Effect of Colonization on the Debt-to-GDP Ratio in Sub-Saharan Africa

Abstract

Sub-Saharan Africa experienced intense European colonization that reshaped its political, economic, and social structures. This study examines whether specific colonial conditions continue to influence modern debt outcomes. Using a sample of 43 Sub-Saharan African countries, the relationship between historical colonial characteristics and modern debt-to-GDP ratios is analyzed. Colonial variables include duration of colonization, colonizing power, settler mortality (logged), number of colonizers, and years since independence. Control variables capture institutional quality, regime type, government expenditure, GDP growth, armed conflict, and a time indicator for 2000 and 2015. Ordinary Least Squares regressions are estimated across multiple specifications to assess robustness, including models with and without settler mortality due to sample limitations. The analysis finds limited evidence that colonial characteristics directly affect modern debt outcomes. Instead, present-day institutional performance, particularly regulatory quality, consistently exhibits a strong negative association with debt-to-GDP ratios, indicating that countries with higher regulatory quality tend to maintain significantly lower debt burdens. Overall, the analysis suggests that while colonial history shaped initial institutional structures, contemporary governance plays a more decisive role in fiscal outcomes in Sub-Saharan Africa.