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AEC 2010 - ICT, Financial Inclusion, and Growth: Evidence from African Countries
This paper studies the impact of information and communication technologies (ICT), especially mobile phone rollout, on economic growth in a sample of African countries from 1988 to 2007. Further, we investigate whether financial inclusion is one of the channels through which ICT influences economic growth. In estimating the model, we use a wide range of ICT indicators, including the mobile and fixed telephone penetration rates and the cost of local calls, and we address any endogeneity issues by using the System GMM estimator. Financial inclusion is captured by variables measuring access to financial services, such as the number of deposits or loans per head, compiled by Beck and others (2007) and the Consultative Group to Assist the Poor (CGAP, 2009). The results confirm that ICT, including mobile phone development, accounts for economic growth in African countries. Part of this effect comes from financial inclusion, and, at the same time, the development of mobile phones consolidates the impact of financial inclusion on economic growth, especially in countries where mobile financial services take hold.