DETERMINANTS OF GROSS DOMESTIC SAVINGS IN SUB-SAHARAN AFRICA Authors

Abstract

In this study the major determinants of gross domestic savings are examined for twenty-five sub-Saharan African (SSA) countries over the period 2000 to 2017. The Fully Modified Ordinary Least Squares (FMOLS) methodology is employed in the empirical analysis. It is revealed that fiscal policy and financial variables, as well as demographic factors have significant impacts on the gross domestic savings in the SSA countries. The impacts of macroeconomic variables are found to be relatively weak. There is also evidence that regional membership groupings of SSA countries significantly explain the savings behaviour of the countries, although there are also country-specific effects. There are policy options to be considered on the basis of the findings: the need for the application of spending and tax options to smoothen critical variations in savings through measures to boost gross income; reforms in the financial sector to boost bank-stimulated savings; and policies to reduce debt vulnerability and encourage economic diversification. Regional economic blocs are also expected to intensify measures to strengthen savings among the member countries through integration.