A Look into Financial Inclusion in Africa

Updated: Oct 7, 2020

Africa, a continent with 54 countries, is the second-most populous continent in the whole world. It is also a continent known for its poverty, with 27 African countries included in the world’s 28 poorest countries. With these figures, it is no surprise then that only 23% of adults have an account at a formal financial institution.

While there are still a lot of Africans who are not financially included, there are some financial-inclusion related projects supported by Development Finance Institutions (DFIs). The following projects just scratch the surface of financial inclusion, but they have helped reach the unbanked and underserved.

Mobile Banking

Mobile banking has proven itself key to financial inclusion because it enables people to use financial services even when they don’t have access to a bank branch. In Africa, mobile banking began via M-Pesa, a mobile phone-based money transfer service, that allowed users to deposit, send, and withdraw funds using their phones. M-Pesa was a success in Kenya and this prompted other DFIs to do the same and invest in mobile banking.


The microfinance sector in banking specifically targets and serves low-income households with no access to financial services. Launched by the European Investment Bank and the African Development Bank, the European Solidarity Financing Fund for Africa provides microfinance funds to the underprivileged in rural Africa.

Credit Reporting System

The International Finance Corporation helps less developed countries by offering investment, advisory, and asset management services. They have been active in setting up credit reporting systems in Africa. Through the Credit Bureau Program, they provided advisory services to several developing economies in the continent — resulting in improved credit bureaus.

Risk Management Initiative

GuarantCo, a company established to support the development of financial markets in lower-income countries, provides risk mitigation instruments to enhance local currency debt issuance in lower-income countries and funds for technical assistance. In Africa alone, 45 countries are eligible to receive this support from GuarantCo.

While Africa has these financial-inclusion related projects, there is a lot needed to be done to increase the rate of financial inclusion in the continent. While mobile banking has already been introduced, the digital infrastructure has more to improve on to make sure everyone has access to digital financial services. Mobile banking technologies should also work hand in hand with formal banking methods.

Financial literacy in Africa also isn’t very consistent — with the most financially literate country being Botswana at 51% while the least being Somalia at 15%. To address these, the countries with low financial literacy should create national programs to educate those financially illiterate.

Lastly, one of the barriers to financial inclusion in Africa is the distance needed to travel to a financial institution. To address this issue, financial services should be extended to rural areas via banking agents. Agency banking as proven effective in enabling financial inclusion, so this should continually be practiced in underserved areas in Africa.


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