Financial Inclusion in the Economic and Monetary Community of Central Africa: Analysis of its Effects on the Standard of Living

Abstract

Aims: This study aims to examines the effects of financial inclusion on living standards as measured by per capita income and consumption in CEMAC countries. According to World Bank (2022) financial inclusion rate capted by the possession of mobile money for example is passed to 12% at 21%. We see an augmentation but the rate remains low. Location and Duration: The paper uses a sample of 6 CEMAC countries from different sources for the period 2004-2017 to carry out the analysis. Methodology: Using Generalized Method of Moments (GMM), we identify the causal relationship between financial inclusion and living standards, showing that the latter has a positive and significant effect on per capita income and consumption in the CEMAC region. To consolidate these findings, we subject our results to a robustness test using the generalized equation estimation (GEE) method, which confirms the beneficial effect of financial inclusion on living standards in the CEMAC zone. Results: These results highlight the importance of implementing incentive policies aimed at reducing barriers to access to banking services, in order to enable low-income individuals to benefit from these services and thus improve their quality of life. In addition, inclusion of the policy implications of the results, including requirements for governance reforms and improved banking access could further strengthen the relationship between financial inclusion and standards living. Conclusion: We conducted a robustness test using the Generalised Equation Estimation (GEE) method, and the results obtained confirm the positive impact of financial inclusion on the standard of living in the region. CEMAC. However, despite this rather satisfactory result, it should be noted that financial inclusion in the sub-region remains low compared to West African countries.