Financial Inclusion and Entrepreneurship in Six Sub Saharan African Countries: Evidence from FinAccess and FinScope Survey Data
Date
2023-06
Authors
GAKPA, Lewis-Landry
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
This paper investigates how financial inclusion affects individuals’ decisions to start
businesses in the context of six Sub-Saharan African countries, using micro-data
from the FinScope and FinAccess surveys. To do so, we use an instrumental variable
(IV) technique to assess the empirical relationships. Overall, the results reveal that
access to banking services, formal non-banking services, informal financial services
and mobile money services positively and significantly influence the decision to start
businesses in the six countries, namely Kenya, Rwanda, Tanzania, Uganda, Namibia
and Zambia. Furthermore, although the results show that a range of both demand and supply-side barriers prevent individuals from accessing banking services for
entrepreneurial purposes, supply-side constraints are the most common barriers to
individuals starting a business. In view of the above, policy interventions should first
aim at creating an enabling environment to increase people’s access to all types of
financial services and, secondly, address both supply- and demand-side constraints
to promote entrepreneurship and economic growth. These measures should be aimed
at increasing the level of financial inclusion with a view to stimulating entrepreneurial
activities, which are the real pillars in development and poverty reduction process in
Sub-Saharan African countries.