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Energy, being one of the significant drivers of growth, has gained much focus in the last four decades. A connection between energy and growth exists in the economy: on the one hand, energy is a vital factor of production while growth improves living standards, which increases energy consumption on the other hand. Previous studies on the energy‐growth nexus paid less attention to sectorial differentials in the consumption of energy and growth. Also, the literature could not relate that to sustainable development. Thus, this study explores the sectorial differentials in energy consumption and how they affect the energy‐growth nexus within the context of sustainable development. The research employed secondary data for 46 sub‐Saharan Africa (SSA) countries for the period 2007 to 2020. Using the General Methods of Moments estimation technique, we found that all the measures of energy consumption positively affect economic growth. Also, CO2 intensity is positively related to growth in the economy while CO2 emissions from solid fuels negatively affect economic growth. Again, Foreign Direct Investment (FDI) is positively impacting economic growth and Gross Domestic Product (SSA) per energy use. Policy implications are discussed in the paper. [ABSTRACT FROM AUTHOR]

Following a global vector autoregressive (GVAR) approach, this paper presents new evidence on the validity of international transmission of economic shocks from key trading partners as sources of macroeconomic fluctuations in sub‐Saharan African (SSA) countries. The GVAR model was estimated for 21 SSA countries grouped into three country classes—oil‐rich, other‐resources‐rich and non‐resource‐based economies, to account for output shocks from crucial trading partner countries—United States, United Kingdom, China and Europe. Furthermore, the generalized forecast error variance decompositions results reveal that output shocks from key trading partners constitute significant contributors to changes in key macroeconomic indicators—real gross domestic product, inflation, exchange rate and short‐term interest rate, in the SSA region. The generalized impulse response functions indicate that these economic shocks have more significant impacts on oil‐rich countries than on other country groups. A key recommendation from this study is that SSA countries, especially the resource‐rich economies, need to strengthen and diversify their economic structure, including the trade basket. [ABSTRACT FROM AUTHOR]

Concerns about the human effects of climate change have contributed to forecasts of how populations in drought‐prone and flood‐prone areas would respond to these events. Empirical studies have predicted that human migration has been among the critical resilient strategy in responding to the impact of climate change. To obtain a more comprehensive understanding of the climate–migration relationship, the impacts of climate change on international migration flows from sub‐Saharan Africa nations to South Africa are investigated empirically in this paper. The study employed static and dynamic models and panel data from 35 countries in sub‐Saharan Africa, spanning 1990 to 2017. The findings are as follows: (1) The analysis shows that historical temperature has a positive and statistically significant effect on outmigration in agriculture‐dependent nations. (2) The analysis shows that agricultural value added as a share in gross domestic product has a negative and statistically significant effect on outmigration in agriculture‐dependent nations. (3) The results also show that geographic location and development level of a country, in addition to dependency on agriculture, are key factors in the climate change–international migration nexus. Policy implications are discussed. [ABSTRACT FROM AUTHOR]

An introduction is presented in which the authors discuss various articles within the issue on topics including the comparability of gross domestic product (GDP) estimates in Sub-Saharan Africa, the rise in asset ownership in Africa and the body mass index of adults in Southern Africa.

This study investigates the effects of aid grants on inclusive growth in 37 Sub‐Saharan African countries for the period 1984–2018. Grant aid is decomposed into aid grants and technical cooperation grants. Two inclusive growth indicators are used, namely gross domestic product (GDP) per capita growth and unemployment rate. The dynamic panel autoregressive distributed lag (ARDL) approach, which is employed comprises three different estimators; the pooled mean group (PMG); mean group (MG) and dynamic fixed effect (DFE). The Hausman diagnostics were used to assess the efficiency and consistency of the estimators. Based on the PMG estimator, our findings show that aid grants and technical cooperation grants exert a positive influence on GDP per capita growth in the long run. However, while the observed influence of aid grants is found to be significant, technical cooperation grants display insignificant effects. In the short run, however, the PMG estimates show that aid grants and technical cooperation grants have negative and insignificant effects on GDP per capita growth. On the other hand, results based on the DFE estimators reveal that neither of the aid grants has influenced the unemployment rate positively in the short run. However, whereas aid grants contribute significantly to the reduction of the unemployment rate in the long run, technical cooperation grants do not. This study complements the attendant literature by assessing how aid grants versus technical cooperation grants affect inclusive growth. The findings are relevant to international policy coordination for the attainment of sustainable development goals. [ABSTRACT FROM AUTHOR]

