Data From the Global Findex 2021: Progress and Obstacles: Financial Account Ownership and Usage in Africa, 2011–2021

This note is one of a series on financial inclusion in Africa.¹ It examines the state of financial account ownership and use in the continent’s five economic regions: Central Africa, East Africa, North Africa, Southern Africa, and West Africa.² This note highlights data by subregion, and the underlying data for all countries is available here. We are grateful to the Bill & Melinda Gates Foundation and the Mastercard Foundation for providing financial support to make the collection and dissemination of the Global Findex 2021 data possible. We thank the UNDP Better Than Cash Alliance for their financial support of this note.

The continent has seen significant growth in financial inclusion over the past decade, particularly enabled by digital financial services delivered via mobile money and mobile banking. Yet the rate of growth and the factors driving it differ by region, and by the gender, income, education, and age of the user.³ North Africa, for example, has untapped opportunities when it comes to having access to and using digital financial services; and millions of adults across the continent still receive or make everyday payments in cash. This points to opportunities to increase financial inclusion through continued payment digitalization.

Financial account ownership increased steadily between 2011 and 2021

All five African regions have seen significant account ownership increases over the past decade, though the growth rate varies. Central Africa, which had the lowest average account ownership rate on the continent in 2014, has seen its share of adults with an account more than double to reach 33 percent. The other regions saw more modest but impressive average growth of around 50 percent across East Africa and around 30 percent across North Africa, Southern Africa, and West Africa (see figure 1).⁴ Since they all had different starting points, their current account ownership rates range from 33 percent in Central Africa to 66 percent in Southern Africa—all below the low- and middle-income economy (LMIC) average of 71 percent.

Map 1: Account ownership has increased in every African region since 2014

All five African regions have seen significant account ownership increases over the past decade, though the growth rate varies. Central Africa, which had the lowest average account ownership rate on the continent in 2014, has seen its share of adults with an account more than double to reach 33 percent. The other regions saw more modest but impressive average growth of around 50 percent across East Africa and around 30 percent across North Africa, Southern Africa, and West Africa (see figure 1). Since they all had different starting points, their current account ownership rates range from 33 percent in Central Africa to 66 percent in Southern Africa—all below the low- and middle-income economy (LMIC) average of 71 percent.

The factors driving financial inclusion vary by region, particularly between North Africa and the other four regions of the continent. These geopolitical and regional political stability; financial sector policy and regulation and its impact on competition; gender norms; and the effects of the COVID-19 pandemic.

One of the most significant factors is how various regulators have allowed mobile money and other fintech providers offering e-wallets and other digital financial services to compete and in what form. For example, mobile money is widely credited for helping expand access in Africa, starting in East Africa and now more fully across all Sub-Saharan African regions. The details of how mobile money functions in each economy vary, however. In some countries, mobile money adoption has happened on top of already higher-than-average account ownership at banks, or in parallel with increased financial account ownership. This is the case in some East and Southern African economies. In other economies, mobile money is bringing unbanked individuals into the formal financial system for the first time and providing them with their only financial account, as observed in Central African countries.

Yet mobile money is not universal. In North Africa, for instance, only about 5 percent of adults had mobile money accounts in the countries where they were available as of 2022, including about 1 percent of adults who had only a mobile money account (and no other financial account). In recent years, other digital payment methods have expanded access and use of accounts in North Africa. For example, in 2022 (after the Global Findex 2021 data collection), the Arab Republic of Egypt introduced the Instant Payment Network (IPN), a national “Fast Payment” system that allows banks to process digital payments between their respective customers using digital infrastructure; customers access the system through a mobile app called InstaPay.⁵ Approximately 33 countries in Africa have access to fast payments through domestic and regional Fast Payment Systems (FPS), while others are also in the process of implementation.⁶

Account ownership of women and low-income adults is increasing, but wide gaps remain

Financial inclusion gains across the continent have helped women and men, low-income and higher-income households alike. Consequently, while more underserved adults now have accounts than a decade ago, women, low-income adults, those with low education, and those living in rural areas are all still more likely to be unbanked than men, those with higher incomes, more education, and urban or peri-urban residents (see figure 2).

