Determinants of domestic private savings in Sierra Leone

Abstract

This study investigates the determinants of private domestic savings in Sierra Lone. It specifically looks at the empirical determinants of private domestic savings through econometric analysis and the role of the informal sector in mobilising savings through rapid assessment appraisal. The data used covered the period 1967-1995. Estimated results from the econometric analysis indicated that income and government savings have a positive impact on private savings, while foreign savings and private savings are negatively related. The rapid assessment appraisal indicated that the informal financial sector could play an important role in mobilising savings from the broad mass of the people who, for various reasons, do not utilise the banking system. The study however observed very weak linkages between the formal and informal financial sector. The study made certain recommendations in line with its findings. These are: increasing the productive base of the country to ensure real income growth, employment and private savings; providing access to financial institutions, and accelerating the integration of the formal and informal financial sectors; and reduction of the government budget deficit. Implementing these recommendations would significantly improve domestic private savings mobilisation.