Economics

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Assessing the Effects of Overseas Banks Entry on the Performance of Domestic Banks and the Economy in Selected Sub-Saharan African Countries: A Lesson for Ethiopia
(AAU, 2024-07-01) Melaku Habte Woldehitsan; Tadele Ferede Agaje (PhD)
Assessing the Effects of Overseas Banks Entry on the Performance of Domestic Banks and the Economy in Selected Sub-Saharan African Countries: a Lesson for Ethiopia
(A.A.U, 2024-07-18) Melaku Habte; Tadele Ferede (PhD)
The main purpose of this study is to assess the effects of overseas banks’ entry on domestic bank performance and the economy in selected Sub-Saharan African countries. The time under scrutiny is from 2005 to 2020. To this end, both primary and secondary data were employed. A two-step system of generalized method of moments (GMM) was adopted to identify the effects of overseas banks’ entry on domestic bank performance and the economy. Overseas bank assets share is used as a proxy for overseas banks’ entry. Accordingly, domestic bank performance is positively determined by overseas banks’ entry, while economic performance (nominal gross domestic product (GDP) per capita) is negatively determined by overseas banks’ entry. The study finding reveals that there exists no significant difference between globalized Sub-Saharan Africa (SSA) countries and Ethiopia as far as the domestic bank performance is concerned. The finding also indicates that overseas banks’ entry will bring enormous opportunities for domestic banks such as capital, technology, more efficient processes, new service channels, systems, and expertise. In the case associated with overseas bank entry, the study identified challenges that include loss of potential customers, unfair competition, transmitting external shocks, and talent drains. The implications of the study include the government and central bank’s need to formulate an appropriate strategic response to minimize the destructive outcomes of overseas bank entry on the performance of domestic banks and the economy. Keywords: - Overseas banks entry, domestic bank performance, economic performance, and generalized method of moments (GMM)
The Impact of Corporate Governance on Bank Performance: Evidence From Ethiopian Banks' Board Structure and Financial Ratios
(AAU, 2025-04-16) Temesgen Kibrekulu Alem; Sisay Regassa (PhD)
This study aims to investigate the influence of corporate governance on bank performance in Ethiopia, focusing on how board characteristics (such as size and gender diversity) and regulatory financial ratios impact banks from 2010 to 2023. The analysis is based on data gathered from 10 licensed commercial banks operating in the country. The effect of corporate governance methods on financial performance of banks, as measured by return on equity and Return on asset, was assessed using a quantitative research methodology. Panel data regression is adopted for estimation of main results. The notable findings show that board gender composition and liquidity ratio has a significant and positive relationship with bank performance. Furthermore, the results show that capital adequacy ratio have a significant and negative association with bank performance. Furthermore, the research revealed that the choice of performance metrics significantly impacts corporate governance analyses. The study observed varying outcomes depending on whether Return on Assets (ROA) or Return on Equity (ROE) was used to assess firm performance
Equity Healthcare Financing in Ethiopia: Measuring the Burden of out-of-pocket Payments
(AAU, 2025-03-15) Zena Sahlemariam Haile; Saba Yifredew (PhD)
Paying out-of-pocket (OOP) continues to be a major obstacle to accessing healthcare in Ethiopia. While the government aims to provide universal health coverage, high direct costs continue im- pose severe financial hardship on households. This study evaluated the impact of OOP payments on healthcare access, using data from the general household survey collected in 2019/20, to esti- mate the incidence of both catastrophic health expenditure and impoverishing health expenditure due to OOP health payments. The study estimated the incidence of catastrophic health expenditure (CHE) at 10% and 25% of total expenditure and 40% of non-food expenditures. It also calculated the incidence of impov- erishing health expenditures using Ethiopia’s national poverty line of Birr 10,053 annually per adult. The findings indicate that a notable percentage of households, 8.5%, encountered CHE at the 10% threshold, with 0.7% falling below the poverty line as a result of healthcare expenses. Under the 10% total expenditure threshold, the regions exhibiting the highest incidence of CHE are Somalia (12.2%), SNNPR (11.5%) and Gambela (9.3%). The incidence of impoverishing health expenditure was also high in regions such as Benishangul-Gumuz (1.4%), SNNPR (1%), and So- malia (1%). The low-income and rural households were found to be the most vulnerable. In sum- mary, OOP payments undermine healthcare access and impoverish Ethiopian households. There is a need to strengthen financial risk protection mechanisms and improve equity in healthcare financing, especially in the regions most affected by the catastrophic and impoverishing effects of out-of-pocket health expenditures. Expanding prepayment mechanisms like social health in- surance and subsidies could help promote equitable access in line with universal health coverage goals. Strengthening financial risk protection is critical to reducing disparities across Ethiopia.
