When Conflict Disrupts the Money Lifeline: Africa’s Remittances and Credit Access Come Under Pressure

Armed conflict threatens financial security through a less visible form of disruption: people may retain bank accounts while losing the ability to borrow, transfer money or receive financial assistance. Across Sub-Saharan Africa, where mobile money has expanded participation beyond traditional banking, insecurity exposes the fragility of the networks connecting households to essential financial services.

A study titled "Financial Resilience Under Conflict: Access, Use, and Financial Disruption in Sub-Saharan Africa," published in the International Journal of Financial Studies, examines how armed violence is associated with financial participation across 33 African countries. Conducted by Michael Kodom, Daniel Osarfo and Edwin Osafoh, the research distinguishes between possessing financial accounts and actually using financial services under conditions of insecurity.

Drawing on information from 32,951 adults, the researchers find that higher conflict intensity is associated with reduced formal banking access, borrowing, domestic remittances and transfer receipt. However, savings, wages and pensions show comparatively limited average associations with violence, revealing that financial disruption differs substantially across services.

The evidence presents a challenge for financial inclusion policy: expanding account ownership cannot guarantee financial resilience when the infrastructure supporting everyday transactions becomes unreliable.

The Financial Damage of Conflict Extends Beyond Banks and Branches

Armed violence disrupts economic activity through damaged infrastructure, displacement, restricted movement and weakened institutions. Financial systems face additional pressures because their operations depend on communication networks, cash movement, customer identification, functioning intermediaries and reliable relationships between borrowers and lenders.

For households, these disruptions create overlapping financial pressures. Income losses and uncertainty can increase demand for emergency liquidity, borrowing and outside assistance just as insecurity makes the institutions and networks delivering those services more difficult to access.

The challenge is particularly significant in Sub-Saharan Africa, where mobile money has reduced dependence on conventional banking infrastructure. Digital platforms have expanded opportunities to transfer funds, save and access financial services, but their operation still requires electricity, connectivity, functioning agents and sufficient cash or electronic liquidity.

The study examines this tension using the Global Findex 2025 database, 2024 conflict records from the Uppsala Conflict Data Program and mobile money regulatory indicators from GSMA. Researchers distinguish violence involving state actors from conflict between organized non-state groups while examining account ownership and seven categories of financial use.

Their analysis reveals the limits of treating account registration as evidence of financial security. Across the surveyed population, 62.2% reported owning some form of financial account, compared with 36.1% holding accounts at formal financial institutions. The difference demonstrates the importance of non-bank services but does not establish whether these channels remain functional during insecurity.

Higher state-based conflict intensity was associated with a 2.9-percentage-point reduction in formal financial-institution account ownership and a 1.3-point reduction in ownership of any account. Non-state conflict showed a 1.8-point negative association with formal account ownership, while its relationship with any-account ownership was statistically inconclusive.

These findings indicate different patterns of financial access across conflict categories. However, because the two conflict measures were estimated separately, the researchers caution against interpreting the results as proof that one form of violence produces greater disruption than another.

Money Transfers and Credit Face Greater Pressure Than Established Financial Accounts

The study's clearest evidence concerns financial activities requiring functioning transaction networks. Under state-based conflict, the strongest negative association emerged in domestic remittances, followed by borrowing and transfer receipt.

A one-standard-deviation increase in state-based conflict intensity was associated with a 5.4-percentage-point reduction in domestic remittance participation, a 2.7-point reduction in borrowing and a 1.4-point reduction in transfer receipt. These relationships remained statistically significant in the principal analysis.

Domestic remittances are especially revealing because sending and receiving money requires functioning connections between households, financial intermediaries and payment infrastructure. Conflict can increase the need for financial assistance while simultaneously restricting the channels through which that assistance moves.

The estimated differences become more pronounced across observed levels of state-based conflict intensity. Predicted domestic remittance participation declined from 42.5% at the median conflict level to 34.2% at the upper quartile, an 8.3-percentage-point difference.

Borrowing showed a comparable pattern, with predicted participation falling from 72.6% to 67.9% between the median and upper-quartile state-based conflict levels. Transfer receipt declined from 5.2% to 3.3% over the same comparison.

