Developing the financial sector is one of the most urgent challenges facing Sub-Saharan Africa, a new report has revealed.

According to the AFRICA PROGRESS REPORT 2014, a report compiled by the African Development Bank, there is limited access to financial services across Africa. This subsequently forces poor people and small enterprises to rely on their own limited resources to invest in entrepreneurial activity, or to insure themselves against risks. The report was released last week in Abuja during the World Economic Forum.

Allegedly, two-thirds of adult Africans (about 316 million people) do not have a bank account, let alone access to savings, credit or insurance. Lack of money and distance barrier were cited as the biggest barriers to formal account ownership.

The report maintains that inclusive finance plays a very vital role in Africa’s development and emphasizes on the need for African governments to exploit new opportunities that have been provided by technological innovation like mobile banking to achieve financial inclusion.

“An efficient financial sector provides the rudiments for income growth and job creation and financial development contributes to the reduction of poverty and inequality.” reads part of the report.

MOBILE BANKING

The study observes that the mobile banking revolution has not only enhanced communication but has also provided opportunities for banking, commerce and investment.

Kenya’s popular mobile money transfer service, M-PESA which is powered by Safaricom, has been pinpointed in the report to illustrate just how mobile banking has revolutionized the finance industry.

It’s reported that in just six years, more than 15 million Kenyans have been able to send and receive money electronically for the first time . 86 per cent of households in Kenya use mobile phones to make payments, or send and receive money. This rate is reported to be one of the highest in the world.

M-PESA is reported to have more subscribers than Kenya’s top five banks combined.

AFRICA’S TRANSFORMATIVE GROWTH

Other than the lack of access to formal financial services other challenges that are impeding Africa‘s transition from high growth to transformative growth are poor infrastructure and lack of funds for public investment.