Financial Access and Firm Productivity in Sub-Saharan Africa

Abstract

The paper investigates the effect of access to finance on the productivity of manufacturing firms in Sub-Saharan Africa. With the aid of the Semi-parametric approach by Levinsohn and Petrin, findings reveal that access to a cost-effective line of credit/loan or an overdraft facility has a positive effect on firm productivity. The study, therefore, concludes that it is of outmost benefit for firms to acquire credit facilities for more productive projects and that the credit constraints firms in Africa face should be significantly relaxed.