These predictions demonstrate how financial participation differs across the observed conflict distribution. They do not establish that conflict suddenly becomes more damaging beyond a particular threshold or identify a nonlinear causal relationship.

Non-state conflict produced less conclusive results across most financial-use indicators, although domestic remittances showed weaker evidence of a negative association. The findings therefore support differentiated assessments of conflict exposure rather than a uniform interpretation of financial disruption.

Importantly, reduced borrowing cannot automatically be attributed to banks restricting credit. Conflict may also weaken household income, borrowing demand and repayment capacity. The available data cannot distinguish these mechanisms or establish changes in lending institutions' credit decisions.

Why Savings and Salaries Can Persist While Financial Lifelines Weaken

The research identifies a notable contrast between transaction-dependent services and other forms of financial participation. Saving, wage receipt and pension receipt did not show statistically significant average associations with state-based conflict intensity.

One possible explanation concerns how different financial activities operate. Established employer payments and pension arrangements may continue where institutional channels remain functional, while account ownership can persist without requiring an immediate transaction.

Savings present a more complicated picture. Some households may withdraw resources to manage emergency expenses, while others may increase precautionary saving in response to uncertainty. Opposing behaviours could weaken the overall statistical association without indicating an absence of financial hardship.

The findings therefore distinguish registered financial access from the active movement of money. A financial account can remain open even when transferring funds, obtaining credit or receiving support becomes more difficult.

Existing inequalities further complicate financial participation. Women and rural residents showed lower account ownership, while employment, education and internet access were positively associated with financial access across the sample.

Internet access was associated with a 12.9-percentage-point higher probability of formal account ownership and a 19.8-point higher probability of owning any financial account. It also showed positive associations with financial activities including remittances, saving and utility payments.

National income classification offered no consistent protection across financial functions. Among lower-middle-income countries, greater state-based conflict intensity was associated with reductions of 6.9 percentage points in domestic remittances and 2.2 points in transfer receipt.

Under non-state conflict, upper-middle-income countries displayed an 11.4-point negative association with domestic remittances but a 13.5-point positive association with transfer receipt. These contrasting findings caution against assuming that higher national income necessarily protects every financial service from disruption.

Financial Resilience Requires Working Networks, Not Just Registered Accounts

The research redirects attention toward the operational foundations of financial inclusion. For central banks, regulators and financial service providers, account ownership statistics cannot adequately reveal whether people can complete transactions, obtain cash or receive payments during instability.

Monitoring remittance completion, cash-in and cash-out availability, payment failures, network reliability and geographical service continuity would provide a more functional assessment of financial access in conflict-exposed environments.

Agent-service conditions showed some of the study's most consistent positive associations with financial participation. Consumer protection and more flexible identification requirements were associated with selected outcomes, although the evidence does not establish that regulatory changes would independently offset conflict-related disruption.

For governments and humanitarian organizations, the findings direct attention toward the reliability of payment and transfer channels. Financial assistance depends not only on available funds but also on whether recipients can access functioning intermediaries and withdraw or use the money they receive.

Potential responses include liquidity planning, alternative transaction routes, communications backup and stronger operational arrangements for financial agents. However, these measures remain policy options for evaluation rather than interventions proven effective by the research.

The study's methodological strengths include its extensive household sample, separate analysis of financial activities and statistical checks using alternative conflict measures. Its main patterns remained broadly stable when researchers adjusted conflict fatalities for population and excluded individual countries from the analysis.

Nevertheless, the evidence remains observational. National fatality measures cannot establish respondents' proximity to violence, while the cross-sectional design cannot directly measure how services deteriorate, adapt or recover over time.

The analysis also cannot establish changes in bank solvency, loan quality, credit rationing or institutional liquidity management. These potential transmission mechanisms require evidence from financial institutions and transaction networks alongside household observations.

Further research combining geographically detailed conflict information, repeated household surveys and financial-provider records could distinguish the mechanisms behind reduced participation. Direct evidence on payment interruptions, agent liquidity and credit decisions would also support more precise policy responses.

For conflict-exposed African economies, resilience cannot be established by counting accounts that remain registered. It must also be assessed through the financial activities households can continue performing when access to money becomes most critical.