The conventional wisdom is that growth is a precondition for poverty reduction. Paying particular attention to the level of growth, poverty and institutions in sub-Saharan Africa (SSA), this paper investigates the effect of GDP per capita growth and sectoral growth on poverty and explores whether the growth-poverty link can be strengthened by institutions. Using the panel dataset of 41 SSA countries over the period 1981-2010 and dynamic two-step system generalized method of moment (GMM) estimator; it is found that GDP per capita growth is an important instrument for poverty reduction. Also, the growth of agriculture and the service sectors have direct poverty-reducing effects. The paper further reveals that good and accountable government, bureaucratic quality and sound policies and regulations are important ingredients in sustaining the growth-poverty link in SSA. [ABSTRACT FROM AUTHOR]

Exercising fiscal prudence in periods of deteriorating fiscal balance requires sound policies which promote debt sustainability. This paper estimates a dynamic cross-country model and investigates the impact of domestic debt on economic growth and private sector credit in a panel of 21 sub-Saharan African (SSA) countries over the period 1985 to 2010. System-GMM results reveal a non-linear relationship between domestic debt and economic growth, characterized by a maximum turning point of 11.4 per cent of GDP. In addition, domestic debt is found to crowd out private sector credit by an elasticity of negative 0.3 per cent of GDP, deterring capital accumulation and private sector growth. These findings underscore the need for effective debt management strategies which incorporate debt ceiling to limit domestic indebtedness, as well as the design of financial policies which enhance credit availability, promote fiscal discipline and deepen domestic debt markets on the continent. [ABSTRACT FROM AUTHOR]

The unreliability of African income estimates was highlighted when Ghana announced that GDP estimates were revised upwards by 60.3 percent in November 2010. Similar revisions are to be expected in other countries. Many statistical offices are currently using outdated base years. It is argued that with the current uneven application of methods and poor availability of data, any ranking of countries according to GDP levels is misleading. The paper emphasizes the challenges for 'data users' in light of these revisions. GDP data are disseminated through international organizations, but without any detailed data descriptions. It is argued that many statistical offices in Sub- Saharan Africa struggled to recover from the structural adjustment period, and the offices have not had the capacity to handle other challenges such as providing data to monitor the Millennium Development Goals. Currently, neither data users nor data producers are getting the assistance they need. [ABSTRACT FROM AUTHOR]

Foreign direct investment is believed to have a positive impact on the economies of the developing countries but its determinants are not yet fully established. This paper empirically investigates the relationship between official development assistances and foreign direct investment flows using panel data from 11 sub-Saharan African countries for the period 1990–2003. The results show that bilateral official development assistance has a significant and positive influence on foreign direct investment flows. The results also show that trade openness, growth rate in the labor force, and exchange rates have a positive and significant effect on foreign direct investment flows. But multilateral development assistance, the growth rate in GDP per capita, the country's composite risk level, and the index for political freedom and civil liberties do not have a statistically significant effect on foreign direct investment flows. The policy implication of the positive and significant influence of the bilateral official development assistance on foreign direct investment is that the recipient countries need to formulate policies that improve their economic relationships with the donor countries in order to attract greater foreign direct investment flows from the multilateral corporations located in these countries. [ABSTRACT FROM AUTHOR]

This paper uses an instrumental variables approach to estimate the relationship between trade openness and economic growth in Sub-Saharan Africa. Instrumental variables estimates show that economic growth has a significant negative contemporaneous effect on trade openness, while trade openness has a significant positive effect on economic growth. A 1 percentage point increase in the ratio of trade over GDP is associated with a short-run increase in growth of approximately 0.5% in a given year; the cumulative long-run effect on the level of GDP per capita is larger, reaching about 2%. [ABSTRACT FROM AUTHOR]

Based on the Environmental Kuznets Curve (EKC) hypothesis, this paper uses panel cointegration techniques to investigate the short- and long-run relationship between CO2 emissions, gross domestic product (GDP), renewable energy consumption and international trade for a panel of 24 sub-Saharan Africa countries over the period 1980-2010. Short-run Granger causality results reveal that there is a bidirectional causality between emissions and economic growth; bidirectional causality between emissions and real exports; unidirectional causality from real imports to emissions; and unidirectional causality runs from trade (exports or imports) to renewable energy consumption. There is an indirect short-run causality running from emissions to renewable energy and an indirect short-run causality from GDP to renewable energy. In the long-run, the error correction term is statistically significant for emissions, renewable energy consumption and trade. The long-run estimates suggest that the inverted U-shaped EKC hypothesis is not supported for these countries; exports have a positive impact on CO2 emissions, whereas imports have a negative impact on CO2 emissions. As a policy recommendation, sub-Saharan Africa countries should expand their trade exchanges particularly with developed countries and try to maximize their benefit from technology transfer occurring when importing capital goods as this may increase their renewable energy consumption and reduce CO2 emissions. [ABSTRACT FROM AUTHOR]

