How Technology Reshapes the Markets in Africa

Nicola Limodio, Professor at Bocconi Department of Finance, is the Principal Investigator of the research project "Financial Technologies and Credit Markets in Africa", which received a £ 99,000 grant from Structural Transformation and Economic Growth (STEG). The project aims to study the potential effects of upgrades in information and communication technologies (ICT) on banks and credit markets.

This project would provide useful insights for policymakers and offer novel material to the existent literature. Specifically, this research contributes to several threads. Firstly, it shows the effects of the internet on the economy through the financial system. Secondly, it evidences how new technologies shape banking, by reducing transaction costs and information asymmetry.

In order to provide empirical evidence on how the arrival of high-speed internet and mobile technologies has affected the demand and supply of bank credit, the study focuses on Rwanda, a low-income country in East Africa. Rwanda was chosen for this project, given its recent and massive investments in digitalization. Moreover, it is one of the fastest-growing economies in the African continent.

Structural Transformation and Economic Growth (STEG) is a new research initiative, funded by the Foreign, Commonwealth and Development Office (FCDO), with the aim to help low- and middle-income countries to design and implement strategies, policies and programs that better facilitate productivity gains, structural change, and both sustained and sustainable growth.

The project will put together researchers and experts from Bocconi (Angelo D'Andrea), International Monetary Fund (Roland Kpodar and Andrea Presbitero), and National Bank of Rwanda (Hitayezu Patrick).