Sub-Saharan Africa’s long-term development, including attainment of the MDGs and continued progress beyond 2015, depends on mobilizing domestic financial resources and channeling them to productive private and public investment. From roughly the mid 1980s to the mid 1990s, many of the countries in the region undertook financial liberalization in order to promote such an objective. This One Pager evaluates the outcomes by examining the experience of 19 countries that have liberalized (see Serieux 2008).

During 1965-1985, almost all African countries followed what orthodoxy now labels as policies of ‘financial repression’, i.e., maintaining (administered) low interest rates and directing cheap credit to certain enterprises and sectors in order to foster rapid growth. Between 1986 and 1995, many of these countries underwent a process of domestic financial liberalization, instituting market- determined deposit and lending rates, eliminating directed credit, creating more competitive conditions and reducing the flow of credit to the public sector.