This paper re-examines the long-run finance-growth nexus in sub-Saharan Africa (SSA) using data from 17 countries over the period 1975-2005. We apply error correction-based panel cointegration tests that take into account cross-sectional dependence among countries. Our results - unlike a previous study using the same data - indicate the existence of a long-run relationship between financial and economic development in SSA countries. Moreover, our results clearly show that the long-run causality runs from financial to economic development, although a muted support for the reverse causal impact is observed when financial development is measured by the percentage of liquid liabilities in GDP. The estimated long-run parameters measuring the finance-growth link are positive and statistically significant. Therefore, our results strongly support policies aimed at developing the financial sector in SSA in order to promote long-run economic development. [ABSTRACT FROM AUTHOR]

In this paper, we argue that the answer to the question of whether the impact of corruption on development is homogenous, is no. Our optimism rest on how development may be conceptualised. When equated to a narrow measure in economic-wise which fundamentally ignores critical issues, then there is a possibility the outlook could be positive. But when conceptualised using a broad-based approach such as sustainable development, then the outlook could be negative. We assess a panel of 22 economies in Sub-Sahara Africa with the most recent dataset (1996-2013) from the World Bank and other reputable agencies. Our finding is quite robust. It holds in pooled OLS, Fixed effects and GMM within IV settings; and it also holds for different measures of institutions and different measures of development using growth per capita GDP and genuine wealth per capita, respectively. Taking stock of major policy blue-prints of selected countries in the region on the fight against corruption, we are able to point out that institutions play important role in insulating citizens against the devastation caused by corruption. Overall, through this comparison, we are able to signal that both incidental and systematic corruption poses a long-term threat to sustainable development. [ABSTRACT FROM AUTHOR]

Sub-Saharan Africa will be undergoing substantial demographic changes over the next 15 years with the rising working-age share of its population. The opportunity of African countries to convert these changes into demographic dividends for growth and poverty reduction will depend on several factors. The outlook will likely be good if African countries can continue the gains already made under better institutions and policies, particularly those affecting the productivity of labor, such as educational outcomes. If African countries can continue to build on the hard-won development gains, the demographic dividend could account for 11-15% of gross domestic product ( GDP) volume growth by 2030, while accounting for 40-60 million fewer poor in 2030. The gains can become more substantial with better educational outcomes that allow African countries to catch up to other developing countries. If the skill share of Africa's labor supply doubles because of improvements in educational attainment, from 25 to about 50% between 2011 and 2030, then the demographic dividends can expand the regional economy additionally by 22% by 2030 relative to the base case and reduce poverty by an additional 51 million people. [ABSTRACT FROM AUTHOR]

Sub‐Saharan African (SSA) countries recorded impressive economic growth in the last two decades. The question however is, how inclusive and sustainable is this growth? With this in mind, this study examined the sustainability and inclusiveness of economic growth in a panel of 44 SSA countries, over a period of 38 years, while taking into account the diversity of the continent's institutional quality, income growth and resource endowment. The study adopts the innovative nonlinear fiscal reaction function and the dynamic panel threshold model to account for potential asymmetric phenomena in public debt series. The study also adopts Driscoll and Kraay's estimator to account for cross‐section dependency and cross‐country heterogeneity. The result shows that the recent increase in the economic growth rate in SSA is not sustainable and inclusive. This is tenable since if economic growth is debt induced, more money will be spent on servicing public debt, thus depriving governments of funds for critical intervention programs. Lastly, the study found a public debt/gross domestic product ratio threshold of 34% beyond which public debt impairs growth inclusiveness across SSA. The research and policy implications are discussed. [ABSTRACT FROM AUTHOR]