The Effect of Remittance on Economic Growth: The Mediating Role of Financial Development: Evidence From Sub-Sharan Africa Countries
(A.A.U, 2024-08-23) Senayit Bekele; Mengesha Yayo (PhD)
This study investigates the relationship between remittances and economic growth in SSA Countries, as well as the mediating role that financial development plays, using GMM and SEM methodologies. The study considers annual panel data from 15 countries over the years 2000–2022. The objective was achieved through the use of both descriptive and inferential analysis. The econometric study included both diagnostic and pre-estimation testing, including panel unit root and cointegration tests. The estimate's findings showed that trade openness, foreign direct investment, gross domestic saving, and remittances all significantly boost economic growth, whereas population growth and trade openness have comparatively negative effects. Furthermore, gross fixed capital formation has no effect on economic growth in SSA countries. The research indicates that remittances are likely to have a positive effect on the economic growth of sub-Saharan African nations and that this effect will become more pronounced with increased financial development.
Good Governance and Poverty Reduction: Empirical Evidence from Selected Sub-Saharan Africa
(A.A.U, 2025-02-21) Salah Yusuf; Abdurezack Hussein (PhD)
The purpose of this study is to investigate the impact of good governance on Poverty reduction in selected Sub-Saharan African countries. The study used panel data from 36 Sub-Saharan African countries over the period 2010 to 2022. The data is analyzed using a fixed effect estimation model and a Granger causality test to investigate a possible causal relationship between good governance and Poverty reduction. The result of the study revealed that effective governance has a positive significant effect on Poverty reduction. Moreover, the economic growth and development of human capital are found to contribute to the reduction of Poverty in sub-Saharan Africa. Nevertheless, the Granger causality test suggested that there is no evidence for a causal relationship between good governance and Poverty reduction. The study suggests that improved effectiveness of government, strengthening economic growth, and enhancing human capital contribute to the reduction of poverty in sub-Saharan African countries.
The Effect of Multinational Corporations on the Economic Growth: The Case of Ethiopia (Incoming Investments)
(AAU, 2025-03-10) Dereje Tilahun; Girma Estiphanos (PhD)
This study analyzes the economic changes by multinational corporations on Ethiopia throughout the years using yearly time series data from 2005-2022. Using ARDL and VEC analysis, the effects of multinational corporations on gross domestic product growth, the exchange rate, the BP, and the Unemployment rate is been estimated in the long and short term. The study found that the effects of multinational corporations on economic growth works passed on the short- term aggregate demand and the long-term aggregate supply channel using GDP as an indicator of the economic growth and its effect on the exchange rate, the balance of payments and the Exchange rate. The devaluation of the national currency leads to economic growth only in the short term. In the long run, it affects negatively the EG. Public expenditure is statistically as vital as of the REER rate in explaining economic growth in Ethiopia
A Path to Low Carbon and Climate Friendly Transport Sector in Addis Ababa: System Dynamics Approach
(AAU, 2023-06-15) Kaleab Enyew; Mengesha Yayo (PhD)
Urban transportation system is a complex system with multiple variables and nonlinear feedback loops and influenced by transportation, social, economic, and environmental factors. Conventional transportation modeling approaches are unsuitable to simulate and evaluate its performance. This paper presents a system dynamics approach based on the cause-and-effect analysis and feedback loop structures. The proposed SD model comprises population, economic development, number of vehicles, environmental influence, travel demand and transport supply. The model runs in Vensim PLE software using the data from Addis Ababa, Ethiopia. The impacts of different policy scenarios on transportation system related carbon emission are analyzed. Ban imports of used vehicle, Energy shift and setting emission standard have the capacity to reduce carbon emission with the magnitude of 17%, 59% and 43% respectively by 2030. The study suggests that a combination of policies to achieve a low carbon and climate-friendly transport sector which will result a 74% decrease in carbon emission by 2030.
