IMF Survey: Financial Access Gap Narrows in Sub-Saharan Africa

The IMF’s latest Financial Access Survey (FAS) highlights how the access gap in Sub-Saharan Africa is fast narrowing when compared to other areas. One notable statistic is that commercial bank depositors leapt to 295 per 1,000 adults in 2012, up from 70 per 1,000 adults in 2004. This is an encouraging rise although some differences in institutions and countries included from each of the years do not make this a scientifically precise comparison. Globally, low-income countries had 332 per 1,000 adults and so Sub-Saharan Africa is nearly at par with countries at similar income levels. The promising trends in Africa are likely to gain momentum as mass market institutions like Equity Bank expand and pan-African banks such as Ecobank serve a broader segment of the population. Indeed, access to finance is keeping pace, or even outpacing, economic growth in various parts of Sub-Saharan Africa.

Source: FAS 2013 Highlights, IMF

The IMF has been collecting annual Financial Access Survey supply-side data since 2004 and in the 2013 survey the number of participating countries rose to 189, covering nearly the entire globe. The aggregating power of the IMF’s effort is impressive and with nearly a decade of statistics, we can now see trends on access to basic financial services worldwide. The data, which was released last month, is freely available online.

The annual survey collects data from all commercial banks and has been expanded to include microfinance institutions, cooperative financial institutions, insurance and other formal providers. The rise of mobile money does not appear directly in the FAS figures which may miss many mobile phone based accounts provided by mobile network operators. Mobile accounts are largely used for payment transactions and would have added only modestly to total deposits (mobile money account float is typically kept on deposit in commercial banks). More important than the deposits generated is that mobile wallets are increasingly being linked to other banking services; for instance M-Shwari is a new savings and loan product offered by the Commercial Bank of Africa and is accessible purely through a mobile based account. Mobile transaction accounts ought to provide a gateway to a broader range of financial services. The Financial Sector Deepening Trust of Kenya is examining this link and expects to release its findings soon. With some African countries like Tanzania, Kenya, Rwanda and Uganda at the leading edge of innovation around mobile based accounts, we can confidently expect a dramatic increase in financial access in multiple countries across the continent in the coming years.

A man and a woman in Burkina Faso sit under a a tree holding documents from an MFI A man and a woman in Burkina Faso sit under a a tree holding documents from an MFI

Photo credit: Mary Thibaut

The ability to measure progress underscores how far we still need to go in order to reach universal financial inclusion in Sub-Saharan Africa. The global demand-side Findex data from household surveys done by the IMF’s sister organization, the World Bank, in 2011 showed that about one in four African adults (24 percent) had an account at a formal financial institution. By some estimates this leaves 400 million Africans unbanked. In some countries, like the Central African Republic or Democratic Republic of Congo, access is below 5%. And in large parts of rural Sub-Saharan Africa the population remains largely financially excluded.

Such uneven progress is not surprising and our hope is that surveys such as the IMF’s will give the critical feedback that providers and regulators need to identify and address gaps. It is encouraging that the IMF’s data is being leveraged elsewhere. The Global Partnership for Financial Inclusion under the G20 has formed a sub-group on data and measurement which has developed a set of financial inclusion indicators. These indicators pull heavily from the IMF’s FAS data.

Governments in Sub-Saharan Africa are also striving for better data and measurement. The Alliance for Financial Inclusion has created a Financial Inclusion Data working group involving 15 African Central Banks (out of 28 members of the working group) that are dedicated to better measure and monitor progress in their countries. One of them is Rwanda that has invested in collecting insights on financial inclusion through a regular Finscope survey. This has helped Rwanda craft its financial inclusion strategy and adjust policy. Other countries such as Tanzania and Nigeria have established their own high level indicators and will start measuring progress and identify gaps.

The IMF’s survey is a powerful example of the value of data and measurement which when collected accurately and consistently can be a driver for progress and boost our efforts as we go forward.

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