Financial Literacy and Financial Inclusion at Critical Juncture in West and Central Africa

by | 08/06/14 | Commentary, Insight, Uncategorized

Financial literacy and education relating to money management, as well as access to financial products and services, continue to be a challenge throughout many regions in Africa. This problem is exacerbated by the extent of the rural areas, which possess weaker financial services and infrastructure than their urban counterparts. Moreover, notwithstanding a mobile penetration rate of nearly 90 percent, mobile education services have been unable to bridge the financial literacy gap.

It has been widely suggested that the lack of access to financial services throughout Africa creates a feeling among some individuals that knowledge of financial affairs is of limited use and importance. To that point, many countries in Africa require significant expansion of physical infrastructure, such as retail banking branches and ATMs. It is estimated that 95 percent of bank holders are based in the urban areas since accessing financial services outside of those regions is exceedingly difficult.

The good news is that many financial literacy proponents contend that we are at a critical turning point in several areas throughout West and Central Africa. Specifically, on one hand, it is recognized that return on average equity (ROAE) in this region has declined given the recent global financial crises, which has spurred a rise in capitalization in the short term to meet regulatory requirements. However, near-term ROAE data cloaks the longer term possibilities. For example, a sharp increase in real estate growth could spark greater levels of mortgage lending. Similarly, as many commodities watchers are projecting a mining surge, fast economic growth and greater levels of capital in this area could come soon as well. Given these and other expectations among economists and others focused on West and Central Africa, it therefore is not unlikely that these regions could see economic growth resulting in more interest and needs for financial services among individuals and families in these parts of the continent.

Hence, the turning point, as a greater focus on financial services is expected to drive even greater interest in financial education. Governments, NGOs, research institutions, and a wide range of community-based organizations all are concentrating on how best to increase the level of financial literacy in this region to coincide and support the anticipated growth in financial services. Moreover, financial literacy advocates are viewing this region as an important case study so they can observe and determine the best practices for programs and initiatives that yield the greatest success in driving financial literacy in a region that historically has been challenged with access to financial education and financial services that could improve the quality of life in those areas.

Become a Member

Join financialcorps today to get access to exclusive content, networking community, and inside information to the world of financial literacy.

Subscribe

to the top financial literacy news from the world’s leading financial education funders, news sources, analysts and commentators, e-mailed to you FREE.