Understanding domestic savings in sub-Saharan Africa: A case study of Ghana

One essential condition of economic progress is ample supply of savings, which is a key determinant of the growth of real capital and, consequently, economic growth. In view of Ghana’s aspiration to wean herself ‘Beyond Aid’, this study aims to provide an understanding of the long-run relationship between variables considered to be important determinants of savings in Ghana. We employ time-series analyses using data from 1980 to 2019 to capture the effects of major policy changes likely to have implications for private savings. Empirical analyses show no significant long-term relationship between private savings and the variables examined. However, short-run analysis suggests that per capita income and money supply have a significant positive relationship with domestic savings. This finding is particularly instructive as it suggests that policymakers must think critically about the kinds of policies and reforms required to boost domestic resource mobilization in the long term.