Why Financial Inclusion Should Be Africa's Top Priority

Financial inclusion—the ability of individuals and businesses to access affordable financial services—plays a pivotal role in driving economic growth, reducing inequality, and improving living standards. For Africa, a continent rich in resources and bursting with entrepreneurial potential, prioritizing financial inclusion is not just a developmental goal but a necessity to unlock its full economic potential.

What is Financial Inclusion?

Financial exclusion is a phenomenon whereby people have difficulties accessing and/or using financial services and products in the mainstream market that adequately meet their needs and enable them to lead economically fruitful lives.

Financial inclusion refers to the access and provision of financial services to all citizens, especially low-income earners, poverty-stricken and marginalised individuals in society (Ozili, 2018). Another definition of financial inclusion sees it as a situation that advances the ease of access to formal financial systems by the citizens of a country. This means that all citizens in an economy don’t have difficulties with opening a bank account, accessing affordable credit, and regularly using financial products/services (Kama and Adigun, 2013).

The Current State of Financial Exclusion

Despite Africa's economic progress, approximately 45% of Sub-Saharan Africa don’t have access to any financial account compared to 52% of Middle East & Northern Africa. Many people, particularly in rural areas, lack access to basic financial services such as savings accounts, credit, and insurance. This exclusion perpetuates cycles of poverty and limits the ability of individuals and small businesses to participate in the formal economy.

Benefits of Financial Inclusion

Economic Growth and Poverty Alleviation

Financial inclusion empowers individuals by providing them with tools to save, invest, and manage risks. Entrepreneurs, particularly in small and medium enterprises (SMEs), gain access to capital to expand their businesses, creating jobs and boosting local economies. For instance, studies show that fintechs in the remittances segment reduce poverty, especially in rural areas which are often major beneficiaries of such solutions.

Building Generational Wealth

Solutions that make financial services such as investing accessible to Africans are important because they potentially help citizens to become wealthier. This coupled with other solutions focused on improving financial literacy can ultimately help Africans build generational wealth

Enhanced Innovation

Digital financial services, such as mobile money platforms, have revolutionized financial inclusion in Africa. M-Pesa in Kenya, for instance, demonstrates how innovative solutions can bridge the gap for unbanked populations, offering secure and affordable transactions.

Improved Resilience

Access to financial services enables individuals and businesses to manage financial shocks, such as medical emergencies or economic downturns. Insurance products, for example, help protect smallholder farmers from the impact of climate change, fostering stability in vulnerable communities.

Challenges to Overcome

Achieving widespread financial inclusion in Africa requires addressing several obstacles:

• Infrastructure Deficits: Unreliable internet connectivity hinders access to financial services in remote areas.

• Regulatory Barriers: Outdated policies often fail to accommodate digital innovations and new financial models.

• Lack of Financial Literacy: Many individuals are unfamiliar with formal financial systems, limiting their adoption of services.

The Way Forward

To prioritize financial inclusion, African governments, private sector players, and development organizations must collaborate. Key steps include:

• Investing in Digital Infrastructure: Expanding internet coverage and mobile networks to underserved areas.

• Promoting Regulatory Reforms: Encouraging policies that foster innovation while protecting consumers. Only a few countries such as Egypt, Nigeria, Kenya, and South Africa create environments that encourage fintech startups pioneering innovative solutions.

• Enhancing Financial Literacy: Implementing educational campaigns to build trust and understanding of financial tools. Our analysis revealed that this is a good opportunity for aspiring entrepreneurs to seize.

• Encouraging Public-Private Partnerships: Leveraging resources and expertise to scale financial solutions.

Financial inclusion is a cornerstone for Africa’s sustainable development. By breaking down barriers to access and ensuring that everyone, regardless of income or location, can participate in the financial system, Africa can create a more equitable, prosperous future. Now is the time to make financial inclusion a top priority—because no one should be left behind in the journey toward economic progress.

Pre-Order our Latest Fintech Report

Africa’s fintech industry is booming, with a growing need for innovative solutions that address financial inclusion, payments, lending, and more. However, the market is dominated by the so-called 'Big Four'. In our latest research report, 'Untapped Potential: Exploring Future Growth Opportunities for Fintech in Africa', we explain the key trends, challenges, and opportunities shaping the industry across the continent.

Get the following benefits when you pre-order your copy:
1. Quarterly Fintech Trend Reports
2. Access to Our Fintech Founders Community
3. Access to a Virtual Live Q&A Session on the 10th of February 2025

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