Assessing financial inclusion advances in sub-Saharan Africa

Advancing inclusive access to and usage of affordable formal financial services within the context of robust consumer protection frameworks is a vital mechanism for achieving broader policy objectives, such as promoting financial health, economic empowerment, financial stability, and sustainable growth. Thus, ensuring that individuals are able to identify, access, and leverage financial tools that help them save for the future, protect themselves from economic shocks, support their entrepreneurial goals, and otherwise contribute to their well-being should be a key priority for public sector and non-government entities alike.

With about 350 million adults excluded from the formal financial ecosystem as of 2014, sub-Saharan Africa offers considerable opportunities to expand access to and usage of formal financial services. Given the region’s burgeoning mobile ecosystem, limited physical banking infrastructure, and substantial levels of poverty and financial exclusion, many countries in sub-Saharan Africa are particularly well-positioned to reap the benefits of digital financial services.

The Brookings Financial and Digital Inclusion Project (FDIP), begun in the summer of 2014, launched its second annual report in August 2016 examining the financial inclusion ecosystems of 26 economically, politically, and geographically diverse countries. The report assessed these countries’ financial inclusion landscapes based on four dimensions of financial and digital inclusion—country commitment, mobile capacity, regulatory environment, and adoption of selected traditional and digital financial services—and offered recommendations for accelerating progress toward financial inclusion.

Of the 26 countries featured in the report, 10 are located in Africa. In a recent post on Brookings’s TechTank blog, the FDIP team highlighted key findings for five of these countries: Egypt, Malawi, Tanzania, Uganda, and Zambia. In this post, we examine the remaining five countries, all located in sub-Saharan Africa: Ethiopia, Kenya, Nigeria, Rwanda, and South Africa.

Mobile money (defined here as mobile phone-based financial services that do not require a bank account) in particular has already played a key role in driving financial inclusion among underserved populations in many contexts within Africa. Indeed, of the 19 markets globally that had more mobile money accounts than bank accounts as of 2015, nearly all of them were located in sub-Saharan Africa. On the supply side, the region accounted for about 52 percent of live mobile money services as of 2015, according to the GSMA (a global association that represents the interests of mobile operators).

Yet opportunities for further progress toward financial inclusion remain. Below, we identify selected scoring highlights, financial inclusion developments, and recommendations for accelerating progress toward financial inclusion in Ethiopia, Kenya, Nigeria, Rwanda, and South Africa.


While Ethiopia has experienced rapid economic growth in recent years, participation in the formal economy remains uneven. As of 2014, about 22 percent of adults had an account with a formal financial institution or a mobile money provider, according to the World Bank’s Global Financial Inclusion (Global Findex) database—about 12 percentage points below the average in sub-Saharan Africa. As in the 2015 FDIP scorecard, low adoption rates of formal financial services and limited mobile capacity constrained Ethiopia’s overall score (53 percent) on the 2016 scorecard. Unlike many of the other FDIP countries in sub-Saharan Africa, mobile money has not served as a driving force for financial inclusion in Ethiopia to date. The limited number of service providers and offerings has been noted as a potential obstacle to the take up of mobile money, and while the mobile money ecosystem has diversified somewhat in recent years, further time is needed to assess the impact of these new services on Ethiopia’s financial inclusion landscape.

Ethiopia has engaged in a number of recent efforts to advance access to and usage of formal financial services. For example, on the country commitment side, the National Bank of Ethiopia finalized a national financial inclusion strategy. With respect to the country’s payments infrastructure, a national payment system was launched in May 2016. The unified payment system will enable Ethiopia’s 17 retail banks to be interconnected in a way that allows account holders to withdraw cash from any ATM and facilitates point of sale payments at any terminal.

Moving forward, amplifying investment in information and communications technologies and infrastructure could help further strengthen the digital financial services ecosystem. Additionally, key financial inclusion stakeholders from across the public and private sectors, including the national Financial Inclusion Council, will need to work together to implement the provisions of the national financial inclusion strategy.


For the second year of the project, Kenya once again placed at the top of the FDIP scorecard, earning a score of 84 percent. High levels of mobile money usage propelled Kenya to first place on the adoption dimension of the scorecard, and robust performances across the other dimensions supported Kenya’s strong overall score. Nonetheless, Kenya’s first place ranking on the FDIP scorecard does not indicate that financial and digital inclusion have reached a saturation point in the country, as demonstrated by the fact that Kenya earned the third-highest country commitment score (89 percent), the third-highest mobile capacity score (83 percent), and the second-highest regulatory environment score (94 percent).

With respect to the digital financial services sector in Kenya, recent progress is evident both in terms of infrastructure and service provision. On the infrastructure side, one recent development was the migration of M-PESA servers from Germany to Kenya, which is expected to help improve the efficiency and reliability of the popular mobile money service. Moreover, Kenya continues to expand the diversity of its mobile financial service offerings. For example, in November 2015, Safaricom partnered with MTN Rwanda to offer interlinked mobile money transactions for their respective customers in Kenya and Rwanda. This effort will enhance financial inclusion by facilitating international transfers, an important component of many individuals’ financial lives.

As indicated by the 2016 FinAccess household survey, Kenya has experienced significant progress toward financial inclusion, more than halving the percentage of adults excluded from the financial ecosystem since 2006. Moving forward, further strengthening digital infrastructure could reduce the materialization of network connectivity issues that impede usage of mobile financial services. Additionally, advancing account-to-account interoperability could help promote financial inclusion by facilitating greater utility and convenience for mobile money customers across different networks. Finally, considering how to target product design and marketing to better reach women customers could help reduce disparities in access to and usage of formal financial services among men and women. According to a recent study by the GSMA, while women and men in Kenya are equally likely to be familiar with and try mobile money, women are more likely to receive money than to send money and are less likely to try services such as savings and loans products. Women are also generally more sensitive to transaction fees. These findings suggest that greater awareness regarding the availability and utility of a diverse suite of financial tools might help facilitate more equitable adoption of these services.