The main objective of this study is to analyze the effect of political instability on youths unemployment in sub‐Saharan Africa. Particular interest is devoted to the channels through which political instability affects youths unemployment. The empirical analysis covers a sample of 23 countries for the period 2000–2016. To better characterize the labor market framework in sub‐Saharan Africa, the empirical analysis incorporates the impact of political instability on youths underemployment and labor underutilization. Using panel data techniques, the results show that political instability increases youths unemployment, underemployment, and labor underutilization in sub‐Saharan Africa. The main transmission channels identified are foreign direct investment, domestic investment, gross domestic product, government spending, human capital, and labor market flexibility. The findings confirm the investigated hypothesis. As the main policy implication, policymakers in sub‐Saharan Africa should resolve political instability as a priority toward addressing youths unemployment. [ABSTRACT FROM AUTHOR]

We use a financial development indicator to revisit the relationship of financial development and financial structure with economic growth. The financial development indicator simultaneously takes into account accessibility, depth and financial efficiency for the period 1980–2017 for Sub‐Saharan Africa countries. The continuously updated fully modified (Cup‐FM) and continuously updated bias corrected (Cup‐BC) estimators, as well as the panel smooth transition regression (PSTR), were used to examine the linear and nonlinear effects of financial development and financial structure on economic growth. For low‐income countries, the Cup‐FM and the Cup‐BC estimators indicate that the financial system relies on financial markets. The findings obtains through the PSTR model confirm this conclusion when the financial market represents more than 34% of financial institutions. For middle‐income countries, the Cup‐FM and Cup‐BC estimators reveal that the financial system relies on banking industry. However, this result is not supported by the PSTR model. In fact, it indicates that the financial system in these countries is based on financial markets when government expenditure as percentage of gross domestic product is less than 2.62%. Above this threshold, the financial system depends on the development of financial services, legal and regulatory framework. [ABSTRACT FROM AUTHOR]

This study analyses population, urban agglomeration (UAG), and economic growths dynamics in Sub‐Saharan Africa (SSA) using the World Bank panel data ranging from 1970 to 2019. The study utilized a panel fixed effect (FE) model after verifying the suitability of the model using a Hausman test. The estimation result from the panel FE model reveals remarkable findings which conform to some extent, the theoretical a priori expectations. The result shows that growth in rural as well as urban population growth and total trade (TRD) have negative relationships with UAG. On the other hand, gross domestic product (GDP, a better proxy for income) and foreign direct investment (FDI) have a positive association with UAG in the economies of SSA thereby validating the existence of the Williamson–Kuznets hypothesis. Based on the findings, it is advised amongst other policy recommendations that the governments of the Sub‐Saharan African countries should pursue inward‐looking policies targeted toward encouraging the local processing of agricultural raw materials—possibly to finished products to boost foreign exchange earnings through trade in other to engender sustainability in both the economic growth and UAG in the region. [ABSTRACT FROM AUTHOR]

This study analyses the effect of natural gas consumption on economic performance in selected sub‐Saharan African countries between 1998 and 2017. The lag augmented vector autoregressive approach of Toda and Yamamoto to heterogeneous mixed panels illustrated in Emirmahmutoglu and Kose and the dynamic heterogeneous techniques are employed in data analysis. The study finds a significant long‐run relationship between the real gross domestic product and natural gas consumption. The study also reveals that natural gas consumption has a significant positive influence on economic performance in the short run. Furthermore, the results support the conservative hypothesis for the selected sub‐Saharan African countries. Therefore, it is reasonable for the selected sub‐Saharan African countries to formulate and promote cost‐effective and eco‐friendly energy and environmental policies that will enhance the use of natural gas without reducing economic performance in the long run. [ABSTRACT FROM AUTHOR]

The article discusses the challenges posed by the demographic change in sub-Saharan Africa. It talks about the economic growth and the trending annual real gross domestic product (GDP). Topics include falling fertility, declining dependency ratios, and population pressure on human capital formation.

We analyse the relationship between public debt, economic growth and inflation in a group of 52 African economies between 1950 and 2012. The results indicate that the limits of public debt are negatively related to economic growth and exhibit, from a given level of debt, an inverted U behaviour regarding the relationship between economic growth and public debt. Briefly, the high levels of public debt are coincident with reduced rates of economic growth and rising levels of inflation. Our results for three specific geographical areas resemble those of the overall analysis, despite some differences. In North African countries, the growth rates of the gross domestic product ( GDP) and inflation also show an inverted U behaviour as the ratio of public debt/ GDP increases. The highest rate of economic growth is recorded when the ratio of public debt/ GDP is below 30% of GDP and corresponds to an average inflation rate of 5.33%. An identical behaviour of the GDP growth rates and inflation also appears in Sub-Saharan countries until the third interval (60-90%). However, the highest growth rate of the GDP and GDP per capita is registered when the public debt/ GDP ratio is in the second interval (30-60%). For the countries of the Southern Africa Development Community, the highest average rate of economic growth (6.8%) is similar to North African countries, when the ratio public debt/ GDP is below 30% of GDP, with an average inflation rate of 11%. A number of robustness analyses were performed and the great majority of them confirm the general analysis. [ABSTRACT FROM AUTHOR]

