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Abstract

In recent decades, the economic trajectory in Africa has been characterised by a combination of positive and negative outcomes, with some populations encountering more significant obstacles due to the COVID-19 pandemic, while others face comparatively fewer hurdles. The negative risks have resulted in a decline in the Human Development Index (HDI), causing policymakers in the area to re-evaluate existing programmes designed to enhance HDI. This research investigates the ways in which fintech credits are transforming and enhancing the HDI, especially in regions where banking access is severely limited. The primary concept underlying this observation is that the advent of financial innovation has facilitated the emergence of digital financial services such as Neobank. These services enable small-scale entrepreneurs in the informal sector to avail themselves of financial products and services. It is important to recognise that the advantages of these services extend beyond merely promoting the formalisation and modernisation of the informal economy. They also contribute to the overall improvement of the HDI and the generation of credit in the unbanked sector of specific African countries, despite its early stage of development, where transactions represented less than 1% of the total value from 2017 to 2018 and reached a record high of 2.2% in 2022.