Internet Adoption and Financial Development in Sub-Saharan Africa: Evidence from Nigeria and Kenya

Financial development is influenced by the dynamics of multiple factors which have remained insufficiently explored up to date. In view of this, an attempt is made in this paper to investigate the impact of internet adoption on financial development in sub-Saharan Africa, using Nigeria and Kenya as case studies. The dynamic ordinary least squares and vector error correction mechanism methods were employed in the study which revealed that the internet, complemented by financial openness, exerted a significant positive impact on financial development in the period 2000-16. The null hypothesis which states that the internet does not encourage financial development is therefore rejected. It follows that the level of financial development in both countries, and indeed most countries in sub-Saharan Africa, could be enhanced by adopting appropriate policies that encourage more inclusive use of the internet. The policy recommendations of this study therefore include (1) relaxing the stringent requirements for licensing internet operators in order to make more services available for financial transactions, (2) integrating internet technology into the national infrastructure framework in order to sustain its application, (3) fostering local skills and expertise that will be maintaining internet infrastructure and (4) providing a legal framework that protects personal information and ensures responsible usage of internet.