Measuring Financial Inclusion in South Africa

Financial inclusion has become an important measure of inclusive economic growth in South Africa as well as in other parts of the world. But if inclusion cannot be measured accurately it leaves policymakers and market participants making inadequately informed decisions. This book discusses a new quantitative method to construct financial inclusion indices for the nine provinces. The index trends are used to evaluate the state of financial inclusion in the recent past and to make recommendations for further financial sector development policy. The country has made improvements in financial inclusion since 1994. Since then there has been increased access and usage of financial services. However between 2015 and 2018 there was an overall reduction in financial services. The decline has been heavily influenced by economic shocks such as decreasing income in various provinces a decrease in credit extension to the private sector a rising unemployment rate and rising risks to financial infrastructure. Financial inclusion in 2018 fell back to the level it was in 2014 after a decline that began in 2016.