TO WHAT EXTENT DOES THE FINANCIAL SECTOR DRIVE INDUSTRIALISATION IN SUB-SAHARAN AFRICA?
Date
2026
Authors
Amy Ka
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
This paper examines the effect of financial development on industrialisation in a panel of 43 sub-Saharan African countries over the period 2000–2021. Using a dynamic panel model estimated using the System GMM method, the results show a positive and significant effect of financial development on industrialisation. The multidimensional analysis indicates that financial depth is the main driver, followed by accessibility and efficiency. A mediation analysis reveals that this effect is partly mediated through private investment and total factor productivity. The robustness of the results is confirmed using alternative fixed-effects estimates with instrumental variables (FE-2SLS). Overall, these results highlight the key role of financial institutions in supporting structural transformation and industrial development in sub-Saharan Africa.