Is crowding out of private sector credit inhibiting Africa’s growth?
December 2, 2022
The analysis presented in this study confirms that crowding out has become more severe, but that timely policy support averted a credit crunch. Evidence of an increased sovereign-bank nexus highlights risks to macro-financial stability, especially as sovereign creditworthiness is deteriorating.
Reducing excessive sovereign borrowing and strengthening countries’ public debt management and transparency will help to contain crowding-out effects. Domestic and international development finance institutions can support these efforts by catalysing private sector resources and providing technical assistance.