The Effect of Financial Liberalization on Economic Development in Ethiopia
(A.A.U, 2023-07-21) Markos Taye; AtlawAlemu (PhD)
The financial system is necessary for economic expansion. The financial system facilitates lending and borrowing of money, which fosters economic progress. The goal of the study is toevaluate the effects of the different financial liberalization initiatives using co-integration and causality tests on Ethiopia's financial and economic progress over the period of 1992-2022. In doing so, the ARDL approach to Co-integration and Error Correction Model were employed to investigate the long run and short run relationships.Accordingly results of this study suggest that commercial banks' real-time total deposits have a considerable influence on the loans they offer. On the other hand, the provision of credit by banks has a very positive effect on the expansion of the country's industrial development. The real loan rate has a significant influence in determining the contribution of the industrial sector to real GDP. The study also found that the credit deposit ratio of banks significantly influenced the growth of the industrial sector. The composite financial liberalization index is positively correlated with bank credit extensions, real GDP, and industrial development. The study's findings also indicate that the poorest segment of the population is not being helped by an increase of bank branches through the provision of financial resources
Shocks, Well- Idiosyncratic Being And Labour Market Outcomes in Sub-Saharan Africa
(A.A.U, 2024-06-20) Gidisa Lachisa; Yonas Alem (PhD)
Households in developing countries are subject to considerable risk and shocks, but most can’t deal with them using formal credit and insurance mechanisms. We use five rounds of the South African NIDS panel data and investigate the links between shocks and mental health as measured by the Center for Epidemiological Studies – Depression Scale (CES-D). We find that experiencing idiosyncratic shocks, more importantly, the death of a family member is significantly associated with poor mental health. The magnitude increases by almost two-fold when death happens unexpectedly, i.e., due to an accident or violence, and increases by 35% when the deceased is a close family member of the respondent. We argue that two plausible mechanisms could explain the links between the death of a household member and mental health – bereavement and loss of income. Our results offer suggestive evidence of the large scope for improving welfare further through social support and insurance mechanisms. The results also imply the importance of expanding psychiatric and therapeutic care in Africa, which currently appears to be at the lowest level compared to the rest of the world.
The Contributions of Banking Sector Development to Economic Growth in Ethiopia
(A.A.U, 2024-06-27) Hirko Tesfaye Feyisa; Befekadu Degefe(PhD)
This study examines a contribution of banking sector development on growth of economy in Ethiopia. It makes used time series data of all banks from 1991-2022. The banking sector system mobilized resources in deposit, borrowing, and loan collection, reaching Birr 626.6 billion. Private Banks increased their share in deposit mobilization to 47.7%, with CBE accounting for 53.3%. Reserve mobilization through borrowing remained insignificant. The banking sector's outstanding credit grew by 23.9% to Birr 1.6 trillion, with the number of banks opening 1600 new branches in 2022. Depending on the nature of a banking sector development indicators the researcher selects five independent variables such as Bank size (Asset), Deposit, Loan to deposit ratio, return on asset, Capital accumulations and some Control variables i.e. Export, Investment, Money supply, inflation rate and Labor are employed in the thesis. Dependent variable is a proxy of economic expansion (RGDP). A unit root test satisfies the stationarity of data in the model and Granger causality test has demonstrated there are Unidirectional causes, meaning that all independent variables influence the dependent variable in one direction. The regression results of independent variable coefficients are to have a positive reaction to a dependent variable or to a model of economic growth RGDP. In the same way, within the specified period of time, there was a negative contribution from Loan to deposit ratio, labor and inflation on economic growth. Banking sector is positively contributes to overall economic growth in Ethiopia.
