Financial inclusion in Africa: Challenges and opportunities

The African continent has witnessed some intervention from the World Bank over the last decade. However Africa remains an underdeveloped economy, and the issue of financial inclusion has been one of the numerous concerns in recent times.

Financial inclusion in countries in Africa is quite complicatеd, stemming from significant growth in some nations and very minimal growth in others. 

Sub-Saharan Africa has the least developed economies, with only 43% of adults having a bank account, according to research by JRFM. However, there were just 18 banks in South Africa as of September 2022. This demonstrates the significance of increasing financial inclusion in Africa.

But while there are so many challenges around financial inclusion in thеsе countries, there are also numerous scopе for improvement and opportunities to do so.

This article talks about some of the  challenges that developing nations in Africa are facing and the potential growth opportunities

What is financial inclusion?

Financial inclusion means making financial products and services accessible to all and sundry, business entities, including those in remote and rural communities. 

When it comes to financial inclusion, one is looking at the scenario where banks, insurance and other financial instruments are made available to everyone, and at a relatively low cost. With this, everyone can have access to them irrespective of one’s status and geographical location. With financial inclusion, we are not just talking about the availability of these financial instruments, but one is looking at the ease, convenience, and rate at which the government and these financial institutions have made them possible.

With good financial inclusion, the average individuals from rural communities should have a valid bank account, be able to save money, withdraw money, and have access to insurance and loans seamlessly and at a very low cost.

Financial inclusion makes daily life easier and aids in long-term goal-setting as well as preparing for emergencies for businesses and families, as stated by the World Bank on its website. Additionally, the World Bank opined that “People who have accounts are more likely to establish and grow businesses, manage risk, engage in education and health, use other financial services like savings, credit, and insurance, and withstand financial shock. And all of which can enhance their quality of life overall.

In Africa, the number of those who have access to these services is quite low. While the World Bank has worked together with each nation’s Apex bank to fix this problem, there is still a large gap especially because of the rate low literacy level in the African continent and many other factors that must be addressed, for the larger percentage of the African populace to enjoy a wider financial inclusion according to world bank specifications. This might seem challenging, but it can also be seen as a great opportunity for businesses that seem to take advantage of it,

Challenges of financial inclusion in Africa

1. Limited Access to financial products and services

There are 105 million adult unbanked and ID-free people in Sub-Saharan Africa alone. In contrast, approximately 350 million adults in Africa who are financially excluded live paycheck to paycheck without the protection of a bank account, credit card, or lending arrangement.

This is a huge challenge. In addition to this,  it should be noted that the majority of people live far away from ATMs, bank branches, and other locations where they can obtain financial services. To increase the geographic spread of financial access points, financial service providers might invest more.

2. Socioeconomic factors

On the African continent, almost 431 million people were considered to be extremely poor. Many people’s ability to engage in the official financial system is hindered by poverty, low levels of education, and unstable income. These demographics don’t see the need to have access to banks, because to them it is rather not a necessity or it is a luxury.

Thus, this among others is still an issue with financial inclusion in Africa.

3. Low Literacy and formal education in Africa

‍Low literacy is another issue facing financial inclusion. To give people the information and abilities they need to use financial services wisely and make educated financial decisions largely depends on their level of education. One of the main factors influencing people’s access to financial services in rural areas is also this.

When it comes to borrowing, saving, and investing, most illiterate individuals are incapable of making wise financial decisions, particularly in this day and age when financial goods are becoming more difficult to comprehend.

4. Low levels of financial literacy

Research released in 2022 revealed that financial literacy in sub-Saharan Africa was barely 32%, compared to approximately 52% in high-income nations. In actuality, there were significantly lower levels of financial literacy in several sub-Saharan African regions, such as East Africa. Basic financial concepts and instruments are not well understood by many people.

Just 38% of Kenyans, 40% of Tanzanians, and 34% of Ugandans, for instance, were financially literate. People cannot engage in the formal financial system to the fullest extent if they do not understand topics such as budgeting, investing, insurance, saving, and more. For financial inclusion in Africa, therefore, financial literacy education is essential and must be taught, either formally or informally.

