Introduction
The objective of this paper is to explore the role of development finance in economic development in Sub-Saharan Africa. Development Finance is practice of using scarce financial resources in an unconventional ways in order to advance economic activity(ies). According to (Nyembezi, 2009), development finance makes the economy run smoothly and effectively. The aim of the development finance is to look at the challenges and design the framework as well as stimulating core activities that will develop the economic growth. As stated by (Nyembezi, 2009) development finance, in an economy, can be compared to oil in a vehicle engine that ensures its sound and smooth operation.
According to (Ocran, 2012), development finance is concerned with the financing of development at:
• Household level
• Firm level
• Geographical area/national/regional level
This paper looks at the role of development finance at national and regional level in economic development in Sub-Saharan Africa.
The Organisation for Economic Co-operation and Development (2002) defines development finance officially as funding “used in measuring the inflow of resources to recipient countries: including (a) bilateral official development assistance (ODA), (b) grants and concessional and non-concessional development lending by multilateral financial institutions, and (c) Other Official Flows for development purposes (including refinancing Loans) which have too low a Grant Element to qualify as ODA”.
The role of development finance and economic growth
The current status
Ndulu, (2007) as quoted by (von Drachenfels & Krause, 2010) stated that in previous decades the economies in Sub-Saharan Africa was stagnant averaging below two or even one per cent of annual GDP growth rates. He further stated that, as growth rates were slightly higher in the 1960s, the average growth curve of