Financial inclusion lies at the heart of sustainable development. It is not merely about opening bank accounts. It also ensures affordable, accessible, and appropriate financial services for all, particularly those historically excluded from the formal financial system. Access to savings, credit, and insurance can foster economic empowerment, enhance resilience, and fuel broader economic growth. Despite global recognition of its transformative role, significant disparities in financial inclusion persist between regions, with Sub-Saharan Africa (SSA) remaining among the most financially excluded.
The latest Global Financial Inclusion Index shows that only around 55% of adults in SSA have access to basic financial services.[i] In contrast, developed economies, especially those belonging to the Organization for Economic Co-operation and Development (OECD), report nearly universal financial access. Countries like Nigeria and Egypt, both with large populations, are among those with the lowest inclusion rates globally, together contributing to more than half of the world’s unbanked adults.
Understanding the reasons for this disparity is critical for guiding effective policy. While governments and development partners have made significant investments to expand financial access in SSA, many of these efforts have not yielded uniform or sustained results. Persistent barriers ranging from infrastructure gaps and weak financial literacy to limited bank efficiency and a dominant informal sector continue to undermine progress.
This piece is from a comparative study that used OECD countries as a benchmark to understand the determinants of financial inclusion in SSA. The OECD includes a mix of advanced economies that, while not uniform, are more financially inclusive than SSA. For example, High-income OECD countries, such as the Netherlands, the United States, the United Kingdom, Switzerland, Finland, and Norway, have full access to financial institutions. Comparing both regions helps identify strategies that could be adapted to SSA contexts. Though not all policies are directly transferable, insights from the OECD offer constructive lessons in institutional design, innovation, and regulation.
Determinants of Financial Inclusion in Sub-Saharan Africa
Socioeconomic Factors
Regarding socio-economic factors, literacy is critical in promoting financial inclusion in SSA. As literacy improves, individuals become more aware of financial products and services, leading to better financial decisions. Literate populations are more likely to open accounts, save, and adopt digital financial platforms. Further, remittances were found to exhibit a decreasing impact on financial inclusion in SSA. It is common in SSA for remittances to be sent by travelers or unregulated alternatives due to their low costs for foreign exchange conversion. To capture this market, commercial banks might find it helpful to increase their innovative products tailored to migrants to boost deposit reserves. This approach could involve introducing attractive incentives, such as higher interest rates on remittance-based deposits, and considering regular remittance flows as collateral for credit allocation.[ii]
Policy Factors
Trade openness is observed as a strong positive driver of financial inclusion in SSA. Greater openness attracts foreign competitors to the domestic market. The prevalence of trade competition decreases earnings and internal cash flows, forcing firms to rely on financing from domestic banks, capital markets, or external funding. This dynamic has contributed to the rapid expansion of mobile money platforms and digital payment systems in SSA, especially in economies with high trade integration. Conversely, government expenditure appears to reduce financial inclusion. This may stem from inefficient allocation or public spending that crowds out private investment. More targeted spending on financial infrastructure and inclusion-related initiatives is needed.
Institutional Factors
Political governance, particularly political stability, positively influences financial inclusion. A stable environment fosters private investment in banking infrastructure and financial technology, which are essential for broadening financial access across both urban and rural areas. Effective trade protocols also support inclusion by facilitating financial services for traders and cross-border transactions. On the other hand, tax governance has little to no contributing impact, likely due to the prevalence of informal economies in SSA. A significant portion of financial activity occurs outside the tax net, diluting the role that tax structures can play in promoting inclusion.
Macroeconomic Factors
Surprisingly, higher GDP per capita is associated with lower financial inclusion in SSA. Given the unequal distribution of income and the dominance of the informal economy in SSA, income gains are unequally distributed, benefiting wealthier individuals who already have access, while poorer populations remain excluded.
Industry-Specific Factors
Bank efficiency plays a critical role in improving financial inclusion. Efficient banking can cut operational costs, making it feasible to offer services in remote or low-income areas. Efficiency also supports innovation and reduces political interference. Gross capital formation (GCF), however, negatively contributes to inclusion. Capital investment in SSA often favours infrastructure and extractive industries, focusing little on financial service development or digital finance.
Determinants of Financial Inclusion in OECD Countries
Compared to Sub-Saharan Africa, financial inclusion in OECD countries is shaped by a different set of dynamics. High income levels, formal employment, and efficient banking systems consistently promote financial access, while moderate inflation further supports intermediation. Interestingly, increasing levels of literacy potentially reduce financial inclusion by encouraging overconfidence in personal financial management. People are less likely to seek financial advice or use available services. Unlike SSA, remittances contribute to an increase in financial inclusion levels as they tend to flow mainly through formal channels, which encourages account usage. On the institutional side, higher tax burdens can discourage engagement with the formal financial sector, while trade protocols still help by supporting cross-border financial activity. Meanwhile, factors like political stability and trade openness, which matter a lot in SSA, have less impact in OECD. Most OECD countries already enjoy high levels of political stability and uniform trade patterns, which reduces the marginal impact of these variables on financial access.
