Bond market development and infrastructure-gap reduction: The case of Sub-saharan Africa

Odongo Kodongo, Paul Mukoki and Kalu Ojah

Economic Modelling, 2023, vol. 121, issue C

Abstract: Infrastructure development and it's financing have featured jointly in the economic development discourse. We consider the linkages between the two in the African context by examining the potential role of the region's fledgling bond markets in mobilizing resources to bridge its notorious infrastructure gap (IG). Applying a battery of econometric tests on 40 countries covering 2003–2018, we document robustly negative and nonlinear relationships between bond market development and IG (and, by extension, infrastructure financing deficit). Furthermore, these fledgling government and corporate bond markets play a complimentary role in financing vital infrastructures; with corporate bond markets interestingly eliciting greater reduction in IGs than government bond markets. In the future, African governments should implement policies that promote the development of both sovereign and corporate bond markets, with a strategic emphasis on quickly deepening corporate bond markets to facilitate more impactful financing of infrastructures.

Keywords: Public debt markets; Infrastructure gaps; Infrastructure financing; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: C24 H54 O18 O55 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:121:y:2023:i:c:s0264999323000421

DOI: 10.1016/j.econmod.2023.106230

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