Regarding gender, a more significant percentage of women than men are unbanked in every region, though the differences range from 7 percentage points in Southern Africa to 14 percentage points in North Africa.

Income has an even larger impact in every region than gender alone, such that adults in the lowest 40 percent of households by income are between 15 percentage points (in North Africa) and 20 percentage points (in East Africa) less likely to have an account than adults in the highest 60 percent of households.

Significant gaps among rural communities also point to the potential of fintech solutions that rely on agent networks to reach people in remote areas that traditional brick-and-mortar providers often are not able to serve.

As for workforce participation, many unbanked adults are self-employed or out of the workforce, especially in North Africa. This includes mothers and older adults. People without regular income may feel that they do not need an account and may find it hard to open one (see the paragraph below on barriers). Yet both small business owners and those outside of the workforce can benefit from having an account to store and manage funds and to receive digital payments—whether from customers, the government, or friends and family. Receiving money into an account can also help build a payment history, even for informal firms.

Figure 2: Women and adults in low-income households still have unequal access to accounts

Lack of money, lack of ID, and distance create barriers to account ownership

When asked why they do not have an account, the most common reason unbanked adults gave specifically in reference to bank accounts was that they did not have enough money for one (see figure 3). However, “lack of money” was often the only reason given among multiple respondents (respondents were asked to name as many as were relevant). Other reasons include a lack of documentation to open an account. This includes a government-issued ID and other documents banks use to fulfill “know your customer” (KYC) requirements. In some economies, women were more likely than men to cite lack of documentation as a barrier. Distance to a brick-and-mortar branch and the cost of financial services were also common reasons, implying there could be a market for cost-effective and digitally accessible products. Finally, some unbanked adults say they do not have an account because a family member has one, or because they distrust financial service providers; women are also more likely than men to cite these reasons.

Figure 3. In the four regions of Africa, unbanked adults without a mobile money account highlight a lack of digital connectivity among the main barriers they face

^{Adults without a mobile money account (%), citing a given barrier as a reason for not having an account, 2021/2022}

In North Africa specifically, the largest barriers for the unbanked are that bank accounts are too expensive, a family member already has one, and that the individual needs more documentation. These barriers could be addressed by expanding access to digital products, whether offered by a bank or by a fintech such as a mobile money provider, because digital products often feature pricing and fee structures that better align with low-income households' savings and spending patterns. Some foundations are already in place for successful digital financial services strategies, given that unbanked adults in North Africa are the most digitally connected on the continent, with high rates of ID access, mobile phone ownership, and internet access (see figure 4).

Expanding digital connectivity may also help advance financial access, given that not having a mobile phone is the second-most common barrier cited by adults in Africa in response to why they do not have a mobile money account.⁷ Lack of documentation ranked third for the unbanked without mobile money. Finally, these adults said that they use an agent or someone else, such as a family member or friend, to make payments and, therefore they do not need their own mobile money account.

This last reason calls attention to the confidence—or lack of confidence and skills—that adults need to use an account independently, without help from an agent or a family member. This dynamic is worth considering not only for the way it affects access but also for how a lack of digital and financial skills can open the door for exploitation or fraud. This applies not just to unbanked adults but also to some of those who have accounts—one in three mobile money account owners in Africa, for example, say they cannot use their account without help.

Figure 4. Unbanked adults in North Africa are more digitally connected than the unbanked in other African sub-regions

^{Share of the unbanked (%), 2021/2022}

Addressing gaps in access to mobile phones and to government IDs—required both to fulfill KYC requirements for account opening and to buy a SIM card—could increase account ownership among unbanked adults, given the large share who name the lack of one or both as a barrier. There is precedent for this approach: Programs aimed at providing IDs combined with regulations enabling easy account opening have succeeded in economies such as China and India in driving increased account ownership.

Digital payments, formal savings, and formal borrowing are all increasing in Africa.

The use of digital payments is increasing and seems to serve as a catalyst for using other financial services, such as saving or borrowing.

