About Financial Inclusion

Africa is the world’s second fastest growing region after South Asia, the next billion population addition to the global population will come from Africa. It is therefore important that the continent is prepared to serve and better the livelihoods for these majority

Growth has to be inclusive to be socially and politically sustainable. One key component of inclusive development is financial inclusion, an area in which Africa has been lagging behind other continents. Less than one adult out of four in Africa have access to an account at a formal financial institution.

Broadening access to financial services will mobilize greater household savings, marshal capital for investment, expand the class of entrepreneurs, and enable more people to invest in themselves and their families. Financial inclusion is therefore necessary to ensure that economic growth performance is inclusive and sustained in three major areas.

Access

Making financial services available and affordable to users

Usage

Making customers use financial services frequently and regularly

Quality

Making financial services tailored to clients’ needs

Africa is at a turning point. Many countries have achieved high growth rates over the past decade, and many aspire to structural transformation, but the good performance has not translated into significant poverty reduction and shared prosperity. For sustained and inclusive development to thrive, a great deal of innovation and thinking is needed to ensure that appropriate financial services and instruments are put in place for the benefit of the poor and other vulnerable groups. This includes the provision of appropriate and quality financial products that is both accessible and affordable to low-income and other vulnerable households. Notably the target groups traditionally excluded from the formal financial sector.

Increasing account ownership also would promote gender equality (SDG No. 5). Consider that poor women account for 1.1 billion of unbanked adults, or most of the financially excluded.

People who can access financial services have greater security and privacy over their money. Savings accounts make it easier to save, so people save more and earn more.

Financial inclusion is directly connected to achieving several of the Sustainable Development Goals (SDGs)

  • Increasing account ownership also would promote gender equality (SDG No. 5). Consider that poor women account for 1.1 billion of unbanked adults, or most of the financially excluded. When savings accounts were offered to female market vendors in Kenya, their daily expenditure increased by 37%, relative to a comparable group of women who did not receive an account.
  • Financial inclusion of farmers can unleash bigger investments in the planting season. The result: higher yields—and progress toward greater food security (SDG No. 2). When Malawian farmershad their earnings deposited into a new bank account, they spent 13% more on equipment and increased the value of their crop output by 21%. (Source: CGAP, Financial Inclusion has a big role to play in reaching SDGs).

Join the financial revolution