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Inclusive Finance for Low Income Countries

Inclusive finance is intended to enhance access to, and availability of financial services to the broadest segments of society at affordable terms. The segments are broad enough to include the youth, women, small farmers, small firms, small entrepreneurs, rural areas, etc. The available evidence is that finance and financial development promote economic development.  However, it is not clear how inclusive financial development delivers inclusive and sustainable economic growth. Recent empirical research, though, shows that in low income countries (LICs), there are financial development gaps as well as financial inclusion gaps; and Africa features large gaps relative to other LICs, with women, the poor and rural households having no or limited access to a range of quality financial services at affordable prices.

The current consensus is that there is urgent need for research on inclusive finance and its potential contribution to lifting low income countries to the level of their medium income peers. Led by Professor Victor Murinde at the University of Birmingham, a consortium of partners, including African Economic Research Consortium (AERC), will collaborate on a £2.02 million (approximately US$2.93 million) research project on finance for low income countries with a focus on Africa. The project is inspired and funded by the Department for International Development (DFID) and Economic and Social Research Council (ESRC), shortened as DFID-ESRC - Growth Research Programme (DEGRP). The Consortium is the winner of the global bid for this large scale project [DEGRp call 3 (2015/2016)].


The research project was launched in conjunction with the AERC Biannual Research Workshop in Nairobi on Monday, 30th May, 2016, and pre-launched at the AERC Senior Policy Seminar on “Financial Inclusion in Africa”, Nairobi, March 2016. The launch presentations were led by Professors Victor Murinde, Lemma Senbet, and Robert Lensink, with other partner organization members in attendance and in active dialogue. Both the AERC biannual research workshop and the senior policy seminar provided an opportunity for exchange of views on the project with key stakeholders including AERC network researchers, international resource persons, senior policy officials, private sector actors, and civil society.

The Consortium is international with a focus on the North-South partnership, and it includes the United Kingdom (University of Birmingham; SOAS University of London; Institute of Development Studies at the University of Sussex; Loughborough University; the Overseas Development Institute; and the University of Nottingham), the Netherlands (CIBIF - Centre for Development Finance and Impact Analysis, Faculty of Economics and Business, the University of Groningen), North America (Université Laval in Québec, Canada and Columbia in the United States) and, crucially, Africa (the University of Ghana-Legon; and the African Economic Research Consortium (AERC), a pan African institution headquartered in Nairobi).


“The conversation in Africa has now shifted beyond the growth renaissance the region has witnessed over the years, to that of inclusive growth that is sustainable.  Inclusive finance is at the center of this transformation, and hence the project is very timely.  AERC is privileged to be a partner, since the project pervades its entire capacity building framework inclusive of research, collaborative graduate training, policy outreach, and vast network”, said Professor Lemma W. Senbet, AERC Executive Director and the William E. Mayer Chair Professor of Finance, University of Maryland, during the launch.


“The research project focuses on delivering inclusive financial development, with a focus on low income countries in Africa,”  Professor Victor Murinde, the Principal Investigator, said adding that “the project will: deliver rigorous, high quality research to support financial inclusion policies; develop innovative financial products in collaboration with households, banks, and the private sector; involve collaborative research to enhance methodologies and data for the promotion of inclusive finance; and engage with policy-makers to provide research-based advice on financial inclusion in Africa”.


This research is vital for embedding financial inclusion in African economies, and aims ultimately to have a significant impact on livelihoods. The project’s other important dimensions pertain to capacity building of early career researchers in low income countries, with a focus on Africa, to conduct policy-oriented research of global standards, and to influence policy dialogue and formulation among senior policy decision makers as well as non-state actors, such as the private sector.


About AERC

The AERC, established in 1988, is a premier capacity building institution in the advancement of research and training to inform economic policies in sub-Saharan Africa. It is one of the most active Research and Capacity Building Institutions (RCBIs) in the world, with a focus on Africa. AERC’s mission rests on two premises: First, that development is more likely to occur where there is sustained sound management of the economy. Second, that such management is more likely to happen where there is an active, well-informed cadre of locally-based professional economists to conduct policy-relevant research. AERC builds that cadre through a programme that has three primary components: research, training and policy outreach. The organization has now emerged as a premier capacity building network institution integrating high quality economic policy research, postgraduate training and policy outreach within a vast network of researchers, universities and policy makers across Africa and beyond. AERC has increasingly received global acclaim for its quality products and services, and is ranked highly among global development think tanks.


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For more information about this workshop or AERC, please contact:

The Executive Director
African Economic Research Consortium (AERC)
Middle East Bank Towers, 3rd Floor, Jakaya Kikwete Road,
Tel: (+254-20) 273-4150 / 273-4157
Fax: (+254-20) 273-4173
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