Financial Inclusion Condition of African Countries

Tough Chinoda () and Farai Kwenda ()
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Tough Chinoda: University of KwaZulu-Natal
Farai Kwenda: University of Swaziland

Acta Universitatis Danubius. OEconomica, 2019, issue 15(3), 242-266

Abstract: We assessed the financial inclusion environment and its determinants in Africa. We used the Financial Inclusion index computed through the Principal Component Analysis that is generally acknowledged as the best at estimating the financial inclusion level and the two-step system GMM approach with robust and orthogonal deviation option to study countries for the period 2004 to 2016. We found wide discrepancies in financial inclusion amongst the 49 African countries under study. Only two countries had an average financial inclusion index above 50 percent, and the majority are below 40 percent validating the argument that the African region need immediate intervention. Hence, we concluded that the African region has financial inclusion gaps and is contestable. As such, we recommend, among other things, that policy makers should device measures to ensure an ongoing financially inclusive environment while stimulating other variables which acts as barriers to financial inclusion.

Keywords: Financial inclusion condition; Africa; Financial Inclusion index; Principal Component Analysis (search for similar items in EconPapers)
Date: 2019
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