The Impact of Industry Concentration on Performance of the Ethiopian Banking Industry
(A.A.U, 2025-02-17) Addisu Habte; Worku Gebeyehu (PhD)
This study examines the impact of industry concentration on the performance of the Ethiopian banking industry. The primary research question revolves around the impact of market concentration and relative market share versus bank efficiency in determining profitability and operational outcomes. Key performance metrics, including Return on Assets (ROA) and Net Interest Margin (NIM), were analyzed through a system Generalized Method of Moments (GMM) regression approach using Stata software Version 15. Additionally, MaxDEA Software was employed to compute efficiency scores, particularly technical, scale, and management efficiency, for each bank. The findings reveal that market concentration, represented by the Herfindahl-Hirschman Index (HHI), has a positive and significant effect on both ROA and NIM. This suggests that more concentrated markets enable higher profitability and wider interest margins, which supports elements of the Structure-Conduct-Performance (SCP) hypothesis. However, the negative and significant relationship between market share and bank performance calls into question the validity of the Market Power Hypothesis (MPH), implying that while larger banks enjoy some collusive advantages, individual market share does not necessarily translate into higher performance. From an efficiency standpoint, the results indicate that neither technical efficiency nor scale efficiency has a statistically significant impact on profitability, which challenges the Efficiency Structure Hypothesis (ESH). Interestingly, management efficiency demonstrates a positive and significant influence on both ROA and NIM, underscoring the importance of sound management practices in the banking sector. This research contributes to the ongoing debate about the drivers of bank performance in emerging markets, offering evidence that market concentration and managerial efficiency play crucial roles in shaping outcomes, while technical and scale efficiency are less decisive. The study emphasizes the need for enhanced competition and improved managerial practices within the Ethiopian banking industry to foster sustainable growth and profitability. Key words: Structure, conduct, performance, bank, efficiency, concentration, DEA
The Role of Banking Sector in Capital Accumulation and Economic Growth of Ethiopia: An ARDL Approach
(A.A.U, 2024-06-02) Bonche Bolla; Advisor: Alemu. L (PhD)
This study uses the financial sector development indicator variables of deposit, loan, asset, and profit as explanatory factors and RGDP as a dependent variable to examine the empirical relationship between the banking industry and Ethiopia's economic growth. Using time series data covering the years 1980–2022, the paper empirically evaluates the contribution of the banking industry to capital accumulation and economic growth in Ethiopia. Unit root examinations, cointegration tests utilizing the ARDL approach, Granger non-causality tests, and VECM dynamics investigations of the short- and long-term dynamics are all included in the model estimate process. The analysis's result demonstrates that, although credit only has a substantial impact on short-term capital accumulation, deposits have a significantly favorable short-term impact on both economic growth and capital accumulation. However, aside from deposits, a well-designed quantitative technique has the advantage of making findings reliable and lessening the impact of researcher and subject biases, especially when the research purpose is to analyse the problems and function of the banking sector in capital accumulation and economic progress. There is unidirectional linkage that exists between credit and economic growth, although there is a reciprocal causal connection between deposits and economic expansion, according to the analysis done to ascertain the cause and effect direction. Thus, the study recommends policymakers to strengthen the sector's capacity in a manner that would effectively distribute funds to the economy's most productive sector and mobilize larger savings in order to achieve rapid capital accumulation and sustainable economic growth. In the short run, gross national saving makes a substantial and positive contribution to capital accumulation and economic growth; however, over time, this contribution diminishes and becomes less significant. On the other hand, government expenditure has a significant long- and short-term influence on capital formation; nevertheless, it has a negligibly favorable long-term impact on economic growth and a substantially negative short-term impact.
The Impact of Credit Constraint on Micro and Small Business Enterprises Performance: The Case of Hawassa City Administration, Sidama Region.
(A.A.U, 2024-06-13) Simret Siyoum; Wassie Birhanu (PhD)
Micro- and small-sized enterprises play a critical role in creating job opportunities for millions of young people and attaining Ethiopia's development goals. The study uses a sample survey of 348 operators selected using multistage random sampling procedures to investigate the factors that influence the performance of MSEs in the Hawassa city administration. The cross-tabulated descriptive statistics revealed that personal/managerial characteristics, MSE characteristics, networking, and borrower economic resources all had an impact on MSEs' access to credit. The study investigates the effects of credit on the performance of MSEs in the Hawassa city administration. Propensity score matching was utilized to determine the impact of credit on MSE performance when comparing constraint and unconstrained MSEs. In this setting, it was found that credit had a positive and considerable impact on MSEs yearly average sales growth comparing with constraint MSEs but this finding does not find any significant relationship between the use of credit and employment growth. Hence, it was recommended that collaboration among enterprises, trade associations, and educational institutions should be encouraged. Moreover, enterprises should be able to receive non-financial support services like networking opportunities, business advice, and mentoring. Keywords: MSE, Impact, Credit, Hawassa, Propensity Score Matching
