Financial Repression, Interest Rates, and Credit Allocation in Sub-Saharan Africa

Economic development has been slow in most countries of Sub-Saharan Africa (SSA) during the past two decades. Per capita income in 19 countries grew by less than 1% per annum between 1960 and 1979. During the last decade, 15 countries recorded a negative rate of growth of income per capita. Income per capita was a mere $411 in 1979 (excluding Nigeria). This dismal economic performance is partly due to structural weakness, but also reflect domestic policy inadequacies. Of these domestic policy inadequacies, policies pursued in the financial sector including exchange rate policy have proved to be critical.