본문으로 바로가기

World Economy Brief

PUBLISH

To list

Digital Finance and Financial Inclusion in Africa

  • Author Seoni HAN
  • Series24-15
  • Date2024-05-24

Digital technology is gaining attention as a game changer to reshape the landscape of Africa’s financial industry. This widespread adoption of mobile money has significantly broadened financial accessibility and reduced the proportion of the financially excluded population. The transformation of the financial industry was further accelerated by the COVID-19 pandemic with a surge in online payments and increased fintech activities.


Digital finance has arisen as a solution to address the economic and non-economic constraints in the financial market, such as transaction costs, information asymmetry between financial institutions and customers, and uncertainty in outcomes of financial services. Digital finance strengthens economic resilience of individuals and households by offering a broader spectrum of strategies for risk mitigation and risk sharing. In Kenya, mobile money penetration has facilitated financial management for low-income groups, increased women’s labor market participation, and reduced poverty rates.


The access to finance of small and medium-sized enterprises is especially crucial in developing countries. Limited access to financial services poses significant challenges for SMEs, obstructing their ability to operate seamlessly, increase sales, and boost exports. In Sub-Saharan Africa, only about one-fifth of SMEs can gain access to loans through traditional financial institutions. Han et al. (2023) conducts on an empirical analysis of Kenyan firms and finds that the firms’ use of mobile money is positively correlated with their financial accessibility, and their investment activities in both tangible assets (fixed assets) and intangible assets (R&D expenditure).


Korea has the potential to strengthen its cooperation with Africa in digital finance and the financial sector by actively participating in international initiatives for financial inclusion, promoting more private investments into the financial sector or fintech industry in Africa, enhancing Africa's digital competitiveness in digital infrastructure and skilled workforce, and finally supporting digital transformation in the context of regional integration.

File

Prev Next List

공공누리 OPEN / 공공저작물 자유이용허락 - 출처표시, 상업용금지, 변경금지 공공저작물 자유이용허락 표시기준 (공공누리, KOGL) 제4유형

대외경제정책연구원의 본 공공저작물은 "공공누리 제4유형 : 출처표시 + 상업적 금지 + 변경금지” 조건에 따라 이용할 수 있습니다. 저작권정책 참조