Extending Financial Inclusion In Africa

Extending Financial Inclusion in Africa unveils the genesis and transformation of Africa’s financial sector and its ability to provide finance for all. Contributors of the Book traverse the whole spectrum of African financial systems, examining their depth and breadth and empirically evaluating their appropriateness and effectiveness to achieve inclusive financial services. Explores the evolution of the financial sector in Africa from the pre-colonial to post-colonial era Investigates the financial inclusion–economic growth nexus Explores the role of financial regulation and governance in either enhancing or limiting financial inclusion Evaluates unintended consequences of financial inclusion, including over-indebtedness and increased propensity to spend Assesses cross-sectional evidence on the link between financial inclusion and technological developments such as the internet and mobile technology

Transforming Africa: How Savings Groups Foster Financial Inclusion, Resilience and Economic Development presents in-depth empirical research into current day savings group activities across Africa, exploring savings groups through the lens of financial inclusion and reflecting on formal finance, economic and social outcomes.

This paper discusses how sub-Saharan Africa’s financial sector developed in the past few decades, compared with other regions. Sub-Saharan African countries have made substantial progress in financial development over the past decade, but there is still considerable scope for further development, especially compared with other regions. Indeed, until a decade or so ago, the level of financial development in a large number of sub-Saharan African countries had actually regressed relative to the early 1980s. With the exception of the region’s middle-income countries, both financial market depth and institutional development are lower than in other developing regions. The region has led the world in innovative financial services based on mobile telephony, but there remains scope to increase financial inclusion further. The development of mobile telephone-based systems has helped to incorporate a large share of the population into the financial system, especially in East Africa. Pan-African banks have been a driver for homegrown financial development, but they also bring a number of challenges.

Financial inclusion has been noted as a key driver of poverty alleviation and growth. Yet, most of the scholarly work that exists lacks a comprehensive discussion of how the poor interact with financial services and the channels through which such services can affect their livelihoods. This book offers researchers who focus on financial inclusion and African economies a one-stop resource for understanding the channels of transmission for financial inclusion as well as an application of these channels through original country-specific empirical papers. The book provides a back-to-basics presentation of the transmission of financial services to growth and poverty. This theoretical discussion is complemented by an empirical presentation of the various services used by the poor, with a focus on Africa. Case studies of financial inclusion in six African countries cover a broad range of topics most important to African countries and highlight the unique African setting. These empirical papers provide important learning points. Firstly, hybrid financial institutions such as cooperative financial institutions and financial social entrepreneurs are the best way to increase financial inclusion in Africa. They provide important vehicles to circumvent the restrictive and exclusive bank-based financial markets typical of African economies. Secondly, digital finance is a potent tool for improving financial access and usage in Africa, and its impact on poverty operates through both traditional and nontraditional financial instruments. Thirdly, investment in infrastructure which supports complementary markets is critical and is likely to have a greater effect on credit rationing than direct provision of credit to small businesses.

This edited volume contains eight studies of financial sector challenges in Africa that served as background studies for Financing Africa: Through the Crisis and Beyond. One of the major challenges for African financial systems is to expand financial services to a larger share of the population. The chapters in this area cover microfinance in Africa, the role of technology, reforms of payment infrastructure, and financing agriculture. Two chapters cover challenges in increasing long-term finance; one covers housing finance and the other the role of sovereign wealth fund. The book also contains a detailed discussion of bank regulation and supervision, especially in light of the current regulatory reforms in Europe and North America. The final chapter provides a political economy perspective, discussing the conditions for activist government policies in the financial sector.

FinTech is a major force shaping the structure of the financial industry in sub-Saharan Africa. New technologies are being developed and implemented in sub-Saharan Africa with the potential to change the competitive landscape in the financial industry. While it raises concerns on the emergence of vulnerabilities, FinTech challenges traditional structures and creates efficiency gains by opening up the financial services value chain. Today, FinTech is emerging as a technological enabler in the region, improving financial inclusion and serving as a catalyst for the emergence of innovations in other sectors, such as agriculture and infrastructure.

This paper examines financial inclusion and development in the CEMAC. We explore the level of financial inclusion in the CEMAC through a benchmarking exercise.We construct a measure of financial development gap and analyze its determinants. Using panel data regressions, we find that inflation, income, and natural resources explain most of the financial development level but that better financial sector governance and stronger economic governance are positively associated with financial sector development. Richer and poorer countries can be equally far from their expected financial development levels. Finally, we use a benchmarking exercise to identify countries that have successfully reduced the financial development gap and propose policy measures that CEMAC countries could use to boost financial inclusion.

In its fourth edition, this report focuses on recent developments in Africa's banking sectors and the policy options for all stakeholders. The study of banking sectors across all African sub-regions includes the results of the EIB survey of banking groups operating in Africa. Three thematic chapters address challenges and opportunities for financing investment in Africa: Crowding out of private sector lending by public debt issuance The state of bank recovery and resolution laws in Africa Policy options on how to finance infrastructure development. The report finds that in many African banking markets, the last two years saw a pause in financial deepening. However, a rising share of banking groups report improving market conditions and plan a structural expansion of their operations in Africa and a continued push for new technologies.

In this paper we study how competition and financial soundness affect financial inclusion in Sub-Saharan Africa (SSA). We use detailed individual-level survey data, combined with key country-level indicators of bank competition and financial soundness, to study the effect on the adoption of several financial products (bank accounts, credit and debit cards, and bank loans). We find that more competition tends to increase the probability of access to these financial products. On the contrary, we do not find strong evidence of the effect of bank-balance sheet variables (i.e. capital adequacy or liquidity) on borrowing by individuals. Our results may help policy makers design regulations that could improve financial inclusion, which could potentially impact economic growth and long-term economic development.