Policy Implications and Final Thoughts
We emphasize that educational policies that promote literacy could improve financial inclusion. In OECD countries, designing inclusive services for varying levels of financial literacy is crucial. As financial markets evolve with new products and services, both literate and illiterate individuals interact with the formal financial system. New consumers might require more and better information to improve their understanding of financial services and products. One effective approach to financial literacy is “learning by doing” as individuals open and use accounts. Educational reforms should also incorporate financial innovation and digital literacy. The World Bank encourages financial service providers and regulators to offer information to customers in straightforward language and a simple format. We also recommend that information on financial services and products be provided in the local languages of the various countries. This initiative could complement existing literacy policies and initiatives, such as Ghana’s National Literacy Acceleration Program, Nigeria’s National Mass Education Commission, and South Africa’s Kha Ri Gude Mass Literacy Campaign. These programs focus on native language instruction, literacy, numeracy, and spoken English skills.
Financial literacy initiatives could also be framed as corporate social responsibility (CSR) efforts. When public resources are limited, financial institutions can support underserved communities through targeted education programs. This not only promotes financial inclusion but also builds trust and customer loyalty. A win-win outcome. Furthermore, improving financial inclusion requires policies that enhance bank efficiency. This can be achieved through technological innovation and structural and regulatory reforms. Such efforts reduce reliance on political interventions and help financial systems remain resilient to external shocks. Maintaining an efficient and responsive banking system is critical for financial stability. It supports uninterrupted access to financial services and continuous financial innovation through technology-driven solutions.
The full report is available here: https://www.sciencedirect.com/science/article/pii/S2214845024001431
Financial inclusion lies at the heart of sustainable development. It is not merely about opening bank accounts. It also ensures affordable, accessible, and appropriate financial services for all, particularly those historically excluded from the formal financial system. Access to savings, credit, and insurance can foster economic empowerment, enhance resilience, and fuel broader economic growth. Despite global recognition of its transformative role, significant disparities in financial inclusion persist between regions, with Sub-Saharan Africa (SSA) remaining among the most financially excluded.
The latest Global Financial Inclusion Index shows that only around 55% of adults in SSA have access to basic financial services.[i] In contrast, developed economies, especially those belonging to the Organization for Economic Co-operation and Development (OECD), report nearly universal financial access. Countries like Nigeria and Egypt, both with large populations, are among those with the lowest inclusion rates globally, together contributing to more than half of the world’s unbanked adults.
Understanding the reasons for this disparity is critical for guiding effective policy. While governments and development partners have made significant investments to expand financial access in SSA, many of these efforts have not yielded uniform or sustained results. Persistent barriers ranging from infrastructure gaps and weak financial literacy to limited bank efficiency and a dominant informal sector continue to undermine progress.
This piece is from a comparative study that used OECD countries as a benchmark to understand the determinants of financial inclusion in SSA. The OECD includes a mix of advanced economies that, while not uniform, are more financially inclusive than SSA. For example, High-income OECD countries, such as the Netherlands, the United States, the United Kingdom, Switzerland, Finland, and Norway, have full access to financial institutions. Comparing both regions helps identify strategies that could be adapted to SSA contexts. Though not all policies are directly transferable, insights from the OECD offer constructive lessons in institutional design, innovation, and regulation.
Determinants of Financial Inclusion in Sub-Saharan Africa
Socioeconomic Factors
Regarding socio-economic factors, literacy is critical in promoting financial inclusion in SSA. As literacy improves, individuals become more aware of financial products and services, leading to better financial decisions. Literate populations are more likely to open accounts, save, and adopt digital financial platforms. Further, remittances were found to exhibit a decreasing impact on financial inclusion in SSA. It is common in SSA for remittances to be sent by travelers or unregulated alternatives due to their low costs for foreign exchange conversion. To capture this market, commercial banks might find it helpful to increase their innovative products tailored to migrants to boost deposit reserves. This approach could involve introducing attractive incentives, such as higher interest rates on remittance-based deposits, and considering regular remittance flows as collateral for credit allocation.[ii]
Policy Factors
Trade openness is observed as a strong positive driver of financial inclusion in SSA. Greater openness attracts foreign competitors to the domestic market. The prevalence of trade competition decreases earnings and internal cash flows, forcing firms to rely on financing from domestic banks, capital markets, or external funding. This dynamic has contributed to the rapid expansion of mobile money platforms and digital payment systems in SSA, especially in economies with high trade integration. Conversely, government expenditure appears to reduce financial inclusion. This may stem from inefficient allocation or public spending that crowds out private investment. More targeted spending on financial infrastructure and inclusion-related initiatives is needed.
Institutional Factors
Political governance, particularly political stability, positively influences financial inclusion. A stable environment fosters private investment in banking infrastructure and financial technology, which are essential for broadening financial access across both urban and rural areas. Effective trade protocols also support inclusion by facilitating financial services for traders and cross-border transactions. On the other hand, tax governance has little to no contributing impact, likely due to the prevalence of informal economies in SSA. A significant portion of financial activity occurs outside the tax net, diluting the role that tax structures can play in promoting inclusion.
