Financial Inclusion and Human Development: Evidence from African Countries

Africa is a continent that has experienced significant economic and developmental challenges, including high levels of poverty, income inequality, and limited access to financial services. According to a report by the World Bank in 2020, Africa has the lowest rate of financial inclusion in the world. Financial inclusion is important in that it contributes to the achievement of 7 out of 17 sustainable development goals provided by the United Nations. Apart from having low levels of financial inclusion, African countries are also ranked lowest in terms of human development. There is a growing consensus that financial inclusion is essential for economic growth and human development. This study examined the effect of financial inclusion on human development in African countries. To achieve the research objective, the study employed a panel longitudinal research design that involved collecting secondary data for the period between 2011 and 2020 on an annual basis for each of the 54 African countries. Findings indicate that financial inclusion, measured by bank branches, ATMs, deposit accounts, and loan accounts, has a positive and significant effect on human development in African countries. The study concludes that fostering financial inclusion is crucial for promoting human development in African countries. Policy implications include the need to enhance access to banking services, along with developing supportive regulatory frameworks. The study also emphasizes the need for policymakers to prioritize inclusive finance and implement targeted interventions to address the specific challenges and opportunities within each context.