Dynamic Effects of Fiscal Deficit Financing on inflation in Ethiopia: Markov Regime-Switching Model Approach
(A.A.U, 2024-06-08) Yomif Tadesse; Mesele Araya(PhD)
Ethiopia’s rapid economic growth over the past two decades has been accompanied by a persistent fiscal deficit and soaring inflation, which raised concern about the sustainability of the growth path in the face of inflationary pressure. Thus, examining the relationship between inflation and fiscal deficit financing has drawn substantial attention from researchers and scholars, as financing budget deficits is confirmed both in theoretical and empirical literature to often lead to higher inflation. This study examines the dynamic effects of fiscal deficit financing on inflation in Ethiopia using a Markov regime-switching model (MRSM) approach to capture the nonlinear relationship between fiscal deficit financing and inflation. The Fiscal Theory of Price Level (FTPL) was adopted as a theoretical framework in this research. FTPL is a macroeconomic postulation that highlights the consequences of the dominance of fiscal policy activities over monetary policy and its effect on price stability due to the government's deficit financing. The maximum likelihood estimation (MLE) method has been used to estimate the model for the time series dataset spanning the period from 1980 to 2022. The paper revealed the presence of two fiscal regimes in Ethiopia and the inconsistency in the regimes of fiscal deficit financing over the study period. The findings of this study further indicate that fiscal deficit financing has a stronger impact under the higher regime of deficit financing, whereas, in the lower regime of fiscal deficit financing, the impact of financing government budget deficits on inflation over the study period remains muted in Ethiopia. Keeping other things constant, budget deficit financing increases inflation by 0.9230973 (92%) under a high regime of fiscal deficfinancing, while in a low regime of fiscal deficit financing, deficit financing causes inflation to rise by 0.0867 (8.67%) in Ethiopia. Furthermore, the system stays in State 1 with a transition probability of 36.8% and in State 2 with a transition probability of 55.9%. Therefore, this paper commends that the government of Ethiopia should follow a consolidated fiscal policy that broadens revenue sources for the public sector, tightens the fiscal gap, and ensures fiscal sustainability with low regime deficit financing and a reasonable level of inflation.
The Impact of Financial Inclusion on Bank Performance in Ethiopia: Panel Data Analysis
(A.A.U, 2024-06-18) Alie Fentaw; Jemberu Lulie (PhD)
This study examines the relationship between financial inclusion and banking performance in Ethiopia, using data of 10 banks from 2012 to 2022. The study employs the panel data model to assess the impact of financial inclusion on bank performance. The Regression analysis was conducted after carrying out the Housman test to determine the suitability of either the fixed effect or random effect model after developing the bank performance index and financial inclusion index using principal component analysis (PCA). The results show that financial inclusion negatively affects bank performance and profitability, as measured by the bank performance index. The research has shown bank-specific factors, such as net loan-to-asset ratio, are insignificant to banking performance. Additionally, the deposit has a positive significance for banking performance in the study of selected ten banks in Ethiopia. Inflation and GDP growth rate significantly impact banking performance. The emphasis on increasing the availability of financial services underscores the importance of establishing a robust infrastructure that can cater to the diverse needs of customers across various regions. By expanding physical branches, developing digital banking solutions, and implementing innovative delivery channels, banks can ensure that their services are easily accessible to a wider audience. Finally, the authors suggest the crucial need for banks to collectively prioritize accessibility, utilization, and availability to boost not only their profitability but also their essential role in catalyzing sustainable economic growth and cultivating a more inclusive financial landscape in Ethiopia. This strategic alignment between financial institutions and economic development goals signifies a pivotal stride towards strengthening the nation's economic foundation as a whole. Key Words: Financial Inclusion, bank performance, return on asset, return on equity, net interest margin, principal component analysis (PCA), Gross Domestic Product (GDP)
The Effects of Financial Development and Trade Openness on Economic Growth: Evidence from Sub-Saharan African Countries.
(A.A.U, 2024-06-30) Alemu Olani Tesgera; Fantu Guta (PhD)
For a panel of 21 SSA nations, this study looks at the impacts of financial development and trade openness on economic growth from 2005 to 2018 using balanced data and there is no data for some countries between 2019 and 2022 on some variables. Opposite to most existing studies, the analysis makes use of random effect model that is more efficient as it captures both the within and the between variation of the data and heterogeneity across countries. The panel analysis's findings forwarded that economic growth benefits from trade openness and financial development and the presence of long-term relationships is demonstrated using cointegration test. Unemployment, FDI and inflation are used as control variables. Unemployment and inflation have showed the negative relationship with economic growth which is in accordance with the existing economic theory whereas strong justification has presented for the negative relationship between FDI and economic growth. The results also show that expanding domestic loans to the private sector and the number of commercial bank branches are important channels via which financial development supports economic expansion. Granger causality tests demonstrate the causal relationship between economic growth and trade openness and between economic growth and financial development. The results have showed important policy ramifications for trade openness, financial development, and economic expansion in SSA nations.