Electricity consumption in Sub- Saharan Africa has surged over the past two decades, whereas economic fundamentals like growth in gross domestic product ( GDP) might have contributed to this trend, the impact of changing climatic conditions cannot be underestimated. This study therefore investigates the dynamics among electricity consumption, temperature variability (a proxy for climate change) and economic growth, while controlling for urbanization within a structural vector error correction model for 11 countries in Sub- Saharan Africa. Findings from the study indicate that a positive shock in temperature variability has a positive permanent effect on electricity consumption for all the countries except Togo, South Africa and Zimbabwe. In the case of Togo we find only transitory effects of positive shocks in temperature variability on electricity consumption. However, these effects are minimal, given the low penetration rate for air conditioners and heating devices in these countries. Moreover the findings further indicate that the effects of a positive shock in temperature variability on real GDP is consistent in terms of the direction of the effects, which is negative, but only vary across the sampled countries in relation to the period(s) the effects of the shocks completely diminished. [ABSTRACT FROM AUTHOR]

There has been a recent surge in research on long-term African development. For this research agenda to be fruitful and its theories tested, it is crucial to have consistent estimates of economic change. However, there is a lack of reliable time series data for the colonial period in Sub-Saharan Africa. This article contributes new time series data for the Gold Coast and Ghana between 1890 and 2010 and in particular a new GDP time series for Ghana for the years 1891–1957. The series implies a sustained period of economic expansion from the late nineteenth century. This suggests a revision of some prevalent truths about the history of economic growth in Sub-Saharan Africa, and points the way forward for expanding the database to cover the colonial period for other African economies. [ABSTRACT FROM AUTHOR]

We comprehensively analyse the long-run effect of foreign aid (ODA) on key macroeconomic variables in 36 sub-Saharan African countries from the mid-1960s to 2007, using a well-specified cointegrated VAR model as statistical benchmark. Results provide broad support for a positive long-run impact of ODA flows on the macroeconomy. In contrast, we find little evidence supporting the thesis that aid has been harmful. From a methodological point of view we highlight the importance of transparency in reporting results, especially when the hypothesis being tested differs from theoretical expectations, and we identify reasons for econometrically inadequate results in the literature. [ABSTRACT FROM AUTHOR]

Sub-Saharan African countries have traditionally lagged the rest of the developing world in terms of overall trade relative to gross domestic product. But, there is growing interest among these countries to initiate trade policies and improve quality of institutions as a way to promote trade and boost foreign direct investment. This article extends the gravity model of trade to include proxies for trade reform policy and institutional quality among the 15 countries of the Economic Community of West African States (ECOWAS) for data spanning 1984-2006. Alternative methods of estimation based on ordinary least squares, Heckman two-step procedure, and Poisson pseudo-maximum likelihood produce predictions that are consistent with the standard gravity model. They further highlight the evidence of restrictive trade policies and weak institutions that contribute to the failure of ECOWAS countries to boost bilateral trade. ( JEL F13, F15, O19, O55) [ABSTRACT FROM AUTHOR]

Despite recent improvements in economic performance, undernutrition rates in sub-Saharan Africa appear to have improved much less and rather inconsistently across the continent. We examine to what extent there is an empirical linkage between income growth and reductions of child undernutrition in Africa. We pool all DHS surveys for African countries, control for other correlates of undernutrition, and add country-level GDP per capita. We find that a 10 percent increase in GDP per capita is associated with 1.5 to 1.7 percent lower odds of being stunted, 2.8 to 3.0 percent lower odds of being underweight, and 3.5 to 4.0 percent lower odds of being wasted. Other drivers of undernutrition, including relative socioeconomic status and mother's education and her nutritional status, are quantitatively more important. This suggests that further increases in GDP will have only a modest impact on undernutrition and broader interventions are required to accelerate progress. [ABSTRACT FROM AUTHOR]