Receiving and making digital payments

In Africa, most account owners either receive or make digital payments, meaning the money goes directly into or out of an account. Digital payment usage among account owners ranges from around 75 percent in North Africa to 95 percent in Southern Africa.

The dynamics of payment usage differ in North Africa compared to the other regions. Whereas most payment users make and receive digital payments in all regions of the continent, it is more common to only receive a digital payment in North Africa. Though we cannot be sure as to why that is, the possibilities include a strong preference for cash, a less mature electronic payments acceptance ecosystem, such that there are fewer opportunities to make digital payments, or disincentives to use digital methods, such as extra fees or lack of trust.

Looking deeper at the types of payments people receive across the continent, the most common are remittances, government payments, private sector wage payments, payments for the sale of agricultural goods, or domestic remittances.

Mobile money was initially conceived as a digital way for friends and family members living in separate locations inside of a country to send money to each other. Those person-to-person (P2P) in-country remittances are a popular use case for mobile money payments, which has helped digitalize domestic remittances. Between half (in Central Africa) and two-thirds (in Southern Africa) of adults who send or receive digital remittances now do so digitally. In North Africa, however, only 10 percent of adults sending or receiving domestic remittances used an account.

Some economies have also invested in digitalizing government payments, including government transfers, pensions, or public-sector wage payments. As a result, well over half of government payment recipients in every region received their money in an account, including both financial institution and mobile money accounts (see figure 5). Digitalization of government payments can also enable quicker provision of government funds, such as for climate-related events preparedness. Women, however, are less likely than men to receive government payments in Africa, and those who do are ten percentage points less likely than their male counterparts to receive their payment digitally.

The elevated level of digitalization seen with remittances and government payments does not apply to private-sector wages (see figure 6). Southern Africa is the only region where more than half of wage recipients get their money into an account. Cash is the primary way to receive wage payments in every other region, particularly in North Africa, where more than 75 percent of wage recipients get paid in cash.

The agricultural sector remains similarly cash-dominant in Africa. Although there are a few economies where global buyers have integrated agricultural producers into their supply chains, they are the exception. For the most part, adults who receive agricultural payments receive them only in cash.

Beyond receiving payments, adults in Africa increasingly made different types of digital payments. Growth in this area faces a more complex combination of barriers since the maker and the receiver must be prepared to transact digitally. That is happening, albeit slowly and at different rates.

For example, about half of adults in Southern Africa make digital merchant payments, and about a third of them were seemingly motivated by the COVID-19 pandemic and social distancing rules (see figure 7). In every other region, however, less than 15 percent of account holders who made merchant payments did so digitally.

We see a similar trend related to utility payments, as most adults across the continent pay their bills in cash (see figure 8). Only East Africa and Southern Africa have about half of utility payers managing their bills digitally. Consistent with the other payment trends, less than 5 percent of utility payers in North Africa use digital methods. However, the introduction of new payment platforms has huge potential to develop the digital ecosystem rapidly. Digitalizing and tracking regular utility payments can provide lenders with valuable information to assess the risk of a new loan. Digital payments are also essential for advancing greener and more sustainable pay-as-you-go initiatives, such as solar electrification.

Saving and borrowing using an account

Africa saw a remarkable shift in savings habits between 2017 and 2022, as more savers embraced using an account (i.e., “formal” saving) and transitioned away from less formal methods, such as taking part in one of the rotating savings and credit associations (ROSCA) popular on the continent. Mobile money savings played a significant role in that increase. North Africa and West Africa were the only regions that did not use formal methods more than informal ones (see figure 9).

Borrowing is another financial service that is seeing change from digitalization. Around half of the adults in every sub-region borrowed money in the year before the 2021 survey. Informal borrowing from friends and family is the most common source of credit everywhere. That is slowly changing, however, as account access increases and, with it, access to other financial services. As of 2022, East Africa and Southern Africa had the highest share of borrowers accessing formal loans at about one-third of the total.

Despite advances in access and usage, financial well-being remains relatively low

People in Africa appear to be very worried about common sources of financial stress, such as paying for medical expenses, school fees, monthly expenses, or expenses related to old age. Ninety percent or more of adults in every African worry about one or more of these issues—a larger percentage than in any other world region.

