Financial Inclusion In Africa

1760 Words8 Pages
1.1 Research Background Financial inclusion has been a topic of recent concern in many countries, both developed and undeveloped. Broadly, financial inclusion is defined as individuals and businesses have access to useful and affordable financial products and services that meet their needs transactions, payments, savings, credit and insurance delivered in a responsible and sustainable way (Swamy, 2014). In its most basic definition, financial inclusion refers to the fact that a person owns an account at a formal financial institution. Such an account allows to save and borrow money formally, to contract insurance or to use payment services. Being financially included leads therefore to economic benefits. It can favor disadvantaged and poor…show more content…
Beck and Cull (2015) observe that African banking systems are less inclusive than those outside Africa. Once they drop upper middle-income countries, they observe that 21 percent of firms affirm they have a line of credit and 16.5 percent of households report having an account with a formal financial institution in the median African country, while the figures are respectively 43 percent and 21 percent in the median non-African country. Mlachila et al. (2013a) point out that financial sector development has contributed to improve the growth process but financial services are clustered around major urban areas. There are, however, current evolutions which can foster or at least transform the situation of financial inclusion in Africa with the emergence of mobile banking and the rising economic growth in many of these countries. Financial inclusion enables improved and better sustainable economic and social development of the country. It helps in the empowerment of the underprivileged, poor and women of the society with the mission of making them self-sufficient and well informed to take better financial decisions. Financial inclusion considers the participation of vulnerable groups such as weaker sections of the society and low income groups, based on the extent of their access to financial services such as savings and payment account, credit insurance, pensions etc. Also, the objective of financial inclusion exercise is…show more content…
However, there has not been much discussion on whether financial development implies financial inclusion. It has been observed that even “well-developed‟ financial systems have not succeeded to be „all-inclusive‟ and certain segments of the population remain outside the formal financial systems. The importance of an inclusive financial system is widely recognized in the policy circle and financial inclusion is seen as a policy priority in many countries. A review of extant literature suggests that several studies have been done on financial inclusion with regards to economic development, credit accessibility, poverty alleviation and financial stability among others in Kenya, Uganda, India and some southern American countries (Asongu & De Moor, 2015; Claessens, 2005; Waiyaki, 2013). However, very little is done on the impact on savings behaviour of beneficiaries of financial services in those countries and

More about Financial Inclusion In Africa

Open Document