Human Capital Development, Financial Inclusion, and Inclusive Growth in Sub-Saharan Africa

Abstract

Inclusiveness of growth of many developing countries has been slow with sub- Saharan Africa at the bottom irrespective of increasing economic growth over the years resulting in the high poverty rate and inequality issues. Human capital development has emerged in several empirical pieces of literature as a key factor that could contribute to inclusive growth in emerging economies. However, evidence in the literature indicates that financial inclusion will be more relevant to spur the inclusive growth of economies that have a strong human capital base. Thus, by using the system General Method of Moment, this study examines how human capital development and financial inclusion affect inclusive growth and growth volatility in Sub-Saharan African economies. The study finds that financial inclusion enhances the effect of human capital development on the inclusive growth of Sub-Saharan African economies. It is therefore recommended that economies in the sub-region should put in measures to strengthen the financial inclusion level so that level of human capital development could spur inclusive growth. This would increase the participation of the minor and also create an opportunity for growth for all.