Medical expenses are the most prominent financial worry for the largest share of adults in three of the five regions in Africa. Worrying over school fees nudges out medical bills as the most significant source of worry in Southern and Central Africa. This may be partly because many primary school children—even very low-income students—attend private schools in some economies. Even where there is free primary education, parents still have ancillary school expenses for uniforms, exam fees, school upkeep, and books. Women are often more likely than men to cite school fees as their most significant financial worry.

One reason people worry so much is that they don’t have a buffer in the case of a significant financial shock like a loss of income, a major medical expense, or damage to a home or a vehicle. Research suggests that these types of events are common—between 45 percent and 60 percent of people experience a shock each year, according to different studies in different geographies—and they can push people with limited resources into poverty.⁸ One aspect of financial resilience is the ability to deal with them without cutting into essential spending. The Global Findex measures resilience by assessing whether a respondent can access extra money equal to 5 percent of their country’s per capita GNI without much difficulty in 30 days or less. Across all five regions of Africa, only between 40 percent and 50 percent of adults can do so.

The most common source of extra money to deal with an unanticipated financial shock is borrowing from friends and family—and we see through other research studies that people with financial accounts, in particularly mobile money, tend to get more help from their social networks during a crisis. Despite that, the Global Findex 2021 data shows that across all the African regions, as in every region of the developing world, social sources are less reliable than alternatives like extra work hours or savings. The latter is the most reliable source of extra money—those who have it and would use it to manage a shock are the most likely to say the money would not be hard to get. In this way, financial access, specifically savings, are essential enablers of well-being, as is the ability to receive digital payments, which increases access to domestic remittances, and government support payments.

Despite these general trends, it is worth noting that Southern Africa has one of the lowest shares of financially resilient adults on the continent, despite having the highest rates of financial inclusion and consistently high adoption of digital financial services. In contrast, the regions with the highest share of financially resilient adults are Central and North Africa, the regions with the lowest financial inclusion rates. Interestingly these two regions also have the highest share of adults relying on social sources in a crisis. Unlike in East, Southern, and West Africa, however, social sources are more reliable on average in Central and North Africa—about half of the adults who would rely on them say the money would not be hard to get. This may suggest tight social ties in these regions, more extensive social networks, or a lack of alternatives, making people more attuned to helping each other. Across the world, these regions are the exception. A more effective financial wellness strategy is having savings and using them when needed.

Payment digitalization creates inclusion opportunities

The trends in adoption and usage, combined with the need in Africa to deliver financial services equitably, point to opportunities to expand access and usage through payment digitalization. Digital payment availability and adoption in Africa have grown significantly in recent years but are still maturing. For example, account owners have been slow to embrace digital merchant payments outside of Southern Africa. This may be because payers are used to cash, merchants discourage digital payments, or the digital payment options are unreliable due to unstable network connections. Similarly, in Central Africa, North Africa, and West Africa, most adults make utility payments in cash. Encouraging people to switch to digital payments for these common person-to-business (P2B) payment types can decrease physical theft while helping smooth flows through the entire payment ecosystem.

Digitalizing payments related to Africa’s agricultural sector and other areas of trade is a huge opportunity (Map 2). More than 80 million unbanked adults in Africa receive cash payments for agricultural goods. Digitalizing these payments could motivate a share of unbanked adults to adopt formal accounts, leading to an increase in financial inclusion. Making agricultural payments using mobile phones—which 45 percent of unbanked agricultural payment recipients have—could be especially helpful for unbanked farmers living in rural areas.

Further, the digitalization of intra-Africa trade at Africa’s land borders presents another opportunity for digital merchant payments. The (mostly women) merchants trading at these borders are for the most part digitally and financially excluded yet have a strong propensity to drive trade. Their digital and financial inclusion—as for others—could be enabled by implementing the African Union Women and Youth Financial and Economic Inclusion (WYFEI) 2030 initiative's 10-point agenda as well as the AfCFTA Protocol on Digital Trade, which ensures systemic barriers to digital inclusion are tackled. These efforts can help Africa’s governments accelerate the reach of universal digital financial inclusion that leaves no African behind.

