Predictive Model on Digital Financial Inclusion and Sustainable Development in Sub-Saharan Africa

Abstract

This study examined the nexus between digital financial inclusion (DFI) and sustainable development in Sub-Saharan Africa (SSA). The research aimed at analysing trends in DFI and exploring its impact on economic, social, environmental, and overall sustainability across 28 SSA economies with complete data from 2009 to 2023. Using three key indicators the study assessed DFI's role in promoting sustainable development. The two-step System Generalized Methods of Moment (GMM) approach is employed to address endogeneity and improve the accuracy of panel data estimations. Key findings reveal significant disparities in DFI across the region, with notable progress in some countries but ongoing challenges in ensuring equitable access, especially in rural and underserved areas. Moreover, the study provides strong evidence that higher levels of DFI positively influence all the dimensions of sustainable development. These findings emphasize the role of digital financial services in promoting sustainable development by enhancing economic participation, reducing poverty, and fostering social inclusion and environmental sustainability. The study recommends that governments in SSA integrate DFI into economic growth strategies, promote public-private partnerships to expand digital infrastructure, and enhance financial literacy and inclusivity, especially among marginalized populations. Future research could expand this analysis to other emerging economies and examine country-specific dynamics to inform more tailored policy interventions.