Solutions and remedies to make financial inclusion possible in Africa

Millions of Africans are shut out of the official financial system due to persistently poor financial inclusion in various regions of the continent. Nonetheless, fresh chances to quickly increase access to and usage of financial services are presented by expanding mobile and internet connectivity, cutting-edge technologies, and legislative changes. Here are a few effective, doable ideas for promoting financial inclusion in Africa:

1. Increase mobile and digital financial products services

In Sub-Saharan Africa, the use of mobile money has increased, per research by the World Bank. The percentage of adults who own a mobile money account now is over 33%, which is almost 3 times higher than the 10% global average.

Even in remote locations, mobile money platforms and mobile-enabled services like mobile wallets, micro insurance, and savings offer accessible access to essential financial instruments at a reasonable cost. Because of their practical and safe methods, mobile wallets can significantly contribute to increased financial inclusion.

2. Promulgation of favourable reforms and regulations

Policy changes about client ID requirements will be very beneficial, as it is still illegal to create a bank account in Africa without proper ID proof. The formal financial system can quickly spread into underserved areas by permitting retail establishments, post offices, and other third-party intermediaries to offer basic banking services.

Marginalized groups’ faith in the financial system can be increased by enforcing strict consumer protection laws about fair pricing, data privacy, transparency, dispute resolution, etc.

3. Improvement of financial infrastructure

People in remote places can obtain digital financial services by extending internet and mobile phone coverage to those areas. Banking becomes easily accessible by establishing neighbourhood shops and post offices to offer basic banking services as agents. Access to cash withdrawals and other services can be expanded by installing more ATMs.

A bank’s role in financial inclusion is essential. Banks utilise digital financial solutions to enhance the client experience by expediting money transfers and streamlining service accessibility. More individuals enter the financial system when they can use their cell phones to make mobile money transfers, obtain loans from digital banks, or obtain cash from agents.

4. Leverage agency banking networks

Through the use of digital platforms and networks of retail agents, agency banking provides financial services to those living in underserved and distant locations by using local neighbourhood agents to act as banking outlets. Among banks’ most important contributions to financial inclusion is this one.

These representatives work on behalf of official financial institutions to handle routine banking operations such as transfers, withdrawals, deposits, and payments. At a minimal cost, branchless banking increases financial inclusion and greatly broadens the reach of the official banking system into previously underserved communities.

5. Enablement of  data sharing and digitization

Formal financial institutions find it challenging to evaluate and provide services to a large number of individuals in Africa who lack identity documents and credit histories. Financial service providers can utilize predictive analytics to increase access to credit and insurance products by allowing the secure sharing of client transaction data and alternative credit scoring algorithms like psychometrics and machine learning.

By cutting costs, boosting convenience, and simplifying distribution to unbanked people, digital financial services like mobile money, digital wallets, and payment systems also contribute to the advancement of inclusion. It is also possible to move low-income households from cash to formal digital finance by digitizing government payments such as pensions, welfare benefits, and wages.

Additionally, biometric national ID systems are becoming more widely used in Africa. By making it easier to verify identity and open bank accounts via eKYC solutions, they help increase financial inclusion in rural areas of the continent.

Benefits and opportunities of financial inclusion in Africa

Providing financial security and reducing poverty can be achieved through the effective use of financial inclusion. Among the many advantages of financial inclusion include enhanced access to necessities like clean water and sanitary facilities, increased wealth accumulation, and the creation of jobs.

Since marginalized populations have been purposefully shut out of the financial system, they stand to gain the most from financial inclusion initiatives.


Financial inclusion in Africa must be given the needed attention, and all efforts and policies must be put in place, not just by the World Bank, but by the government of the day in each nation.

There should be a consensus between the private sector, especially in the fintech industry and the government to make financial transactions easy and accessible across Nations.

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Paul Umukoro

Paul Umukoro

Paul Umukoro is an astute content writer with He writes mostly on hot, contested, and valuable topics in business, finance, and technology. He majored in computer science.

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