Map 2: 80 million unbanked adults receive agricultural payments only in cash

For those who already have accounts, promoting savings using product designs that remind savers to put money away or that offer incentives such as payment matching can help even the lowest-income savers to increase their savings balances. This can help build resilience and encourage more Africans to invest in their income-earning potential.

Any effort to increase financial access and usage must account for the customer’s financial capabilities and needs. Many less experienced users are vulnerable to fraud and account misuse, which can lead to distrust of the financial system (another common barrier). Consumer protection policies and programs to improve consumer awareness and financial capability are critical to protecting new financial services consumers and empowering them to protect themselves.

About Findex

Since 2011, the Global Findex Database has been the definitive source of data on the ways in which adults around the world use financial services, from payments to savings and borrowing, and manage financial events such as a major expense or a loss of income. The 2021 edition is based on nationally This note includes data from African economies surveyed in 2021 (which are included in regional, developing economy, and global averages reported in the Global Findex 2021 report and related deliverables) as well as 11 surveyed in 2022 due to COVID-19 related delays. The 2022 economies include Botswana, Chad, Comoros, the Democratic Republic of Congo (DRC), Eswatini, Ethiopia, The Gambia, Lesotho, Madagascar, Mauritania, and Niger. In total, this regional note includes data from 36 Sub-Saharan African economies.

Endnotes

^{1. This note includes data from African economies surveyed in 2021 (which are included in regional, developing economy, and global averages reported in the Global Findex 2021 report and related deliverables) as well as 11 surveyed in 2022 due to COVID-19 related delays. The 2022 economies include Botswana, Chad, Comoros, the Democratic Republic of Congo (DRC), Eswatini, Ethiopia, The Gambia, Lesotho, Madagascar, Mauritania, and Niger. In total, this regional note includes data from 36 Sub-Saharan African economies.}

^{2. Central Africa includes the economies of Cameroon, Chad, Congo Dem. Rep., Congo Rep., and Gabon; East Africa includes Comoros, Ethiopia, Kenya, Madagascar, Mauritius, South Sudan, Tanzania, and Uganda; North Africa includes Algeria, Egypt, Mauritania, Morocco, and Tunisia; Southern Africa includes Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe; and West Africa includes Benin, Burkina Faso, Cote d’Ivoire, The Gambia, Guinea, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.}.

^{3. In this regional note, we use the term “bank” to refer to any financial institution that offers similar services to traditional banks, including credit unions, cooperatives, and microfinance institutions (MFIs). These financial institutions have historically operated through primarily physical channels but may now offer banking apps that allow customers to access traditional banking products through the internet or using a mobile phone. These are distinct from mobile money operators and other fintechs who offer accounts that are supported by a network of mobile money agents independent of the traditional banking network. Typically, 100% of the cash in mobile money is held in a fully prudentially regulated institution such as a bank.}

^{4. The Global Findex defines account ownership to include accounts offered by a bank or other traditionally brick-and-mortar financial institution (such as a microfinance institution, or a credit union) and those with a mobile money service provider.}

^{5. Fast payments (also known as instant, real-time, immediate) allow for instant crediting of payee’s account, are available around the clock, and in their fully inclusive form can accommodate a variety of payment service providers, use cases, transaction channels and payment instruments.}

^{6. World Bank Project FASTT Global FPS Tracker: https://fastpayments.worldbank.org/global-tracker}

^{7. North Africa is excluded because less than 2 percent of adults reported using mobile money.}

^{8. For more information, see: “The Role of Emergency Savings in Family Financial Security: How Do Families Cope With Financial Shocks?" The Pew Charitable Trusts, 2015. Available at: https://www.pewtrusts.org/~/media/assets/2015/10/emergency-savings-report-1_artfinal.pdf; and De Stefani, Alessia; Athene Laws, and Alexandre Sollaci. “Household Vulnerability to Income Shocks in Emerging and Developing Asia: The Case of Cambodia, Nepal and Vietnam.” IMF Working Paper. April, 2022.}