Financing the Frontier: Inclusive Financial Sector Development in Fragility-Affected States in Africa

Facing new challenges to inclusive finance in the region with a market systems approach

This think piece is a response to the recognition that inclusive financial market development in sub-Saharan Africa (SSA) faces new challenges. It demonstrates a shared commitment to better understand how governments, the commercial sector, donors, and development actors can support and scale inclusive financial sector development in countries and regions across Africa and globally which are impacted by fragility and conflict, including refugees and forcibly displaced populations.

The paper argues that there is a triple justification for an increased focus on fragility-affected states in Africa (FASA):

  1. Poverty is reducing, but the concentration of extreme poverty in fragile states is likely to increase. As sub-Saharan Africa (SSA) grows, there is a moral imperative to ensure the benefits are shared, and that no one is left behind;
  2. Levels of financial sector under-development in FASA are distinctly lower than non-fragile counterparts in SSA. If we believe that access to financial services and capital play a key role in poverty reduction, then this inequality must be addressed;
  3. In spite of bright spots – many of which are highlighted in this paper – the response of the donor community of financial market shapers to the challenge of FASA programming has been relatively sluggish.

This think piece is rooted in the market system or ‘M4P’ approach, which hinges on facilitation rather than direct implementation. As such, this approach represents a radical shift in how donors envision, and how development actors interact with, financial systems. 

About this Publication

By Anderson, T. , Johnson, D.