The data represent a third round of data collection since the global findex database was launched in 2011. Kenya is now third in subsaharan africa for financial access, behind south africa and mauritius. Subsaharan africa is, geographically, the area of the continent of africa that lies south of the. An especially high proportion of rural dwellers 63% in 2010 down from 85% in 1960. Financial inclusion is through access to financial services such as credit, bank accounts, deposits, payments services, insurance, and. New data from the global financial inclusion global findex database show that 24 percent of adults in subsaharan africa have an account at a formal financial institution, and 16 percent use a mobile phone to pay bills or send or receive money. Accelerating financial sector development to boost growth in. International remittances and financial inclusion in sub. According to demirguckunt and klapper 2012, overall, 23% of adults in the africa region have an account. One way to improve the wellbeing of south africas population is through financial inclusionthe adop. Financial inclusion and poverty reduction in subsaharan.
Banking in subsaharan africa recent trends and digital financial. Also, it hypothesizes that geographical endowments latitude, land area. Second, it uses the global financial inclusion indicators global findex database to characterize adults in africa. Ifc helps clients like airtel deploy new technology and innovative business models to increase financial inclusion. The good news is that technology can help overcome this problem, and contribute promoting financial inclusion. This paper uses world bank survey data, including about 10,000 households in five countries burkina faso, kenya, nigeria, senegal, and uganda to investigate the link between international remittances and households financial inclusion in subsaharan africa. Understanding financial inclusion in west africa cnbc africa. Financial inclusion is a subsaharan success story acca global. Designations employed in this publication do not imply the expression of any opinion, on. Financial inclusion in africa african development bank. The banking sector of most subsaharan african countries is underdeveloped despite. Financial inclusion is a key element of social inclusion, particularly useful in.
Within africa, there is a large variation in account ownership ranging from 42% in southern africa to 7% in central africa panel b, figure ii. Having identified the nature of this association between financial inclusion and financial stability. Gemechu ayana aga is a private sector development analyst. Whos getting financial inclusion funding in subsaharan africa. Does financial inclusion reduce poverty and income inequality in. Financial development in sub saharan africa promoting inclusive and sustainable growth prepared by a team led by montfort mlachila and composed of larry cui, ahmat jidoud, monique newiak, bozena radzewiczbak, misa takebe, yanmin ye, and jiayi zhang author author author author. Gemechu ayana aga and maria soledad martinez peria. This publication on financial inclusion in africa is produced by the staff of the african development bank, and the views expressed therein do not necessarily re. Sep 21, 2016 kenya is now third in subsaharan africa for financial access, behind south africa and mauritius. And it finds once more that subsaharan africa is well represented in the top 10. For south africa, we recommend that the ministry of finance, the south african reserve bank, or both acting together start a multiyear journey of sustainable financial inclusion. Financial inclusion is poor in subsaharan africa, but. So, what do we know about financial inclusion in our corner of the world.
Using 35 countries and almost 35,000 individuals, this study explored determinants as well as the effect of financial inclusion on poverty reduction in sub saharan africa. This paper uses world bank survey data, including about 10,000 households in five countries burkina faso, kenya, nigeria, senegal, and uganda to investigate the link between international remittances and households financial inclusion in sub saharan africa. New data from the global financial inclusion global findex database show that 24 percent of adults in sub saharan africa have an account at a formal financial institution, and 16 percent use a mobile phone to pay bills or send or receive money. Financial inclusion design in subsaharan africa blog 11. Mobile drives financial inclusion in africa, growing 20%. The paper examines the long run and causal relationship between. The african finance journal, volume 1 9 part 1, 2017 1 financial inclusion and poverty reduction in subsaharan africa jabir ibrahim mohammed, lord mensah and agyapomaa gyekedako. In general, according to the recently published world bank findex survey, financial inclusion in subsaharan africa has increased dramatically from 23% in 2011 to 43 % in 2017. Broadening financial inclusion in subsaharan africa. The little data book on financial inclusion 2018 is a pocket edition of the global findex database published in 2018.
