THE IMPACT OF FINANCIAL INCLUSION ON EMPLOYMENT BASED ON EAST, WEST AND SOUTHERN AFRICA: THE ROLE OF ECONOMIC GROWTH

Abstract

The financial sector plays a pivotal role in driving economic advancement through enhanced access to bank credit for both households and businesses, thereby stimulating economic growth. This growth, in turn, significantly influences employment rates by fostering the success of businesses and increasing capital availability within a thriving economy. This empirical study investigates the relationship between financial inclusion and employment in East, West, and Southern Africa, with a specific focus on the role of economic growth. Panel data spanning from 2009 to 2021 across thirteen West African countries, seven East African countries, and five Southern African countries were analysed using the FMOLS econometric method. Financial inclusion significantly impacts economic growth across all countries and models studied. The study also finds a significant statistical link between economic growth and employment. Given these findings, leveraging financial inclusion initiatives to stimulate economic growth and employment in sub-Saharan Africa is increasingly advocated. The study recommends policy measures such as expanding ATM networks, promoting financial inclusion, and encouraging the use of mobile money in rural areas to enhance financial accessibility and benefits. Policymakers are encouraged to collaborate with financial inclusion institutions, facilitate private sector credit availability, and enhance transparency through the publication of data on financially included populations. Furthermore, integrating financial education into national educational curricula and implementing legislative reforms aimed at improving business climate, infrastructure, institutional frameworks, fiscal policies, and combating corruption are crucial steps forward.