Abstract and Keywords
This chapter discusses the motivation to expand financial inclusion in Africa, the obstacles faced in expanding formal financial services, and the opportunities to do so offered by new delivery channels and technology. Despite the financial sector growth in Africa over the past decades, many individuals and firms are still excluded from access to formal financial services. Ownership of accounts and the use of formal savings and credit are low in Africa, both in absolute terms and relative to other developing regions. However, the low use of formal financial products does not reflect a lack of demand for financial services. Instead, African individuals predominantly rely on informal channels, such as savings with community savings groups and borrowing from family and friends. Yet new innovations have been shown to bring about dramatic changes which have encouraged people to engage in financial transactions by lowering entry barriers, reducing costs, and expanding access.
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