The Political Economy of Financial Reforms in Africa: A Dialectical Analysis of the Inclusiveness an

Gbadebo Odularu, PhD



Bamidele Adekunle, PhD

University of Guelph & Ryerson University


Collins Akoko Ayoo, PhD

 Department of Economics
 Carleton University


A financial sector plays a transformational and catalytic role in fostering socio-economic growth and development. In other words, a well-functioning financial sector, strengthened by sound financial sector policies, legislations and regulations, is a sin qua non for promoting financial market access for all, and also achieving inclusiveness as one of the top priorities of African governments, within its increasingly dynamic socio-economic and political landscape, which is characterized by jobless growth. However, across and within developed, emerging and developing countries, there are significant disparities in the development of the financial sector. More specifically, empirical evidence from several African countries indicates that the financial industry in Africa is substantially less developed when compared to those in the developed world[1]. Due to the fact that Africa’s financial institutions and structures are weak, Africa continues to struggle with how to make its financial sector more efficient and responsive to the needs of the real sector – agriculture, manufacturing and services, et cetera.


Against the background of the number of financial sector reforms that have been implemented in most African countries in the past four decades, there have been increasing successes in the liberalization of money markets, restructuring of existing banks, enhanced recognition of informal finance, introduction of measures to encourage development of capital markets and private banking systems; and the liberalization of interest rates and prices. This is important given that lack of adequate access to financial services is often a critical element underlying persistent income inequality, as well as slower economic growth (Beck, Demirguc-Kunt and Levine (2007), Beck, Levin and Loayza (2000), Demirguc-Kunt and Levine (2009), Klapper, Laeven and Rajan (2006) and World Bank (2008)). For instance, more than 1.5 billion women worldwide remain largely outside the formal financial systems (Demirguc-Kunt and Klapper, 2013).


In this study, individual-level data from  9 strategically  selected African regional pole countries will be used to investigate  the effects of market-based financial sector reforms on access to loans, savings and other credit products by smallholder farmers, youth farmers, and women farmers in selected communities. The study will be carried out in South Africa, Botswana, Angola, Kenya, Nigeria, Equatorial Guinea, Tanzania, Ghana, and Ethiopia, which have been selected due to their experience with financial sector reforms. The study will also identify the salient ones among the stakeholders’ needs, and also examine the determinants of structural shifts and performance outcomes of the microfinance sectors in Africa. The data for this study will be drawn from the Global Financial Inclusion (Global Findex) database that provides indicators which measure how people in 148 economies around the world save, borrow, make payments and manage risk.


This proposal is organized as follows. The next section articulates the rationale for the study. Section three briefly reviews the relevant literature on the political economy of financial sector reforms and social inclusiveness in Africa.  Section four discusses the methodology used in the study and the expected outcomes. Section five explains the dissemination strategy while section six discusses the activity duration plan. Section seven presents the biographies of the researchers.

[1] In the developed countries’ financial industry, financial information is symmetric, and allocative efficiency is continually being targeted in order to facilitate risk management, and also offer to  savers and investors alternative options for diversifying their investment portfolios.

Recent Publications - View all