Financial Outreach, Financial Innovation and Sustainable Development in Africa

Abstract

There has been a call on policy makers in the African continent to formulate and implement initiatives that help to realise some of the SDGs. This is due to the low performance of the continent in terms meeting the targets of the SDGs. In view of this, the study sought to investigate the relationship between financial outreach, innovation and sustainable development in Africa. Data was collected on 34 African economies for a period of 10 years spanning from 2011 to 2020. The study employed the Twostep System Generalised Method of Moments technique to estimate the results. It was discovered that, depending on the indicator used to measure outreach, financial outreach has significant positive and negative relationship with sustainable development. On the various dimensions, financial outreach had negative influence on carbon dioxide emissions, positive impact on economic sustainability and inverse relationship with social sustainability. It was also revealed that financial innovation has a significant negative link with sustainable development in Africa. Additionally, the findings revealed that both financial outreach and innovation serve as moderating variables in the finance/development nexus. The study recommends that governments and policy makers in various African countries work together with financial service providers to ensure fair, flexible, and alluring interest rates on loans to the underprivileged, disadvantaged ones in the society, and vulnerable businesses in order to smooth their consumption and boost their businesses.