Infrastructure development in sub-Saharan African countries: does insurance matter?

Abstract

The objective of this paper is to assess the contribution of insurance to infrastructure development in Sub-Saharan Africa. The researchers used a sample of 31 Sub-Saharan African countries from a panel of data observed over the period 2003–2020. The methodologies used in this paper are the Driscoll-Kraay and Panels Corrected Standard Error. The results show that insurance (life and non-life) positively explains the level of infrastructure in Sub-Saharan Africa. Furthermore, using disaggregated infrastructure indices, the effect remains the same for transport, electricity, and water and sanitation infrastructure. However, insurance has no significant effect on telecommunications infrastructure. Our results remain robust using an instrumental variable technique, two stage least square. The economic policy suggestions concern the improvement of the regulatory framework for the insurance business so that it can participate effectively in financing the economy. In addition, a strengthening of the public–private partnership is commendable in order to provide governments with an alternative source of infrastructure financing, different from the generally used public financing, whose capacity is likely to be insufficient.