Barriers of Financial Inclusion in Sub-Saharan Africa

Abstract

This paper examines barriers to financial inclusion across sub-Sahara Africa (SSA) using the 2014 Global Findex dataset from the demand-side perspective. A two-level model is estimated with individual households nested in the country level variables. Lower levels of income are associated with lower levels of access to formal account. Similarly, literacy rates have significant effect on the level of account ownership.  Estimation results also reveals that as individuals grow old, they tend to switch from one form of account to the other.  Owning a debit card is more likely to increase account ownership.  Another important barrier to account ownership is proximity to the nearest financial services. These barriers have the potential to cause market failure and therefore the right policy interventions are required to stabilize the market.

Keywords: Financial Inclusion, Multilevel Analysis, sub-Saharan Africa