From volatility to stability: how ICT infrastructure mitigates growth penalties in SSA (a system GMM approach)

Exchange rate volatility undermines economic stability and growth in sub-Saharan Africa (SSA) where commodity dependence and shallow financial markets heighten external shocks. This study advances a novel hypothesis: ICT infrastructure moderates the adverse impact of volatility. Using the dynamic panel system GMM on 28 SSA countries, we test this interaction directly. The results confirm volatility significantly hinders growth, but ICT penetration weakens this effect. A marginal analysis shows the growth penalty falls by 40% in high-ICT economies. Sectoral evidence highlights manufacturing as most responsive. The findings position digital infrastructure as a foundation for resilience, urging integrated exchange rate and digital strategies.