A new study suggests that financial worries during the COVID-19 pandemic made many people in Africa less likely to use digital financial services, despite the rapid growth of financial technology across the continent.
Researchers from Carnegie Mellon University and University of the Witwatersrand examined financial data from more than half of African countries and found that concerns about money during the pandemic discouraged some individuals from adopting digital finance tools such as mobile payments and online banking.
The research, published in the journal Research in Globalization, shows that the relationship between financial stress and digital financial inclusion is complex and shaped by both personal circumstances and national economic conditions.
Digital financial services have expanded quickly in Africa in recent years, offering people new ways to send money, pay bills, or access loans using mobile phones. But the study found that the pandemic created mixed outcomes.
While some people turned to digital tools during lockdowns, others faced financial pressures that made it harder to adopt them.
“Financial inclusion is a key factor for seven of the United Nations’ 17 sustainable development goals,” said Ganesh Mani, an adjunct instructor at Carnegie Mellon’s Tepper School of Business and a co-author of the study. “Innovations in financial technology have the potential not only to improve operational efficiency but also to transform industries and create new types of jobs in Africa.”
However, the pandemic also caused widespread economic hardship. Many people across Sub-Saharan Africa were already worried about paying for basic needs such as school fees or medical bills before the pandemic began. When COVID-19 struck, those worries intensified for many households.
To understand how these pressures affected digital finance use, the researchers analyzed data from the World Bank’s 2021 Global Findex Database. The dataset included information from more than 27,000 individuals in 31 African countries and explored how adults manage payments, savings, loans, and financial risks.
The results showed that people who reported financial worry related to the pandemic were significantly less likely to use digital financial services. According to the researchers, this may be because financial stress often reduces disposable income, making it harder for individuals to afford mobile data or transaction fees linked to digital platforms.
But the effects were not the same for everyone.
Young people, urban residents, and individuals who regularly sent money to others were more likely to use digital financial services than other groups. These users may already rely on mobile phones and digital platforms in daily life, making the transition to digital finance easier.
The study also found that national economic conditions played an important role. In countries with weaker financial institutions or higher inflation, people were actually more likely to use digital financial services.
Researchers say this may reflect how individuals adapt during periods of economic instability. When traditional banking systems are less reliable or prices rise quickly, people may turn to digital tools as alternative ways to manage their finances.
On the other hand, economic growth alone did not lead to greater digital financial inclusion. The study found no clear link between a country’s overall economic growth and increased use of digital financial services.
This suggests that improvements in national economies do not automatically translate into better financial access for all citizens.
The researchers note that their study used cross-sectional data collected in a single year, which limits the ability to track changes over time. Still, they say the findings provide valuable insights into how crises influence financial behavior.
“Our findings highlight the complexity of financial behaviors under stress and underscore the need for targeted policy interventions to enhance financial resilience and inclusion during crises,” said Chimwemwe Chipeta, professor of corporate finance at the University of the Witwatersrand in Johannesburg and lead author of the study.
According to the researchers, expanding digital finance in Africa will require more than building technological infrastructure. Governments and financial institutions must also address economic insecurity and the psychological stress that financial crises create, particularly among vulnerable populations.
As digital financial services continue to grow across the continent, the study suggests that policies aimed at reducing financial stress and improving economic stability may be just as important as technological innovation in ensuring that everyone can benefit from the digital economy.
