IDEAS home Printed from https://ideas.repec.org/a/gam/jfinte/v2y2023i2p19-343d1161978.html
   My bibliography  Save this article

The Policies, Practices, and Challenges of Digital Financial Inclusion for Sustainable Development: The Case of the Developing Economy

Author

Listed:
  • Godfred Anakpo

    (Department of Economics, Nelson Mandela University, Gqeberha 6001, South Africa)

  • Zizipho Xhate

    (Department of Economics, Nelson Mandela University, Gqeberha 6001, South Africa)

  • Syden Mishi

    (Department of Economics, Nelson Mandela University, Gqeberha 6001, South Africa)

Abstract

Globally, over 1.4 billion adult people remain unbanked. This worrisome phenomenon was exacerbated by the outbreak of the COVID-19 pandemic, which further created a new dimension of inequality in accessing financial services. Digital financial inclusion promises to be an effective tool for addressing this socioeconomic ill and propelling economic development. Given the limited studies on the subject in the context of developing economies, it is imperative to understand the existing policies, practices, and barriers to digital financial inclusion in developing economies so as to provide cutting-edge interventions for redress. It is against this background that this study seeks to address the following research questions: (1) What is the state of digital financial inclusion in the developing economy? (2) What are the policies and practices regarding digital financial inclusion in the developing economy? (3) What are the barriers to digital financial inclusion and innovative interventions for redress? Findings reveal that about 44% of the adult population in developing countries does not have access to financial services, with only a few countries that have made significant progress and gains through policy and practice, such as mobile financial services, mobile money interoperability, native connectivity, human capital development, and the digitalization of public services for digital financial inclusion. Our findings also identify challenges and implications with recommendations, which are discussed in detail in this paper.

