Contribution to the measurement of digital financial inclusion in Sub-Saharan Africa

Despite the notable progress made in the development of digital financial services in sub-Saharan Africa, no comprehensive measure is currently available to quantify this progress. Therefore, we constructed a digital financial inclusion index using a parametric approach. Our findings show an upward trend in digital financial inclusion from 2014 to 2021, with a notable increase observed in this index in 2021. Based on the instrumental variable approach, we found that COVID-19, growth product per capita, and quality of governance were the main drivers of digital financial inclusion. Furthermore, findings reveal that not all sub-Saharan African countries have benefited equally from the digital financial revolution. Some countries, including Kenya, Ghana, and Côte d’Ivoire, have benefited substantially because of their high degree of digital financial inclusion. However, other countries—such as Malawi, Guinea, Burkina Faso, and Mali—have fallen behind in terms of digital financial inclusion and are reaping fewer benefits from the revolution in digital banking. We interpreted this observation as symptomatic of inequality. Using the Shapley decomposition analysis, we found that 33% of the disparities in digital financial inclusion among the examined countries were attributable to differences in the use of digital financial services and 13% to the differences in access to those services. We identified the legal origin as a driver of inequality in both access to and use of digital financial services. Moreover, access to the internet has contributed to inequality in the use of digital financial services. In terms of economic implications, countries with the lowest digital financial inclusion must revise their legal systems and invest in internet infrastructure.