Non-linearity between financial inclusion and economic growth in sub-saharan Africa: What implications for the West African Economic and Monetary Union (WAEMU)?

In a context where many African populations are excluded from the traditional banking system, financial inclusion appears to be a determining factor in enabling agents in need of financing, notably producers and consumers, to have easy access to financial services in order to contribute to the multiple efforts of economic and social progress of nations. However, to date, the literature remains silent on the optimal level of financial inclusion that can boost growth. Consequently, this paper aims to verify whether there is a non-linear relationship between economic growth and financial inclusion in the WAEMU zone. Econometric applications based on the PCSE (panel-corrected standard error) model on a panel of eight countries for the period 2014–2018 reveal a U-shaped relationship between the extended banking rate and economic growth. Economic growth shows two different behaviours depending on whether one is on the side of one or the other of the regimes inherent to the inflection point. In view of these results, we suggest that the public authorities: i) intensify campaigns to open accounts in local languages, ii) promote the development of online sales applications for goods and services, iii) pursue the dematerialisation of financial operations within public administrations. Finally, this paper paves the way for future research on the microeconomic component and a similar treatment of the subject, but taking into account the occurrence of the Covid pandemic19.