The Domestic Savings Shortfall in Sub-Saharan Africa : What Can Be Done About It?

Abstract

This book aims to increase knowledge about (i) the key drivers of domestic saving rates in sub-Saharan Africa (SSA); (ii) whether alternative approaches, such as pension funds or fintech, could provide new solutions to increase domestic savings; (iii) lessons learnt from the experiences so far in different countries in SSA; and (iv) what can SSA learn from the experience of other regions which have been more successful in raising savings rates. The book consists of two parts: (I) thematic studies and (II) country studies. The thematic studies examine the implications of new developments in African financial markets on savings behaviour, the role of sovereign wealth funds, pensions, and capital markets in augmenting savings and in economic development, the challenges of the debt crisis in Africa, the implications of financial liberalization for private saving in SSA, and lessons on how to increase savings rates from East and South Asia. The four country studies—Tanzania, Ghana, Cameroon, and Ghana—examine the determinants of domestic savings. The countries were selected based on criteria that capture the diversity of savings performance in SSA. Each case study uses a common conceptual framework drawn from the life-cycle theory of savings and the same empirical methods to test for the determinants of savings using time-series data for the country in question. The findings of the book provide clear recommendations on how to increase savings in sub-Saharan Africa.