Effects of Economic Policy Uncertainty on Credit Risks and Banks’ Lending Decisions: Evidence from Ethiopian Commercial Banks
(A.A.U, 2023-07-04) Fanuel Gizaw; Befekadu Degife(PhD)
The objective of this study is to explore the effects of economic policy uncertainty on credit risk and lending decision of 12 Ethiopian commercial banks for the period spanning from 2010– 2021. In order to analyze the relationship between credit risk measured by non performing loan ratio and lending decisions measured by growth rate of loan and economic policy uncertainty controlled bank specific and macroeconomics variables, the study employed two fixed effect (within) panel regression Models. The empirical results revealed that economic policy uncertainty has a significant positive effect on credit risk (nonperforming loan ratio), and a significant negative effect on lending decisions (growth rate of loan). Furthermore, bank size and gross domestic product have significant negative relation with non performing loans and have significant positive relationship with growth rate of loans. However, lending interest rate has a significant positive relationship with nonperforming loan and has a significant negative link with lending decision of Ethiopian commercial banks.
Credit Risk and Technical Efficiency in Ethiopian Commercial Banks
(A.A.U, 2022-06-22) Tamrat Mekonen; Guta Legesse (PhD)
This study examined the relationship between credit risk and technical efficiency of Ethiopian commercial banks in the period from 2012/13 to 2017/18. The two-stage data envelopment analysis model was used to obtain efficiency scores. The estimated result of the constant returns to scale assumption indicates that the commercial bank of Ethiopia and Dashen bank are inefficient, whereas Debub Global bank, Addis International bank, and Zemen bank are more than efficient compared to the other. Similarly, the estimated result of variable return to scale assumption showed that Commercial bank of Ethiopia and Dashen bank are shown to be inefficient, whereas Addis International bank, Development bank of Ethiopia and Debub Global bank are found to be more efficient. It is also found that, in compared to the commercial banks included in the study, united bank and Debub global bank are the most scale efficient commercial banks in Ethiopia, whereas Bunna international bank and Ethiopian Development Bank are the least scale efficient banks. In the second stage to estimate the relationship between credit risk and technical efficiency score of commercial banks as we used Tobit model. The finding indicates that credit risk has negative and statistical significant effect on Ethiopian commercial bank’s technical efficiency. The higher the credit risk is the lower the efficiency scores and those commercial banks that manage to maintain their continuity in the market and diversify their products had higher efficiency scores, however generating greater benefits to their shareholder. Furthermore, the findings also indicate that liquidity risk, return on asset and capitalization have positive and significant effects on the technical efficiency score of the commercial banks under study, whereas ownership structure have negative and significant effects, but market share is a positive and insignificant variable under this study.
The Effect of Foreign Direct Investment on Economic Growth in Sub-Saharan Africa: Moderation Analysis
(A.A.U, 2024-06-17) Tegegn Tise; Mengesha Yayo (PhD)
Considering the empirical and literature gaps as well as ongoing debates and dilemmas about the effect of Foreign Direct Investment (FDI) on economic growth in sub Saharan African countries, the objective of this study is to examine the effect of foreign direct investment (FDI) on economic growth in sub-Saharan African countries and the moderating roles of macroeconomic stability, infrastructure development, and trade openness on this relationship. Using panel data for 18 sub-Saharan African countries from 2000 to 2022, the study employs System GMM (Generalized Method of Moments) and structural equation modeling techniques to analyze the dynamic relationships. The findings indicate that Foreign Direct Investment has a positive and significant effect on economic growth in the region. However, the effectiveness of FDI in promoting growth is found to be contingent on the prevailing macroeconomic conditions, level of infrastructure development, and degree of trade openness. Specifically, the results show that macroeconomic stability and infrastructure development positively moderate the FDI-growth nexus, enhancing the growth-inducing impact of FDI. Conversely, trade openness is found to negatively moderate this relationship, suggesting that excessive trade liberalization may limit the growth benefits of FDI inflows. These findings underscore the importance of establishing conducive macroeconomic environment, investing in infrastructure, and carefully managing trade policies to maximize the growth-enhancing effects of foreign direct investment in sub-Saharan Africa. The study provides valuable policy implications for governments and policymakers in the region aimed at leveraging FDI to foster sustainable economic development. Key Words: Foreign Direct Investment (FDI), Economic Growth, Sub-Saharan Africa, Macroeconomic Stability Infrastructure Development, Trade Openness

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