Financial intermediation is low in sub-Saharan Africa (SSA) compared to other regions of the world. This paper examines the determinants of bank interest margins using a sample of 456 banks in 41 SSA countries. The results show that market concentration is positively associated with interest margins, but the impact depends on the level of efficiency of each bank. In particular, compared to inefficient banks, efficient ones increase their margins more in concentrated markets. This indicates that policies that promote competition and reduce market concentration would help lower interest margins in SSA. The results also show that bank-specific factors such as credit risk, liquidity risk, and bank equity are important determinants of interest margins. Finally, interest margins are sensitive to inflation, but not to economic growth or public or foreign ownership. There are regional differences within SSA regarding the level of interest margins even after controlling for other factors. Low financial intermediation in sub-Saharan Africa (SSA) results from many factors. These factors vary greatly across regions and include financial policies, market structure, and bank behavior, to name a few. In sub-Saharan Africa (SSA), financial intermediation is very low, compared to other regions of the world. As a result, bank lending is low and interest margins are high compared to the rest of the world. This paper investigates the main factors that explain the high bank interest margins observed in SSA (Figure 1), focusing mainly on the impact of market structure. Interest margins2 could be high because the financial sector is relatively small, concentrated (Figure 2), and shallow in most African countries. Bank operations entail large fixed costs, including the costs of setting up a network of branches to be close to clients, to collect deposits, and to extend loans. If markets are small, banks may not enjoy the benefits of economies of scale. Banks may also be able to charge high interest margins.