improved by controlling the import of industrial goods.

Purpose - The purpose of this paper is to examine the role of global value chains (GVC) in industrial development of emerging economies, with particular focus on participating African countries. The findings of this study are expected to provide insight on the need for more developing countries to participate in GVC. Design/methodology/approach - This study is built upon the neoclassical and endogenous growth theories, which postulate that savings, physical capital and human capital are the fundamental drivers of development in productive sectors of the economy. The investigation, covering the period 1980-2021, is carried out by using the unrestricted error correction model and dynamic ordinary least squares model. Findings - The results of this study reveal that GVC stands as the dominant factor driving industrial development, compared to savings, physical capital and human capital. The findings, therefore, seem to contradict the postulation of conventional theories. The policy implications of the findings are not farfetched. First, industrial development in the participating African countries has benefited largely from GVC; hence, it is necessary to encourage more participation. Second, industrial development also benefited from the control variables (savings, physical capital and human capital), hence the need to sustain their complementary role. Thirdly, only three African countries are actively participating in GVC, which suggests that more countries need to join, to facilitate industrial development. Originality/value - Previous studies have not given adequate attention to African countries that participate in GVC, thus creating a void that needs to be filled. This study, therefore, produced results that are relevant to policy-making on industrial development in African countries

Purpose The purpose of this paper is to determine how macroeconomic performance work with institutional quality influences divestment of foreign direct investment (FDI) in Sub-Saharan Africa, in the short and long run. Design/methodology/approach This paper investigates divestment of FDI in Sub-Saharan Africa, within the period 1980–2020. The investigation is undertaken by first comparing the trend with what is obtained in other economic regions of the world. The factors behind the divestment are subsequently investigated, using the vector error-correction model. Findings In the comparative analysis, Sub-Saharan Africa and other regions are observed to have witnessed sustained divestment in recent years. The estimation results of the model reveal that macroeconomic performance and institutional quality are the predominant drivers behind the divestment. Research limitations/implications The findings, however, do not conform to the neoclassical theory that lays emphasis on investment return as the fundamental factor influencing investment. Long-run structural stability is also established; hence, the results may be considered suitable for predicting future divestment in the region. Practical implications In view of the empirical findings, macroeconomic performance and institutional quality need to be improved to ameliorate FDI divestment in Sub-Saharan Africa. Originality/value There is paucity of research works on divestment of FDI in Sub-Saharan Africa. Again, there is paucity of works on how macroeconomic and institutional conditions work together to influence divestment. This study provides some evidence to bridge the perceived gaps.

Purpose The purpose of this study is to determine the impact of disaggregate official development aid (ODA) on economic growth, and ascertain whether bilateral and multilateral aid played complementary role with private sector, government sector and external sector in driving growth of sub-Saharan African economies. Design/methodology/approach The role of bilateral and multilateral aid in economic growth of sub-Saharan Africa (SSA) is investigated in this study. The vector error correction model (VECM) and generalized method of moments (GMM) techniques are employed in estimating the short-run and long-run impacts, over the period 1980–2020. Findings The estimation results reveal that the effect of bilateral aid is positive, and more significant than multilateral aid. Their effect on economic growth is, however, less significant than the effects of domestic private investment and government spending. Nonetheless, aid complemented private and government sectors in facilitating growth. External trade is the only exogenous variable in estimation that is insignificant. The results further reveal that economic growth is unable to significantly respond to its own lag. Generally, the estimation results conform to theoretical expectations. Practical implications One major implication of the findings is that SSA countries have benefited substantially from development aid. It is, therefore, important for these countries to develop stronger institutions that would attract more inflows of development aid. Originality/value The study was motivated by the fact that less attention has been given to the role of disaggregate ODA in economic growth of African countries. Previous research works have tended to focus more on aggregate ODA. Furthermore, adequate research has yet to be done on how ODA complements the private sector, government sector and external sector in facilitating growth of African countries. These issues are investigated in the study.

In this study, we investigate the role of capital returns and currency value in determining foreign portfolio investments, with a focus on Sub-Saharan African economies. The empirical results from the auto-regressive distributed lag and vector error correction models reveal significant positive impact of capital returns and significant negative impact of currency value, indicating that the variables play contrasting roles in driving foreign portfolio investments. Financial openness also exerts a positive impact on the investments, but not so significant to qualify as a key driver of foreign portfolio investments. Inflation, however, tends to impair the investments. Adjustment speed of the investments is also found to be low.

This study investigates external debt accumulation in four dominant African countries. It covers the period 2000Q1-2018Q4, and employs the generalised method of moments (GMM), auto-regressive distributed lag (ARDL) and vector error correction mechanism (VECM) techniques in estimating the relative impact of fiscal imbalance and financial development on external debt. Estimation results from the three methodologies, which are largely similar, reveal that both factors exerted significant positive impact. The impact of fiscal imbalance is, however, greater than that of financial development. In view of these findings, some policy measures are proffered to stem the rising trend of external debt in African countries. The measures include reduction in fiscal imbalance through rational budgeting, encouraging financial sector to provide domestic funds rather than facilitating external borrowing, diversifying export revenue base in order to minimise external borrowing, and lowering domestic lending rate to also discourage external borrowing.