Macroeconomic Factors
Surprisingly, higher GDP per capita is associated with lower financial inclusion in SSA. Given the unequal distribution of income and the dominance of the informal economy in SSA, income gains are unequally distributed, benefiting wealthier individuals who already have access, while poorer populations remain excluded.
Industry-Specific Factors
Bank efficiency plays a critical role in improving financial inclusion. Efficient banking can cut operational costs, making it feasible to offer services in remote or low-income areas. Efficiency also supports innovation and reduces political interference. Gross capital formation (GCF), however, negatively contributes to inclusion. Capital investment in SSA often favours infrastructure and extractive industries, focusing little on financial service development or digital finance.
Determinants of Financial Inclusion in OECD Countries
Compared to Sub-Saharan Africa, financial inclusion in OECD countries is shaped by a different set of dynamics. High income levels, formal employment, and efficient banking systems consistently promote financial access, while moderate inflation further supports intermediation. Interestingly, increasing levels of literacy potentially reduce financial inclusion by encouraging overconfidence in personal financial management. People are less likely to seek financial advice or use available services. Unlike SSA, remittances contribute to an increase in financial inclusion levels as they tend to flow mainly through formal channels, which encourages account usage. On the institutional side, higher tax burdens can discourage engagement with the formal financial sector, while trade protocols still help by supporting cross-border financial activity. Meanwhile, factors like political stability and trade openness, which matter a lot in SSA, have less impact in OECD. Most OECD countries already enjoy high levels of political stability and uniform trade patterns, which reduces the marginal impact of these variables on financial access.
Policy Implications and Final Thoughts
We emphasize that educational policies that promote literacy could improve financial inclusion. In OECD countries, designing inclusive services for varying levels of financial literacy is crucial. As financial markets evolve with new products and services, both literate and illiterate individuals interact with the formal financial system. New consumers might require more and better information to improve their understanding of financial services and products. One effective approach to financial literacy is “learning by doing” as individuals open and use accounts. Educational reforms should also incorporate financial innovation and digital literacy. The World Bank encourages financial service providers and regulators to offer information to customers in straightforward language and a simple format. We also recommend that information on financial services and products be provided in the local languages of the various countries. This initiative could complement existing literacy policies and initiatives, such as Ghana’s National Literacy Acceleration Program, Nigeria’s National Mass Education Commission, and South Africa’s Kha Ri Gude Mass Literacy Campaign. These programs focus on native language instruction, literacy, numeracy, and spoken English skills.
Financial literacy initiatives could also be framed as corporate social responsibility (CSR) efforts. When public resources are limited, financial institutions can support underserved communities through targeted education programs. This not only promotes financial inclusion but also builds trust and customer loyalty. A win-win outcome. Furthermore, improving financial inclusion requires policies that enhance bank efficiency. This can be achieved through technological innovation and structural and regulatory reforms. Such efforts reduce reliance on political interventions and help financial systems remain resilient to external shocks. Maintaining an efficient and responsive banking system is critical for financial stability. It supports uninterrupted access to financial services and continuous financial innovation through technology-driven solutions.
The full report is available here: https://www.sciencedirect.com/science/article/pii/S2214845024001431
[i] Demirgüç-Kunt, A., Klapper, L., Singer, D., & Ansar, S. (2022). The global findex database 2021: Financial inclusion, digital payments, and resilience in the age of COVID-19. The World Bank. https://doi.org/10.1596/978-1-4648-1897-4
[ii] Misati, R. N., Kamau, A., & Nassir, H. (2019). Do migrant remittances matter for financial development in Kenya? Financial Innovation, 5(1), 31. https://doi.org/10.1186/ s40854-019-0142-4
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About the Authors;
Samuel Fiifi Eshun is a doctoral researcher at the Institute of Economic Studies, Charles University, and is also affiliated with the Environment Centre at Charles University, both in Prague. His academic interests include financial markets and institutions, economic development, energy, and environmental economics. Samuel has co-authored peer-reviewed articles in leading field journals such as Borsa Istanbul Review and the Global Finance Journal, with notable contributions to the literature on financial inclusion in developing and advanced economies. In addition to his academic work, Samuel brings applied experience in treasury advisory at PwC Czech Republic. Before this, he worked with the Ministry of Finance, Ghana. He holds a Master of Commerce in Finance from the University of Cape Coast, Ghana.
Evžen Kočenda is an economist with over 25 years of research experience in applied economics, international finance, econometrics, and macroeconomic policy. He is a Professor of Economics at the Institute of Economic Studies at Charles University in Prague. He is also a senior researcher at the Charles University Environment Centre and the Institute of Information Theory and Automation. His research focus is on financial and energy markets, European economic integration, corporate governance, and nonlinear methods. He is a Research Fellow with the CESifo Network in Munich and the IOS in Regensburg, and a member of the Academia Europaea. He serves on the editorial boards of several journals, such as Public Sector Economics and Eastern European Economics, and is currently the Co-editor of the Czech Journal of Economics and Finance. Over the course of his career, he has authored over 200 peer-reviewed publications in top-tier journals including the Journal of Banking and Finance, Journal of Corporate Finance, Journal of Economic Literature, Journal of Economic Surveys, Journal of Financial Markets, and the Journal of Money, Credit and Banking.