Nigeria earned an overall score of 72 percent on the FDIP scorecard, boosted in part by strong country commitment to advancing financial inclusion. For example,  the Central Bank of Nigeria is a signatory to the Maya Declaration on Financial Inclusion and launched the National Financial Inclusion Strategy (in collaboration with a variety of key stakeholders) in October 2012. The strategy set a target of reducing financial exclusion to 20 percent by 2020 and established other measurable targets with respect to access to payment services, savings products, credit, insurance, and pensions.

“Branchless banking” initiatives, such as agent banking and mobile money services, were among the tools identified as driving Nigeria’s financial inclusion strategy. A number of institutional and industry developments highlight Nigeria’s emphasis on the central role of digital mechanisms in advancing financial inclusion. For example, in October 2015, the Central Bank of Nigeria hosted the first Digital Inclusion Project meeting, in partnership with the Federal Ministry of Finance and the Bill & Melinda Gates Foundation. Additionally, as of February 2016, several banks had established agent banking arrangements, which are expected to help extend the reach of financial access points into underserved communities. Moreover, as of April 2016 the Nigerian Postal Services planned to introduce banking services into rural areas.

One area of untapped opportunity regarding the financial market in Nigeria is that, as with most of the FDIP countries, Nigeria features a sizable disparity in terms of financial account ownership between men and women. The country has engaged in a number of efforts to reduce this “gender gap.” For example, Nigeria collects sex-disaggregated data pertaining to its financial ecosystem, which could help key stakeholders better assess market opportunities and develop targeted strategies to reach prospective women customers. Moreover, MasterCard and U.N. Women have partnered on an initiative that seeks to enroll women in a national digital identity program, which will help mitigate obstacles to opening formal financial accounts. Moving forward, efforts to digitize conditional cash transfers and financial services within the agricultural sector have been identified by financial inclusion influencers in Nigeria as key priorities for facilitating engagement with the formal financial ecosystem among both men and women.


With a score of 76 percent, Rwanda earned the fourth-highest overall score among the sub-Saharan African countries in the FDIP sample. Rwanda tied for the second-highest score on the country commitment dimension (94 percent), as well as the top score in terms of its regulatory environment (100 percent). Rwanda’s country commitment score was supported by its engagement with multinational financial and digital inclusion bodies; for example, the National Bank of Rwanda became a principal signatory under the Maya Declaration in 2011, and the government of Rwanda joined the Better Than Cash Alliance in 2014. Additionally, the government of Rwanda has emphasized that promoting digitization across diverse sectors is a central policy objective.

This concerted commitment to advancing financial and digital inclusion has been accompanied by significant quantifiable progress: A 2016 FinScope survey conducted in Rwanda found that between 2012 and 2016, financial exclusion among adults age 16 and older in Rwanda declined about 17 percentage points, driven by a significant increase in the proportion of adults who have or use a product or service from a formal financial institution. Mobile money has played a central role in the growth of financial inclusion in Rwanda; indeed, as of 2014, Rwanda ranked fourth among the FDIP countries in terms of mobile money account ownership. The country’s mobile money ecosystem continues to grow and diversify, as evidenced by the Safaricom-MTN Rwanda partnership (discussed earlier in this post) that is expected to promote greater affordability, utility, and convenience for users.

Efforts to address disparities between men and women’s engagement with the formal financial ecosystem have been prioritized as part of the national financial inclusion drive. For example, as of February 2016, Rwanda’s central bank was developing a data scorecard for bank reporting intended to elucidate product, channel, and distribution reach among men and women. Mobile operator Tigo Rwanda also joined the GSMA’s Connected Women Commitment Initiative, which seeks to reduce the gender gap in mobile internet and mobile money services. More broadly, opportunities remain to amplify awareness of financial products and services among both men and women and to enhance financial education initiatives in order to deepen financial inclusion.


South Africa, the highest-income of the FDIP countries based in Sub-Saharan Africa, tied with Brazil and Uganda for the third-highest score on the 2016 FDIP scorecard. Robust adoption rates of formal financial services, compared with most other FDIP countries, helped propel South Africa toward its strong overall ranking, although it is noteworthy that mobile money in South Africa has not scaled nearly to the same extent as other top-scoring FDIP countries in sub-Saharan Africa. Indeed, in May 2016, Vodacom announced that the M-PESA mobile money service would be shut down in South Africa; in contrast, the service has been highly successful in countries such as Tanzania and Kenya.

Interestingly, South Africa was the only FDIP country in Africa to demonstrate approximate gender parity in terms of account ownership with a mobile money provider or financial institution, according to the World Bank’s 2014 Global Findex. With that said, engagement with formal financial services could be further augmented among both men and women. Developing and publishing a national financial inclusion strategy and establishing a dedicated body to coordinate the strategy’s implementation could help crystallize national digital and financial inclusion initiatives.

In terms of access to formal financial services, financial inclusion experts have raised concerns regarding a bill in South Africa that could lead financial institutions to adopt conservative “know-your-customer” processes that potentially inhibit customer engagement with the formal financial ecosystem. On the usage side, over-indebtedness is a salient concern for the financial inclusion community in South Africa. Financial inclusion stakeholders in South Africa must balance the complementary objectives of promoting financial access, usage, and integrity in order to protect consumers and promote sustainable economic growth.

Grant Michl contributed to this post.