The economic growth of emerging Sub-Saharan African countries is investigated in this study, with the aim of determining the relative impacts of foreign development assistance (FDA) and macroeconomic policies. The GMM and VECM models are respectively employed in estimating the long-run and short-run impacts. The short-run results indicate that FDA strongly complemented fiscal policy only, in facilitating economic growth within the period 1980–2019. The long-run results, on the other hand, show that FDA complemented both monetary and fiscal policies in driving growth. The results further reveal that exchange rate played a non-complementary role, and economic growth did not respond significantly to its own lag. Generally, the estimated impacts conform to theoretical expectations of the models. The results are also considered reliable for policy making. The possible policy measures emanating from the estimation results include sustenance of FDA inflow, reinforcement of monetary policy framework, maintenance of fiscal policy framework, enhancing efficiency of the exchange rate system, and allowing market forces to drive the economy.

The study in this paper investigates how information technology (IT), directly and indirectly, affects capital flows to Sub-Saharan African countries. It also examines the asymmetric effects of IT on capital flows. The general method of moments methodology is employed to estimate a decomposed model of capital flows, which produced results that clearly show the correlative effect of IT is relatively more significant, compared to the effects of other explanatory variables. Furthermore, the results reveal appreciable asymmetric effects of IT on capital flows and the components, with the effects found to be uneven and dissimilar. It is also revealed that capital flows and the components reinforced themselves over time. The salutary effects of IT on capital flows, therefore, need to be sustained. In order to achieve this goal, economic policies should be fashioned to drive the deepening of IT, stable policy environment, synergy among determinants of capital flows, usage of advanced IT in financial markets, awareness of investment opportunities in a real sector, and application of IT in weak sectors. Such policies are most likely to sustain and improve upon the current trend of capital flows to Sub-Saharan Africa.

This study investigates development of capital markets in West African countries, with the main aim of determining the role of fiscal budget deficit. Investigation is done by building a panel model, showing the relationship between capital market and fiscal budget deficit. Estimation results reveal that the deficit significantly influenced the markets by exerting positive impact on market capitalisation and stocks traded, with the impact on stocks traded superseding that of market capitalisation. The impact of deficit is complemented by return on investment, exchange rate, financial openness, and money supply. The major implication of these findings is the high vulnerability of these markets to switch in fiscal policy from deficit budgeting to surplus budgeting, which may lead to decline in market activities. In view of this, attention needs to be focused on enhancing the role of financial openness and return on investment, which are also strong drivers of capital market development.

This study investigates the impact of external debt and export on economic growth of Sub-Saharan African countries, using ARDL panel model and appropriate estimation techniques. The estimation results reveal insignificant positive impact of both external debt and export on economic growth, in the short run. The impact turns negative in the long run, with export exerting a more significant adverse impact than external debt. However, there is long-run convergence among the variables. Furthermore, the estimated model exhibits significant structural stability, hence the estimation results are reliable for purpose of policy making. In the light of these findings, some policy options may be considered. These policy options include the curtailing of external borrowing until current debt stocks are repaid, ensuring external loans are tied to specific projects to avoid inefficient allocation of the funds, exploring domestic capital market for funds as alternative to external borrowing, embarking on more export diversification in order to mitigate poor performance of primary commodity exports, and establishment of commodity exchanges that would attract more foreign buyers of export products. These policy options can help to stem growing external debt and declining export, and subsequently ameliorate the unfavorable effect on economic growth in the countries.

Financial development is influenced by the dynamics of multiple factors which have remained insufficiently explored up to date. In view of this, an attempt is made in this paper to investigate the impact of internet adoption on financial development in sub-Saharan Africa, using Nigeria and Kenya as case studies. The dynamic ordinary least squares and vector error correction mechanism methods were employed in the study which revealed that the internet, complemented by financial openness, exerted a significant positive impact on financial development in the period 2000-16. The null hypothesis which states that the internet does not encourage financial development is therefore rejected. It follows that the level of financial development in both countries, and indeed most countries in sub-Saharan Africa, could be enhanced by adopting appropriate policies that encourage more inclusive use of the internet. The policy recommendations of this study therefore include (i) relaxing the stringent requirements for licensing internet operators in order to make more services available for financial transactions, (ii) integrating internet technology into the national infrastructure framework in order to sustain its application, (iii) fostering local skills and expertise that will be maintaining internet infrastructure and (iv) providing a legal framework that protects personal information and ensures responsible usage of internet.

This study examines the interactive effect of hot money inflows and the monetary system on inclusive growth in Nigeria. The structural vector autoregressive (SVAR) technique is employed to examine this interactive effect. Findings from the study reveal that inclusive growth is positively and significantly impacted by hot money inflows passing through the monetary system. The study therefore, recommends that policies aimed at attracting more inflows of short term capital such as interest rate policies, exchange rate deregulation policies, lower inflation targeting policies, targeting higher GDP growth rates, and the development of stock market structure are to be uncompromisingly pursued.