Microfinance investment in brief stability, a growing middle. A couple of examples that i read in the latest issue of the africa. In subsaharan africa, women are not encouraged to do business due to cultural barriers, but mobile banking services drove financial inclusion in countries of subsaharan africa demirguckunt et al. The trend is healthy, but there are challenges ahead. Taking stock of financial and digital inclusion in sub. With 350 million adults excluded from the formal financial ecosystem, subsaharan africa is working to provide better access to financial services. The experience of 10 subsaharan african countries revisited anthony enisan akinlo and tajudeen egbetunde abstract. Asiimwe now stores earnings and even pays her bills by mobile phone with airtel money, one of the 22 digital financial services receiving ifc advisory support in sub saharan africa. The sahel extends across all of africa at a latitude of about 10 to 15 n. Countries that include parts of the sahara desert proper in their. International remittances and financial inclusion in subsaharan africa. Digital financial inclusion in subsaharan africa central banks are mandated to promote and protect financial stability, but they need to balance this mandate with the need to foster financial inclusion, said afi head of strategy and member relations, mr. We find that being a man, richer, more educated and older favor financial inclusion with a higher influence of education and income. This paper examines barriers to financial inclusion across sub sahara africa ssa using the 2014 global findex dataset from the demandside perspective.
First, it provides a brief overview of the african financial sector landscape. For the first time in over a decade, subsaharan africa is a top priority for international funders investing in financial inclusion, with 30 percent of all active projects focused on the region. Financial inclusion in africa world bank documents. Without addressing these constraints, those 700 million accounts are a vanity statistic for the. To fully appreciate the potential for further financial development, take a look at the encouraging progress subsaharan african countries have made over the last decades. Comparative financial inclusion in subsaharan africa and.
Asiimwe now stores earnings and even pays her bills by mobile phone with airtel money, one of the 22 digital financial services receiving ifc advisory support in subsaharan africa. Gemechu ayana aga is a private sector development analyst in the enterprise analysis unit of the world bank. In its 2016 report it scores best practice in terms of country commitment, mobile capacity, regulatory environment and level of actual adoption. And it finds once more that sub saharan africa is well represented in the top 10. Financial inclusion has been identified as a priority by multiple agencies in the region. These objectives are stated in the null hypotheses as follows. Absolute number of people risen to 534m from 196m in 1960. This paper summarizes financial inclusion across africa. Finally, the amount of credit provided to the private sector % of gdp captures the usage. Broadening financial inclusion in subsaharan africa overseas. Increased banking coverage must happen simultaneously with the necessary, domestic macroprudential policies that protect against the greater risks of transmitting financial shocks. South africa is 1% away from its national development plan goal of 90% financial inclusion by 2030.
Online banking boosts financial inclusion in subsaharan africa. In india, pakistan, and the philippines, either the finance ministry or the central bank has taken the lead in pushing for financial inclusion. Pdf an investigation into the level of financial inclusion in sub. West africa has many financial cooperatives mostly called decentralized financial systems or savings and credit cooperatives. The politics of central banking and implications for regulatory reform in subsaharan africa the cases of kenya, nigeria and uganda florence dafe this discussion paper is part of a wider study on the political economy of financial reforms within the research project making finance. Recent growth in bank branches largely an urban phenomena e. Despite instances of significant financial innovation, financial inclusion in lowerincome countries is uneven, especially in the regional case of subsaharan africa. However, a more innovative approach to financial inclusion is required in south africa. This paper examines barriers to financial inclusion across subsahara africa ssa using the 2014 global findex dataset from the demandside perspective. Financial inclusion is critical for the competitiveness of the middle east and north africa mena region, for employment creation, and for raising incomes and reducing poverty. We first provide a brief overview of the african financial sector. Skills development in financial institutions in subsaharan. Despite instances of significant financial innovation, financial inclusion in lowerincome countries is uneven, especially in the regional case of sub saharan africa. Maria soledad martinez peria is a research manager in the development research.