Suggested Citation

  • Godfred Anakpo & Zizipho Xhate & Syden Mishi, 2023. "The Policies, Practices, and Challenges of Digital Financial Inclusion for Sustainable Development: The Case of the Developing Economy," FinTech, MDPI, vol. 2(2), pages 1-17, June.
    • Handle: RePEc:gam:jfinte:v:2:y:2023:i:2:p:19-343:d:1161978
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2674-1032/2/2/19/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2674-1032/2/2/19/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Mhlanga, 2022. "Digital Financial Inclusion," Palgrave Studies in Impact Finance, Palgrave Macmillan, number 978-3-031-16687-7, December.
    2. Asli Demirgüç-Kunt & Leora Klapper & Dorothe Singer & Saniya Ansar & Jake Hess, 2020. "The Global Findex Database 2017: Measuring Financial Inclusion and Opportunities to Expand Access to and Use of Financial Services," The World Bank Economic Review, World Bank, vol. 34(Supplemen), pages 2-8.
    3. Godfred Anakpo & Umakrishnan Kollamparambil, 2022. "Artificial intelligence and average wages in Southern Africa: A panel VAR approach," Development Southern Africa, Taylor & Francis Journals, vol. 39(4), pages 575-588, July.
    4. Godfred Anakpo & Adeola Oyenubi, 2022. "Technological innovation and economic growth in Southern Africa: Application of panel dynamic OLS regression," Development Southern Africa, Taylor & Francis Journals, vol. 39(4), pages 543-557, July.
    5. Muellbauer, John & Aron, Janine & Sebudde, Rachel, 2015. "Inflation forecasting models for Uganda: is mobile money relevant?," CEPR Discussion Papers 10739, C.E.P.R. Discussion Papers.
    6. Wendt, Charlotte & Adam, Martin & Benlian, Alexander & Kraus, Sascha, 2021. "Let’s Connect to Keep the Distance: How SMEs Leverage Information and Communication Technologies to Address the COVID-19 Crisis," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 128819, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    7. Godfred Anakpo & Umakrishnan Kollamparambil, 2022. "Effect of automation on unemployment: The case of Southern Africa," Development Southern Africa, Taylor & Francis Journals, vol. 39(4), pages 516-527, July.
    8. Nomonde Tshabalala & Godfred Anakpo & Syden Mishi, 2021. "Ex Ante vs Ex Post Asset-inequalities, Internet of things, and COVID-19 Implications in South Africa," Africagrowth Agenda, Africagrowth Institute, vol. 18(1), pages 18-21.
    9. Barbara Iannone & Giulia Caruso, 2023. "“Sustainab-lization”: Sustainability and Digitalization as a Strategy for Resilience in the Coffee Sector," Sustainability, MDPI, vol. 15(6), pages 1-32, March.
    10. Lee, Chien-Chiang & Lou, Runchi & Wang, Fuhao, 2023. "Digital financial inclusion and poverty alleviation: Evidence from the sustainable development of China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 418-434.
    11. David Mhlanga, 2022. "Financial Inclusion and the Fourth Industrial Revolution," Palgrave Studies in Impact Finance, in: Digital Financial Inclusion, chapter 0, pages 39-57, Palgrave Macmillan.
    12. Asli Demirguc-Kunt & Leora Klapper, 2013. "Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 279-340.
    13. Asli Demirguc-Kunt & Leora Klapper, 2013. "Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 279-340.
    14. Grace Ofori-Abebrese & Samuel Tawiah Baidoo & Ebenezer Essiam, 2020. "Estimating the effects of financial inclusion on welfare in sub-Saharan Africa," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1839164-183, January.
    15. Bauer, Johannes M., 2018. "The Internet and income inequality: Socio-economic challenges in a hyperconnected society," Telecommunications Policy, Elsevier, vol. 42(4), pages 333-343.
    16. David Mhlanga, 2022. "Digital Financial Inclusion in the Fourth Industrial Revolution," Palgrave Studies in Impact Finance, in: Digital Financial Inclusion, chapter 0, pages 117-136, Palgrave Macmillan.
    17. João Jungo & Mara Madaleno & Anabela Botelho, 2023. "Controlling corruption in African countries: innovation, financial inclusion and access to education as alternative measures," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 50(6), pages 766-786, January.
    18. Josephat Lotto, 2018. "Examination of the Status of Financial Inclusion and Its Determinants in Tanzania," Sustainability, MDPI, vol. 10(8), pages 1-15, August.
    19. Dan Luo & Man Luo & Jiamin Lv, 2022. "Can Digital Finance Contribute to the Promotion of Financial Sustainability? A Financial Efficiency Perspective," Sustainability, MDPI, vol. 14(7), pages 1-29, March.
    20. Godfred Anakpo & Sisonke Phuthumani & Syden Mishi, 2023. "Digital Disparity between Formal and Informal Sectors: The Case of South Africa," Africagrowth Agenda, Africagrowth Institute, vol. 20(1), pages 4-7.
    21. Esihle Komanisi & Godfred Anakpo & Mishi Syden, 2022. "Vulnerability to COVID-19 Impacts in South Africa: Analysis of the Socio-Economic Characteristics," Africagrowth Agenda, Africagrowth Institute, vol. 19(2), pages 10-12.
