The Determinants of Financial Inclusion in Western Africa: Insights from Ghana

Abstract

There is low financial inclusion across developing countries, especially those in Sub-Saharan Africa including Ghana. This paper examines the determinants of financial inclusion in Western Africa with specific focus on Ghana. The data used in the analyses came from 1000 individual adults across Ghana and included people across the different wealth classes, occupations, geographical locations, gender and generations. Using the logit model, the determinants of individuals’ inclusion in the formal financial market were estimated. The results show that only two in five adults are included in the formal financial sector of Ghana. Age of individuals, literacy levels, wealth class, distance to financial institutions, lack of documentation, lack of trust for formal financial institutions, money poverty and social networks as reflected in family relations are the significant determinants of financial inclusion in Ghana. The implication of this for policy is that there is the need for governments in Western Africa, particularly Ghana and their development partners to formulate a holistic financial framework that seeks to mitigate the negative determinants of financial inclusion and sustained the positive ones. It is recommended that such a policy framework should be politically neutral, economically viable, gender sensitive, socially stable and financially feasible so as to make it sustainable.

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