Economic Transformation and Financial Literacy: Impacts on Human Capital Development in Africa.

Abstract:

This study examines the interrelationship between economic transformation and financial literacy, as well as their collective influence on the development of human capital in Africa. Utilizing a quantitative research methodology, the analysis incorporated data obtained from sources including the World Development Indicators (WDI) and the United Nations (UN), encompassing the timeframe from 2003 to 2024. The Generalized Method of Moments (GMM) was utilized as the estimation technique to mitigate potential endogeneity and to ensure the robustness of the findings. The findings underscore that although economic transformation plays a crucial role in the advancement of human capital, its complete potential is only actualized when it is accompanied by extensive financial literacy. Financial literacy enhances individuals' ability to make informed decisions, thereby magnifying the advantages of economic growth. The policy implications of the study underscore the necessity of incorporating financial literacy into educational curricula, advocating for the advancement of inclusive economic policies, and utilizing technology to enhance access to financial education. Future research endeavors should investigate the regional disparities in the effects of financial literacy, the significance of digital financial inclusion, and the interaction between governance and the development of human capital within the African context.