Key Factors that Illustrate the Situation
Low Financial Inclusion: Financial inclusion refers to the proportion of the population that has access to financial services. According to the World Bank’s Global Findex database, only 43% of sub-Saharan African adults hold accounts with formal financial institutions, which is a very low figure compared to the global average of 69%.
Access Barriers: There are various barriers to accessing formal financial services in Africa, such as low income, lack of documentation, and inadequate financial infrastructure in rural areas. Many people may also face language barriers or lack financial literacy to understand the products and services offered by financial institutions.
Mobile Money: One promising development in Africa is the growth of mobile money services, which allow users to store and transfer money using their mobile phones without the need for a bank account. According to the Global System for Mobile Communications Association, the number of mobile money accounts in sub-Saharan Africa exceeded 480 million in 2020.
Encouragement from Governments: African governments are also taking steps to promote financial inclusion. For example, the Nigerian government launched a national financial inclusion strategy in 2012, with a goal of increasing financial inclusion to 80% by 2020. The Kenyan government is also encouraging mobile money services through initiatives such as M-Pesa.
Encouragement from Private Sector: Private sector companies are also working to increase financial inclusion in Africa. For example, the Mastercard Foundation launched the “Fintech for Social Impact” initiative in 2018, which aims to support fintech startups focused on promoting financial inclusion in Africa.
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