    22. Favourate Y. Mpofu & David Mhlanga, 2022. "Digital Financial Inclusion, Digital Financial Services Tax and Financial Inclusion in the Fourth Industrial Revolution Era in Africa," Economies, MDPI, vol. 10(8), pages 1-22, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohammad Rakibul Islam Bhuiyan & K. M. Salah Uddin & Md Noor Uddin Milon, 2023. "Prospective Areas of Digital Economy in the Context of ICT Usages: An Empirical Study in Bangladesh," FinTech, MDPI, vol. 2(3), pages 1-16, September.
    2. Aurel Burciu & Rozalia Kicsi & Simona Buta & Mihaela State & Iulia Burlac & Denisa Alexandra Chifan & Beatrice Ipsalat, 2023. "The Study of the Relationship among GCI, GII, Disruptive Technology, and Social Innovations in MNCs: How Do We Evaluate Financial Innovations Made by Firms? A Preliminary Inquiry," FinTech, MDPI, vol. 2(3), pages 1-42, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cristina Sbîrneciu & Nicoleta-Valentina Florea, 2023. "An exploratory case study: Romania’s digital innovation opportunities due to rise of digital currencies," Journal of Financial Studies, Institute of Financial Studies, vol. 8(14), pages 143-164, May.
    2. Thereza Balliester Reis, 2022. "Socio‐economic determinants of financial inclusion: An evaluation with a microdata multidimensional index," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(3), pages 587-611, April.
    3. Amit Pandey & Ravi Kiran & Rakesh Kumar Sharma, 2023. "Investigating the Determinants of Financial Inclusion in BRICS Economies: Panel Data Analysis Using Fixed-Effect and Cross-Section Random Effect," Sustainability, MDPI, vol. 15(2), pages 1-21, January.
    4. Ongo Nkoa, Bruno Emmanuel & Song, Jacques Simon, 2020. "Does institutional quality affect financial inclusion in Africa? A panel data analysis," Economic Systems, Elsevier, vol. 44(4).
    5. David Damiyano & Stephen Mago, 2023. "An Analysis of the Impact of Financial Inclusion on Poverty and Development: Case of SACU Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 141-147, November.
    6. Lu, Weijie & Niu, Geng & Zhou, Yang, 2021. "Individualism and financial inclusion," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 268-288.
    7. Singh, Nirvikar, 2018. "Financial Inclusion: Concepts, Issues and Policies for India," MPRA Paper 91047, University Library of Munich, Germany.
    8. Gallego-Losada, María-Jesús & Montero-Navarro, Antonio & García-Abajo, Elisa & Gallego-Losada, Rocío, 2023. "Digital financial inclusion. Visualizing the academic literature," Research in International Business and Finance, Elsevier, vol. 64(C).
    9. Grohmann, Antonia & Klühs, Theres & Menkhoff, Lukas, 2018. "Does financial literacy improve financial inclusion? Cross country evidence," World Development, Elsevier, vol. 111(C), pages 84-96.
    10. Jamil, Abd Rahim Md. & Law, Siong Hook & Mohamad Khair-Afham, M.S. & Trinugroho, Irwan, 2023. "Financial inclusion and economic uncertainty in developing countries: The role of digitalisation," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 786-806.
    11. Asongu, Simplice A. & Biekpe, Nicholas & Cassimon, Danny, 2020. "Understanding the greater diffusion of mobile money innovations in Africa," Telecommunications Policy, Elsevier, vol. 44(8).
    12. Simplice A. Asongu & Nicholas M. Odhiambo, 2022. "The of role economic growth in modulating mobile connectivity dynamics for financial inclusion in developing countries," Working Papers of the African Governance and Development Institute. 22/013, African Governance and Development Institute..
    13. Smita Ramakrishna (Correspondence author) & Pankaj Trivedi, 2018. "What Determines the Success of Financial Inclusion? An Empirical Analysis of Demand Side Factors," Review of Economics & Finance, Better Advances Press, Canada, vol. 14, pages 98-112, November.
    14. Asongu, Simplice A. & Biekpe, Nicholas & Cassimon, Danny, 2021. "On the diffusion of mobile phone innovations for financial inclusion," Technology in Society, Elsevier, vol. 65(C).
    15. Daud, Siti Nurazira Mohd & Ahmad, Abd Halim, 2023. "Financial inclusion, economic growth and the role of digital technology," Finance Research Letters, Elsevier, vol. 53(C).
    16. Orkun Saka & Barry Eichengreen & Cevat Giray Aksoy, 2022. "Epidemic Exposure, Financial Technology, and the Digital Divide," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(7), pages 1913-1940, October.
    17. Asongu, Simplice A. & Agyemang-Mintah, Peter & Nting, Rexon T., 2021. "Law, mobile money drivers and mobile money innovations in developing countries," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    18. Rigzin Yangdol & Mandira Sarma, 2019. "Demand-side Factors for Financial Inclusion: A Cross-country Empirical Analysis," International Studies, , vol. 56(2-3), pages 163-185, April.
    19. Sagir Danladi & M. S. V. Prasad & Umar Muhammad Modibbo & Seyedeh Asra Ahmadi & Peiman Ghasemi, 2023. "Attaining Sustainable Development Goals through Financial Inclusion: Exploring Collaborative Approaches to Fintech Adoption in Developing Economies," Sustainability, MDPI, vol. 15(17), pages 1-14, August.
    20. Thi Anh Nhu Nguyen & Thi Thuy Huong Luong, 2023. "The Determinants of Financial Inclusion in Vietnam: A Demand-Side Approach," SAGE Open, , vol. 13(4), pages 21582440231, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jfinte:v:2:y:2023:i:2:p:19-343:d:1161978. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.