Public Debt and Private Investment in Subsaharan Africa

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Alioum Hamadou
Alioum Hamadou

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The purpose of this study is to analyze the effect of public debt on private investment in Sub-Saharan Africa (SSA). To this end, we proceed with the econometric estimation of the data for a panel of 43 SSA countries over the period 2000-2018. All of this data comes from the World Bank (IDS, WDI, WGI) and the IMF (WEO). In order to achieve robust results, three estimation methods are used: the Ordinary Least Squares (OLS) method, the Ordinary Doubles Least Squares (ODLS) method and the Quantile regression method. All other things being equal, the results show that public debt reduces private investment because of credit rationing and higher taxes to honor debt services. However, we find that the debt from China is positively correlated with private investment. Therefore, to reconcile public debt and private investment, SSA countries need to implement appropriate policies that will ensure that public debt is used optimally to further stimulate private investment. Indeed, SSA countries must encourage and monitor the channeling of financial resources to productive activities likely to strengthen private investment.

Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

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Not applicable for this article.

Alioum Hamadou. 2026. \u201cPublic Debt and Private Investment in Subsaharan Africa\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 22 (GJHSS Volume 22 Issue E1): .

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Study on public and private financial growth in Sub-Saharan Africa.
Issue Cover
GJHSS Volume 22 Issue E1
Pg. 61- 74
Journal Specifications

Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

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GJHSS-E Classification: FOR Code: 149999
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v1.2

Issue date

February 7, 2022

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English

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The purpose of this study is to analyze the effect of public debt on private investment in Sub-Saharan Africa (SSA). To this end, we proceed with the econometric estimation of the data for a panel of 43 SSA countries over the period 2000-2018. All of this data comes from the World Bank (IDS, WDI, WGI) and the IMF (WEO). In order to achieve robust results, three estimation methods are used: the Ordinary Least Squares (OLS) method, the Ordinary Doubles Least Squares (ODLS) method and the Quantile regression method. All other things being equal, the results show that public debt reduces private investment because of credit rationing and higher taxes to honor debt services. However, we find that the debt from China is positively correlated with private investment. Therefore, to reconcile public debt and private investment, SSA countries need to implement appropriate policies that will ensure that public debt is used optimally to further stimulate private investment. Indeed, SSA countries must encourage and monitor the channeling of financial resources to productive activities likely to strengthen private investment.

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Public Debt and Private Investment in Subsaharan Africa

Alioum Hamadou
Alioum Hamadou

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