Understanding Inclusive Growth in Africa's Fragile States: Any Role for Fragility and Financial Inequalities

This study conducts an empirical analysis of the effects of fragility and financial inequalities on inclusive growth of African countries. In order to achieve this, we developed a unified measure of inclusive growth which is decomposed into growth and distributional components which capture the 2 dimensions of inclusive growth: income growth and income distribution. We explicitly captured the fragile status of African countries by using an index of fragility and also measured financial inequalities using new data on financial inclusion. The results of econometric estimations showed that fragility has had a negative, though statistically weak effect on inclusive growth. The results also showed that financial inequalities matter for inclusive growth, as we saw that financial inclusion positively affects inclusive growth while private credit negatively affects inclusive growth. This suggests that private credit is skewed in favour of the rich, showing that private credit is a form of financial inequality.