Financial Inclusion in Africa: An Overview

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues.An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished.The papers carry the names of the authors and should be cited accordingly.The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors.They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Policy Research Working Paper 6088This paper summarizes financial inclusion across Africa.First, it provides a brief overview of the African financial sector landscape.Second, it uses the Global Financial Inclusion Indicators (Global Findex) database to characterize adults in Africa that use formal and informal financial services and identify the barriers to formal account ownership.Next, it uses World Bank Enterprise Survey data to examine how the use of financial services by small and medium enterprises in Africa compares with small and medium enterprises in other developing regions in terms of account ownership and availability of This paper is a product of the Finance and Private Sector Development Team, Development Research Group.It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world.Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org.The authors may be contacted at ademirguckunt@worldbank.org and lklapper@worldbank.org.lines of credit.The authors find that less than a quarter of adults in Africa have an account with a formal financial institution and that many adults in Africa use informal methods to save and borrow.Similarly, the majority of small and medium enterprises in Africa are unbanked and access to finance is a major obstacle.Compared with other developing economies, high-growth small and medium enterprises in Africa are less likely to use formal financing, which suggests formal financial systems are not serving the needs of enterprises with growth opportunities.

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