Financial Markets and Economic Growth Dynamics in Post-COVID Africa: A Comparative Study of the Stock Exchanges of Morocco, Egypt, Nigeria, South Africa, and Rwanda (2021–2024)

Abstract

This article investigates the impact of financial market development on economic growth in five African economies (Morocco, Egypt, Nigeria, South Africa, and Rwanda) during the period 2021–2024, focusing on the post-COVID-19 recovery phase. The literature review is based on a structured narrative review, drawing on 39 studies selected for their theoretical relevance and empirical robustness. The empirical study employs a panel dataset compiled from the World Bank, UNCTAD, and national stock exchanges. The relationship between stock market capitalization, trading volumes, foreign direct investment (FDI) inflows, a multidimensional financial development index, and real GDP growth is estimated primarily using a fixed-effects panel model, selected based on the Hausman test and estimated with robust standard errors. Additional GMM estimations are employed solely as robustness checks to assess the stability of the results and to address potential endogeneity issues. The findings reveal a positive and statistically significant effect of stock market depth and liquidity on economic growth. FDI inflows are identified as a key driver of the post-pandemic recovery, whereas inflation shows a negative and significant impact on economic performance. These results highlight the importance of deepening financial markets, promoting financial inclusion, and maintaining macroeconomic stability to fully leverage the role of finance in supporting sustainable and inclusive growth across African economies.

Classification JEL: G10; O16; 047

Paper type : Empirical Research