Monetary and Financial Inclusion in Fragile States: Do Credit Access and Mobile Money Reduce Conflict Risk in Sub-Saharan Africa?

Abstract

Fragile states in Sub-Saharan Africa continue to face recurrent conflict associated with economic marginalisation, weak institutions, poverty, and restricted access to finance. This study examined whether credit access and mobile money are associated with conflict risk in ten fragile Sub-Saharan African countries—South Sudan, Somalia, the Central African Republic, the Democratic Republic of the Congo, Mali, Nigeria, Ethiopia, Burkina Faso, Niger, and Mozambique—between 2010 and 2024. A random-effects panel regression model was estimated using data from the World Development Indicators, Global Findex, Uppsala Conflict Data Program, and Armed Conflict Location & Event Data Project. Credit access was negatively and significantly associated with conflict risk (β = −0.153, p < .001), while institutional quality also had a negative association at the 5% threshold (β = −0.894, p = .050). By contrast, mobile money penetration (β = 7.593, p < .001) and the overall financial inclusion measure (β = 0.061, p = .002) were positively associated with conflict risk. Poverty showed an unexpected negative association (β = −0.446, p < .001), whereas youth unemployment was not statistically significant (β = −0.142, p = .247). These results should be interpreted as associations rather than causal effects. They indicate that the stabilising potential of financial inclusion depends on institutional capacity, effective regulation, and the productive use of finance. Policies should expand affordable formal credit while strengthening digital-finance oversight, consumer protection, and governance in fragile Sub-Saharan African states.