Recent Perspectives of Integration, Inclusion, Development in the Financial Sector and Economic Growth Nexus in SADC: Empirical Review

Aims: The study examines the relationship between financial development, integration, inclusion and
economic growth.
Study Design: Empirical literature review.
Place and Duration of Study: Southern African Development Community (SADC), January 1980 to
December 2011.
Conclusion: Empirical evidence suggests mixed effect of financial integration and inclusion on
economic growth. While some studies argue that financial integration has positive impact on
economic growth, others state that financial integration has a negative impact on economic growth.
On the other hand, some studies consider sound financial development to be a pre-requisite for
financial integration to have a positive impact on economic growth. Financial inclusion is believed to
have a positive or negative impact on economic growth. Some studies ascertain that the positive
growth impact from the financial inclusion does not hold in economies characterised by low financial
development. Literature reveals that the direction of causality between financial development and
economic growth is uncertain. The SADC region present a unique sample of countries where a lot of
initiatives have been taken to embrace financial integration, inclusion and development through, for
example, strategic plans, policy frameworks, protocols declarations, charters, as well as memoranda
of understanding. In the SADC region, Botswana, Mauritius, Namibia and South Africa are the most
banked countries. The types of financial intermediaries across SADC member states include central
banks, commercial banks, money lenders, unit trust companies, pension funds, non-bank deposittaking
institutions, foreign exchange dealers, mutual banks, stock broking firms and primary dealers.
Countries with no stock exchanges are Angola, Democratic Republic of Congo, Lesotho as well as
Madagascar. South Africa exerts some influence on the financial sector performance in the region.