Digital financial inclusion and energy and environment: Global positioning of Sub-Saharan African countries

Abstract

The Bretton Woods institutions and the G20 have undertaken the initiative to promote financial inclusion in Sub-Saharan Africa and South Asia to reduce the high rate of economic poverty. Due to advanced technology in financial services, Sub-Saharan Africa and South Africa have included a lot of people in the financial system. Thereby digital financial inclusion influences energy consumption and the environment by their pass-through effect on economic growth. This paper evaluates the expansion of innovative digital services and financial inclusion on energy consumption and the environment in different countries according to their geographical position. Regarding socio-economic indicators and the proportion of people who claim to be owners of an account at a bank or financial institution, SSA is still stagnating in poverty and has the lowest percentage compared to other regions. Using the Global Findex data, we find that higher financial inclusion proxies are related to higher energy consumption and CO2 emission. At the same time, the relationship is not always linear between technology, energy consumption and CO2 emission.