13. Financial Inclusion and Poverty Reduction in Sub-Saharan Africa Region

There is a general consensus by development finance experts and theorists that granting the poor and vulnerable persons in the society access to cheap funds will help them create wealth for themselves, achieve financial security as well as reduce poverty. The objective of this study is to examine the extent to which financial inclusion drives of government has helped in poverty reduction. The study used Granger Error Correction Method (ECM) to analyze the decomposed data obtained from the World Bank for 27 sub-Saharan African (SSA) countries for the period 2007 to 2017. The differenced General Methods of Moments (GMM) was used to resolve the endogeneity and persistency problems associated with panel data. The result shows an existence of a long-run correlation amid inclusive finance and poverty for the overall and small savings countries. However, the coefficient of the ECM showed evidence of a negative relationship which implies that an increase in per capital income or reduction in poverty rate will not engender financial inclusion of individuals in the selected countries. It therefore recommends that government of the affected countries should consider other factors like financial literacy, reduction in the cost of funds, deployment of digital financial technology, and increase in payment channels as strategies for driving an inclusive financial system.