Digital Economy and Financial Inclusion in Selected Sub-Saharan African Countries

Abstract

This study examined the influence of the digital economy on financial inclusion across three Sub-Saharan African countries. These countries were selected based on their adoption of modern technologies in delivering financial services. The analysis covered the period from 1996 to 2022 and employed the Pooled Mean Group (PMG) estimation method. Findings indicated that the digital economy, represented by a comprehensive composite index encompassing five dimensions, was significantly and positively associated with financial inclusion in both the short and long term. Regulatory quality also demonstrated a significant positive relationship with financial inclusion, but only in the long term. Additionally, foreign direct investment had a positive impact on financial inclusion, though this was limited to the short term. A country-specific analysis further highlighted diverse relationships between financial inclusion and the explanatory variables across the selected nations. The study concluded by recommending actionable policies to promote the growth of the digital financial sector in Sub-Saharan Africa, aiming to expand access to and usage of inclusive financial services in the region.