ISSN: 2319-7285
Peter Misiani Kerage*, Zedakia Sidha
Financial inclusion is a key pillar for financial deepening which a necessary condition for promoting national security and inclusive economic growth. Using a ten-year panel data for the years 2012 to 2021, this study investigated the interplay amongst financial inclusion and economic security in the East African Community (EAC) States. Three financial inclusion dimensions were considered, namely, usage, penetration, and availability. Data was collected from the World Development Indicators (WDI) of the World Bank and the Financial Access Survey (FAS) of the International Monetary Fund (IMF). Three countries (Rwanda, Uganda, and Kenya) were selected based on availability of consistent representative data. For analysis of the data, the study employed the Generalized Method of Moments (GMM). The study established that availability and composite dimensions have a significant positive impact on economic growth, while the usage dimension indicates a significant negative impact. The penetration dimension has a negligible adverse effect on economic expansion. Financial services utilization, ATMs, bank locations, mobile money agent locations, deposit accounts, mobile money transactions, outstanding deposits, and mild inflation. It is recommended that EAC governments must promote for financial inclusion in their search to combat terrorism and other criminal activities that potentially arise from financial exclusion, increase the number of CRBs in sub region to deal with information asymmetry and establishment of a National Commission on Financial Inclusion under the National Treasury (NT) to synchronize financial inclusion-related laws, rules, programs, and initiatives.