The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial services
Financial inclusion in Africa faces significant challenges, including inadequate infrastructure, regulatory obstacles, and socioeconomic barriers, which limit access to financial services for underserved populations. In response to these challenges, this study examines how financial inclusion influe...
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| Language: | English |
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Elsevier
2025-01-01
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| Series: | Social Sciences and Humanities Open |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2590291124004601 |
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| author | Godswill Osuma |
| author_facet | Godswill Osuma |
| author_sort | Godswill Osuma |
| collection | DOAJ |
| description | Financial inclusion in Africa faces significant challenges, including inadequate infrastructure, regulatory obstacles, and socioeconomic barriers, which limit access to financial services for underserved populations. In response to these challenges, this study examines how financial inclusion influences economic growth and poverty reduction across three Sub-Saharan Africa regions, namely East, West, and Southern Africa, spanning 28 countries from 2016 to 2023. Financial inclusion is measured through the availability of Automated Teller Machines and digital financial services, using a system Generalised Method of Moments and Quantile regression approach. The findings emphasise the pivotal role of digital financial services in expanding access to financial resources, particularly in East and Southern Africa, while highlighting ongoing disparities in West Africa. The quantile regression analysis reveals that inflation adversely affects GDP growth across all quantiles, whereas foreign direct investment consistently supports economic growth. Furthermore, the findings showed that digital financial services are more effective than automated teller machines in promoting financial inclusion, and infrastructure and digital literacy improvements are recommended to accelerate progress. In conclusion, enhancing digital financial services in Sub-Saharan Africa has the potential to significantly improve financial inclusion, drive economic growth, and reduce poverty levels. The study suggests that Sub-Saharan African countries should prioritise digital financial services, invest in infrastructure, promote financial literacy, and implement inclusive policies to ensure broader access to financial resources. This is because promoting digital financial services can offer Sub-Saharan African countries a path toward economic empowerment and alignment with Sustainable Development Goals, helping to bridge the financial inclusion gap. |
| format | Article |
| id | doaj-art-d46ab6b8f0b641d0bb64d8693638ac86 |
| institution | OA Journals |
| issn | 2590-2911 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Social Sciences and Humanities Open |
| spelling | doaj-art-d46ab6b8f0b641d0bb64d8693638ac862025-08-20T02:36:26ZengElsevierSocial Sciences and Humanities Open2590-29112025-01-011110126310.1016/j.ssaho.2024.101263The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial servicesGodswill Osuma0School of Economics, University of Johannesburg, South AfricaFinancial inclusion in Africa faces significant challenges, including inadequate infrastructure, regulatory obstacles, and socioeconomic barriers, which limit access to financial services for underserved populations. In response to these challenges, this study examines how financial inclusion influences economic growth and poverty reduction across three Sub-Saharan Africa regions, namely East, West, and Southern Africa, spanning 28 countries from 2016 to 2023. Financial inclusion is measured through the availability of Automated Teller Machines and digital financial services, using a system Generalised Method of Moments and Quantile regression approach. The findings emphasise the pivotal role of digital financial services in expanding access to financial resources, particularly in East and Southern Africa, while highlighting ongoing disparities in West Africa. The quantile regression analysis reveals that inflation adversely affects GDP growth across all quantiles, whereas foreign direct investment consistently supports economic growth. Furthermore, the findings showed that digital financial services are more effective than automated teller machines in promoting financial inclusion, and infrastructure and digital literacy improvements are recommended to accelerate progress. In conclusion, enhancing digital financial services in Sub-Saharan Africa has the potential to significantly improve financial inclusion, drive economic growth, and reduce poverty levels. The study suggests that Sub-Saharan African countries should prioritise digital financial services, invest in infrastructure, promote financial literacy, and implement inclusive policies to ensure broader access to financial resources. This is because promoting digital financial services can offer Sub-Saharan African countries a path toward economic empowerment and alignment with Sustainable Development Goals, helping to bridge the financial inclusion gap.http://www.sciencedirect.com/science/article/pii/S2590291124004601Financial inclusionSub-saharan africaEconomic growthSystem GMMPoverty rate |
| spellingShingle | Godswill Osuma The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial services Social Sciences and Humanities Open Financial inclusion Sub-saharan africa Economic growth System GMM Poverty rate |
| title | The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial services |
| title_full | The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial services |
| title_fullStr | The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial services |
| title_full_unstemmed | The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial services |
| title_short | The impact of financial inclusion on poverty reduction and economic growth in Sub-Saharan Africa: A comparative study of digital financial services |
| title_sort | impact of financial inclusion on poverty reduction and economic growth in sub saharan africa a comparative study of digital financial services |
| topic | Financial inclusion Sub-saharan africa Economic growth System GMM Poverty rate |
| url | http://www.sciencedirect.com/science/article/pii/S2590291124004601 |
| work_keys_str_mv | AT godswillosuma theimpactoffinancialinclusiononpovertyreductionandeconomicgrowthinsubsaharanafricaacomparativestudyofdigitalfinancialservices AT godswillosuma impactoffinancialinclusiononpovertyreductionandeconomicgrowthinsubsaharanafricaacomparativestudyofdigitalfinancialservices |