ABSTRACT

Sub-Saharan African countries are still at the crossroad of economic performance. Despite quarter of a century of economic reforms, propagated by national policies and international financial agencies and institutions, sub-Saharan Africa is still lagging behind in development. Once thought of as an area with huge potential for economic growth, sub-Saharan African countries are now representing the poorest and least developed populations of the world due largely to skewed economic development polices which are not geared towards sustainability. Economic development must be sustainable, implying that it should be on-going and dynamic in order to achieve the goal of poverty alleviation. A review of literature indicates that studies in this area of economics and finance have focused on the impact of finance on economic growth arising more from developed economies. Recommendations from these works may obviously have favoured these economies to the detriment of the developing ones, sub Saharan African countries inclusive. Such policies nonetheless are growth oriented as opposed to the more development oriented policies which developing countries need at least to salvage their numerous poor. Sub Saharan African countries need not only grow but to develop especially as financial intermediation is taking place in their economies. It is therefore in this context that for economies of sub Saharan African countries to grow, studies that will examine the impact of financial intermediation on economic development should be used as the basis for formulating economic policies for the structural transformation of their economies. It is therefore against the foregoing that this study sought to examine the impact of financial intermediation on quality of life; human development; per capita real income; gross domestic product and employment creation in Sub Saharan African countries. The study adopted the ex-post facto research design. Panel data set were collated from the World Bank for 49 sub Saharan African countries for the period, 1980 - 2012. Five (5) hypotheses which state that financial intermediation does not have positive and significant impact on the quality of life; human development; per capita real income; gross domestic product growth rate; employment creation in sub Saharan African countries were formulated and tested using the Ordinary Least Squares (OLS) technique. Credit to the private sector (FIM) was adopted as the independent variable and physical quality of life index (PQLI), human development index (HDI), per capita income (PCI), growth rate of gross domestic product (GDPGR) and unemployment index (UEI) were the dependent variables for the hypotheses respectively. Capital stock (CS) and trade stock (TS) were introduced as control variables. The result emanating from this study was mixed on the development indicators. While physical quality of life and per capital income was found to have positive and significant impact on economic development, human development index, gross domestic product growth rate and unemployment creation had negative and significant impact. The study, therefore, concludes that for the economies of sub Saharan African countries to develop, emphasis should be placed on  developing and implementing policies that will address critical areas like health, education, agriculture, energy, infrastructural development etc as these are development oriented goals that can move the region forward. We thus recommend, among others, that governments in the sub region should prioritize investments in these areas. This would assist in addressing the problems of underdevelopment observed in the region.