Financial Inclusion: Why? How? And in Which Direction? (4)

As I See

Adel Al-Baz

1. Introduction
In the previous installments, I discussed the concept of financial inclusion and reviewed two papers presented by Dr. Khalid Al-Tijani and Dr. Asjad Al-Kazim on the topics of financial inclusion and electronic payment systems. Now, we turn to the goals we aim to achieve through financial inclusion and digital transformation.

What is the objective of implementing financial inclusion?
To enable all segments of society—especially the vulnerable and marginalized—to access formal financial services such as bank accounts, financing, insurance, savings, and electronic payments.

2. Why is this necessary?
You will understand the importance of financial inclusion to the overall economy when you realize that only 6% of Sudanese people have bank accounts, while 94% are outside the banking system—and by extension, outside the formal economy. According to the World Bank’s 2021 report, Sudan’s financial inclusion rate does not exceed 10%, compared to 70% in Kenya, 67% in Egypt, 40% in Ethiopia, and 70% in Qatar. Sudan ranks at the bottom of the region.

This situation has led to a large amount of cash circulating outside the banking system, resulting in disastrous consequences, including:

Inability to control inflation (constantly rising prices)

Growth of harmful economic activities (drug trade, weapons, smuggling, money laundering)

Obstacles to tax collection due to the lack of digital tracking of financial transactions

An unstable money supply and inflation, making it impossible to stabilize exchange rates

A weakened banking system that cannot provide necessary development financing

This is exactly what is happening now: banks are essentially bankrupt, their capital is embarrassingly low, and they have turned into “small shops.” Consequently, their contribution to economic growth is virtually zero.

3. The Value of Financial Inclusion
Implementing financial inclusion means bringing money back into the banking system, restoring balance to the economic cycle and addressing structural distortions.

Having sufficient financial resources enables banks to fund small and medium development projects, which in turn:

Brings more people into the banking system

Reduces reliance on informal payment methods

Enhances financial oversight and combats money laundering

For this reason, countries aim to implement financial inclusion as a tool for development and poverty alleviation.

4. Financial Inclusion as a Strategic Tool
In essence, financial inclusion is a strategic tool aimed at:

Boosting economic growth by expanding participation

Bringing large segments of society into the formal financial system

Expanding opportunities for investment and consumption

Increasing productivity by easing access to finance

Reducing poverty and achieving social justice

This is done by empowering marginalized groups (women, youth, rural populations) through financial services that are simple, secure, quick, and accessible, improving livelihoods and integrating individuals and small businesses into the banking system.

5. Kenya’s Experience – The M-Pesa Model
Kenya’s M-Pesa service is one of the world’s most successful examples of digital transformation, enhancing financial inclusion and combating poverty. It has played a pivotal role in improving the living conditions of poor and marginalized groups.

Key success features of M-Pesa:

Before M-Pesa, banking services in Kenya were very limited, especially in rural areas.

The service allowed users to send and receive money, pay bills, and purchase goods using just their phones—no bank account needed.

It provided secure digital wallets on phones, reducing reliance on cash and enhancing safety and money management.

It helped develop the banking system by offering microloans and savings services.

It integrated the informal economy into the formal one, strengthening financial oversight.

It reduced poverty levels by up to 2% in some villages and increased household consumption.

It raised financial inclusion from less than 30% to over 80%.

It sparked innovation in the financial sector and encouraged banks to develop new digital services.

It made it easier for workers and migrants to send money to their families.

It gave women a secure and independent means of managing their finances, boosting their economic independence.

It supported small businesses and facilitated their financial transactions, with over 50 million active users across Africa.

Similar services like MOMO in Uganda and Rwanda, PAGA PAY in Nigeria, and Instapay in Egypt have achieved similar goals.

6. Conclusion
Now the question is no longer how to implement financial inclusion and digital transformation—this has already been answered through successful models in nearby countries with similar conditions.

The question we will address in the final installment of this article is:
What does the government need to do to achieve financial inclusion and digital transformation? What impact could a service like M-Pesa have in Sudan? And in which direction can we lead this transformation to use financial inclusion as a strategic tool for holistic economic growth?

To be continued