This article examines the effects of political agreements on regional financial integration ( RFI) on financial market development and access to and cost of finance in Sub- Saharan Africa ( SSA). Our results suggest that RFI positively affects financial development - measured very broadly as ratio of liquid liabilities to gross domestic product ( GDP) - when combined with a sufficient level of institutional quality. If institutional quality is below a threshold level, RFI apparently has negative effects on financial development. However, we cannot find any significant effects of RFI on the ratio of private credit to GDP or on the efficiency of the banking sector. Regarding the effects of RFI on access to and costs of finance of enterprises in SSA, our results are mixed. We can find no significant effect of RFI on access to finance for all firms in the aggregate, but the results indicate that RFI actually impedes small firms' access to finance. Furthermore, there is a significant positive influence of foreign bank involvement on the severity of the credit constraint for small enterprises, while we do not find such an influence for large enterprises. These results provide some support for the foreign bank barrier hypothesis in the context of RFI. [ABSTRACT FROM AUTHOR]

Urbanization has traditionally been understood as a byproduct of economic development, but this explanatory framework fails to account for the phenomenon of 'urbanization without growth' observed in sub-Saharan Africa throughout the 1980s and 1990s. In light of this apparent anomaly, I argue that urbanization is better understood as a global historical process driven by population dynamics associated with technological and institutional innovations that have substantially improved disease control and food security in urban settlements across the globe. These innovations first emerged in Europe in the eighteenth and nineteenth centuries and were subsequently diffused through colonialism, trade, and international development assistance. A range of qualitative and quantitative evidence is presented to demonstrate that this historically grounded theory of urbanization offers a more convincing explanation for the stylized facts of Africa's urban transition-and hence the process of world urbanization more broadly-than the traditional economic account. [ABSTRACT FROM AUTHOR]

We analyze the long-term impacts of large-scale expansion of biofuels on land-use change, food supply and prices, and the overall economy in various countries or regions using a multi-country, multi-sector global computable general equilibrium model augmented with an explicit land-use module and detailed biofuel sectors. We find that an expansion of biofuel production to meet the existing or even higher targets in various countries would slightly reduce GDP at the global level but with mixed effects across countries or regions. Significant land re-allocation would take place with notable decreases in forest and pasture lands in a few countries. The expansion of biofuels would cause a moderate decrease in world food supply and more significant decreases in developing countries like India and Sub-Saharan Africa. Feedstock commodities (sugar, corn and oil seeds) would experience significant increases in their prices in 2020, but other price changes are small. [ABSTRACT FROM AUTHOR]

Since 2002, the Sub-Saharan African countries (except South Africa which already has a free-trade agreement with the EU ) have embarked on free-trade agreement negotiations with the European Union. These arrangements will replace the Cotonou scheme, which requires these countries to eliminate their tariffs on ‘substantially’ all their European imports. Based on a general equilibrium analysis, this study estimates the potential effects of these agreements by considering different levels of reciprocity in the commitments of the Sub-Saharan African countries. It shows that the ‘standard’ EU proposal, whereby Sub-Saharan African countries would cut tariffs on 80 per cent of their European imports, would not be enough to balance the outcome of the Economic Partnership Agreements. As a result of the asymmetries between European and African protections and supply-side capacities, African countries could experience a balance of trade deficit of USD 1.8 billion associated with a 0.1 per cent decrease in GDP. This proposal, which also induces an industrial restructuring to the benefit of the agro-processing industries, will create a significant fiscal burden. A lesser level of commitment could largely mitigate these unfavourable results; by reciprocating tariff eliminations on only 60 per cent of their European imports, African countries would reduce the trade imbalance and fiscal losses induced by these agreements by 21 and 51 per cent respectively. [ABSTRACT FROM AUTHOR]

This study investigates empirically the direction of causality between financial development and economic growth in three sub-Saharan African countries — Kenya, South Africa and Tanzania. The study seeks to answer one critical question: Does financial development in sub-Saharan African countries exhibit a supply-leading or demand- following response? Using three proxies of financial development against real GDP per capita (a proxy for economic growth), the study finds that the direction of causality between financial development and economic growth is sensitive to the choice of measurement for financial development. In addition, the strength and clarity of the causality evidence is found to vary from country to country and over time. On balance, a demand-following response is found to be stronger in Kenya and South Africa, whilst in Tanzania a supply-leading response is found to be dominant. The study therefore recommends that for Kenya and South Africa the real sector of the economy should be developed further in order to sustain the development of the financial sector. However, for Tanzania, there is need for further development of the financial sector in order to make the economy more monetized. [ABSTRACT FROM AUTHOR]