Financial inclusion: Basic theories and empirical evidence from African countries

Abstract

Peer Review DeclarationThe publisher (AOSIS) endorses the South African 'National Scholarly Book Publishers Forum Best Practice for Peer Review of Scholarly Books'. The manuscript was subjected to rigorous two-step peer review prior to publication, with the identities of the reviewers not revealed to the author(s). The reviewers were independent of the publisher and/ or authors in question. The reviewers commented positively on the scholarly merits of the manuscript and recommended that the manuscript be published. Where the reviewers recommended revision and/or improvements to the manuscript, the authors responded adequately to such recommendations. v Research JustificationFinancial inclusion has been noted as a key driver of poverty alleviation and growth. Yet most of the scholarly work that exists lacks a comprehensive discussion on how the poor interact with financial services and the channels through which such services can affect their livelihoods. This book addresses this gap in scholarship. This is important in creating a substantive understanding of how useful financial inclusion is as a concept and practice. The number of articles written on the determinants and effects of financial inclusion at a broad cross-country level is growing. Yet almost all of this literature assumes the impacts of financial inclusion without paying attention to how these effects are transmitted. An understanding of the transmission mechanisms is fundamental to effective application. Moreover, a rapidly developing discourse in financial inclusion literature is digital finance. Much has been written and is being written about the benefits of digital finance with hardly any discussion of the channels through which such benefits are transmitted. This book discusses the various transmission mechanisms through which not only traditional finance can affect the poor but also how digital finance is transmitted to poverty. Most significantly, the chapter on digital finance provides cross-country evidence for African countries.Moreover, the often-macro perspective in the financial inclusion literature implies that country-specific nuances that can provide critical learning points are often overlooked. This book provides six original empirical case studies of financial inclusion in six African countries. The case studies cover a broad area of topics most important to African countries and highlight the unique African setting. The role of cooperative financial institutions and social entrepreneurship presented in this volume, for example, is hardly researched in Africa and yet is an important vehicle to circumvent the restrictive and exclusive bank-based financial markets unique to Africa. The chapters employ various methodologies depending on the topic being addressed in the chapter. Most of these use quantitative methods. Five chapters are empirical in nature and use inferential statistics, whilst the other two use mixed methods with qualitative data as well as descriptive statistics. This scholarly book offers researchers who focus on f...

AN EXAMINATION OF THE EFECTS OF INTER-FIRM COOPETITION ON DIGITAL FINANCIAL INCLUSION: THE CASE OF SELECTED DIGITAL FINANCIAL SERVICES PROVIDERS (DFSPs)

“…Ozili, (2018) asserts that financial inclusion is influenced by poverty levels, financial literacy levels, and the level of financial innovation, among others, and that these determine the level of intervention required for increasing financial inclusion. Financial inclusion is an enabler for poverty reduction, hunger alleviation, gender equality, economic empowerment of women, promotion of employment and economic growth, reduction of inequality, and industry, innovation and infrastructure (Simatele et al, 2021).…”

The Nexus Among Inter-Firm Coopetition, Cooperation Coopetition and Digital Financial Inclusion: A Conceptual Analysis

“…She argued that services should be provided by a wide distribution network, at affordable process (Prahalad, 2019). By so doing, there is increased access which enables the poor to accumulate investments funds, increase entrepreneurial activities, smooth consumption, invest in education (human capital development) and mitigate risks of cash flight and personal encumbrances such as illness (Simatele et al, 2021). It also reduces the tendency to save in kind, but use the cash to invest in business (Prahalad, 2019).…”

“…He stated that about one in every five accounts, whether bank or mobile money, is inactive (Salazer, 2018). (Simatele et al, 2021) also highlighted that, in instances where individuals are financially excluded from formal financial services, they use informally available means. They borrow from family and friends, informal savings clubs such as village banks, engage in barter, or sell savings in kind, or borrow from informal money lenders (Simatele et al, 2021).…”

“…(Simatele et al, 2021) also highlighted that, in instances where individuals are financially excluded from formal financial services, they use informally available means. They borrow from family and friends, informal savings clubs such as village banks, engage in barter, or sell savings in kind, or borrow from informal money lenders (Simatele et al, 2021). Unfortunately, these forms of finance pose disadvantages and risks to the individual.…”

“…Unfortunately, these forms of finance pose disadvantages and risks to the individual. Simatele et al, (2021) emphasised the need to intensify both access and usage as it is safer to use formal financial facilities. Accordingly, Salazer, (2018) identified three key components to increase usage; firstly, the products should be designed according to customers' cultural considerations and needs; secondly, knowledge and trust should be built by having an easy to use communication system where customer questions can be answered; and thirdly, building interoperable digital financial ecosystems, that allow easy digital payment channels and flows across networks.…”