Financial inclusion and poverty reduction in subsaharan africa. Financial inclusion in africa financial systems in africa generally lag behind those in other developing economies, despite the fact that many significant improvements were implemented within the past decades. Financial development in subsaharan africa promoting inclusive and sustainable growth prepared by a team led by montfort mlachila and composed of larry cui, ahmat jidoud, monique newiak, bozena radzewiczbak, misa takebe, yanmin ye, and jiayi zhang author author author author. Taking stock of financial and digital inclusion in subsaharan africa. Financial inclusion in a dynamic west african context looking at the. The politics of central banking and implications for. While regulation by the government can act as a catalyst, financial institutions will need to work together with the public and private sectors. The project has since reported twice annually on the nature and extent of financial inclusion. Subsaharan africa alliance for financial inclusion.
Pdf barriers of financial inclusion in subsaharan africa. We employed treatment effects version of the heckman sample selection model and propensity score matching psm for robustness checks. The launch and growth of digital financial services in africa has led to an unprecedented increase in the number of people enjoying. We use the world banks global findex database on 37 african countries to perform probit estimations.
Download the little data book on financial inclusion. Benchmarking the financial performance, growth, and. Digital financial inclusion in subsaharan africa european. Against this background, this study investigates the level of financial inclusion in subsaharan africa between 2005 and 2015. Financial cooperatives also predominate in central africa, and they tend to be weak on risk indicators, such as portfolio at risk par microfinance investment in.
Kennedy komba during the roundtable, digital financial inclusion in subsaharan africa, in berlin earlier this year. An integrated framework for financial inclusion of vulnerable communities in south africas regulatory system reform. Food security in subsaharan africa deutsches institut fur. Apr 11, 2017 in india, pakistan, and the philippines, either the finance ministry or the central bank has taken the lead in pushing for financial inclusion. To get at those concepts, we rely on the best available indicators that proxy for the growth, financial performance, and outreach to typically underserved market segments of a. Other east african countries such as tanzania, uganda, and rwanda are following kenyas example, using financial technology to leapfrog traditional banking systems and provide financial services to all levels of society.
Second, it uses the global financial inclusion indicators global findex database to characterize adults in africa that use formal and informal financial services and identify the barriers to formal account ownership. Sep, 2016 with 350 million adults excluded from the formal financial ecosystem, sub saharan africa is working to provide better access to financial services. In kenya, both startups and established banks are using technology to evaluate creditworthiness in unconventional ways. On october 6, the brookings africa growth initiative, the global development network, and the african economic research consortium hosted an event in which african researchers and aid agency staff engaged african policymakers in conversations on the present and future of policy in two key areas for the continentfinancial inclusion and agriculturebased on available policy knowledge and. Jul, 2016 to fully appreciate the potential for further financial development, take a look at the encouraging progress sub saharan african countries have made over the last decades. In addition, other financing sources such as equity markets are underdeveloped. First, the region has led the world in innovative financial services based on mobile telephones, especially in east africa. Given that subsaharan africa is so in need of more inclusive growth path, enabling financial inclusion should be a concern.
According to the world bank, 24 % of the adult population of subsaharan countries had a bank account in 2011. Cnbc africa brings you a discussion from the symposium on financial inclusion recently held in ghana accra, themed. Digital financial inclusion in subsaharan africa alliance. This article will draw insights from the world banks global findex database which focuses on measuring financial inclusion globally.
Assessing financial inclusion advances in subsaharan africa. The determinants of financial inclusion in africa sciencedirect. Financial inclusion design in subsaharan africa when the world bank launched a focus on financial inclusion in 2011, about 2. Using 35 countries and almost 35,000 individuals, this study explored determinants as well as the effect of financial inclusion on poverty reduction in subsaharan africa. The objective of this paper is to examine the determinants of financial inclusion in africa. However, much remains to be done and the pace of digital financial inclusion has varied in different african countries. One of the most significant urbanrural financial inclusion divides is in ssa. Aug 31, 2015 taking stock of financial and digital inclusion in sub saharan africa. Financial inclusion is through access to financial services such as credit, bank accounts, deposits, payments services, insurance, and pensions. This paper summarizes the status of financial inclusion in africa. Ethiopia is, however, lagging behind its neighbors. Both the formal financial sector and micro financial institutions have recently witnessed fast growth in africa.