Financial Integration and Gross Fixed Capital Formation (GFCF) in Sub-Saharan Africa

SUMMARY

The broad objective of this study was to examine financial integration and Gross Fixed Capital Formation (GFCF) in Sub-Saharan Africa. Although study on this subject matter has been well researched in Nigeria and some other countries, but are still very scanty in terms of cross-country studies especially in the Sub-Saharan Africa. For this reason, the study employs the Error Correction Model analysis on five financial integration variables such as Foreign Direct Investments (FDI), Foreign Portfolio Investments (FPI), Trade Openness (TOPN), Exchange

Rate (EXCHR) and External Debts (EXTD) to examine the Gross Fixed Capital Formation (GFCF) of the economy of Sub-Saharan Africa countries of Nigeria, Kenya and South Africa for a period of thirty-nine (39) years (i.e. 1981 to 2019). The results from the empirical analysis showed that foreign direct investment, foreign portfolio investment and rate of exchange significantly associated with gross fixed capital formation in Sub-Sahara economy as it relate to Nigeria and South Africa, but was insignificant in the case of Kenya. On the other hand, the study revealed a significant relationship between trade openness, external debts and gross fixed capital formation in Sub-Sahara Africa economies of Nigeria, Kenya and South Africa.