Factors That Matter for Financial Inclusion: Evidence from Sub-Sharan Africa - The Zimbabwe Case

Abstract

The study intended to investigate the factors that are important in influencing the financial inclusion of smallholder farming households in Sub-Saharan Africa with a specific focus on Zimbabwe. Motivated by the fact that there is an increase in the evidence of the importance of financial inclusion in fighting poverty and the fact that by merely having a bank account, financial inclusion cannot be guaranteed, the study went further to interrogate factors that influence smallholder farmers to have a transaction account, to borrow and to have insurance. Since the dependent variable of financial inclusion had more than two categories, with three unordered categories, transaction account, savings/credit account, and insurance, the multinomial logistic regression was used to estimate the determinants of financial inclusion from these three categories of the dependent variable. The multinomial logit model results, with insurance as the reference category, indicated that the size of the household, transaction costs, gender and agricultural extension service were the factors influencing the demand for a household to open a transaction account. On the other hand, off-farm income and age of the household were the only two factors significantly influencing households to borrow. Therefore, it is imperative for, the government of Zimbabwe to come up with more policies that encourage farmers to participate in the formal financial market as financial inclusion can help to fight poverty and the general developments of societies.
 
 Received: 28 April 2021 / Accepted: 31 August 2021 / Published: 5 November 2021

Financial Inclusion and Economic Empowerment

“…Moreover, demand-side factors like financial literacy, religious commitment, and socioeconomic status influence the success of financial inclusion initiatives (Mhlanga, 2021). For instance, in Islamic financial inclusion, factors such as financial literacy and religious commitment play significant roles (Ali et al, 2020).…”

Institutional Theory of Financial Inclusion

“…They include the public good theory of financial inclusion, the dissatisfaction theory of financial inclusion, the vulnerable group theory of financial inclusion, the systems theory of financial inclusion, the community echelon theory of financial inclusion, the public service theory of financial inclusion, the special agent theory of financial inclusion, the collaborative intervention theory of financial inclusion, the financial literacy theory of financial inclusion, the private money theory of financial inclusion, the public money theory of financial inclusion and the intervention fund theory of financial inclusion (see., Ozili, 2020). The vulnerable group of financial inclusion and the public good theory of financial inclusion have been used by several studies to explain the dynamics of financial inclusion in several contexts such as Mhlanga (2021) and Odei-Appiah, Wiredu and Adjei (2021), etc.…”

Block chain technology for digital financial inclusion in the industry 4.0, towards sustainable development?

“…Financial inclusion using digital technology entails "the deployment of cost-saving digital means to reach populations that are currently financially excluded or underserved with a variety of formal financial services that are suited to their needs and that are delivered responsibly at a cost that is, affordable to customers and sustainable for providers". In other words, digital financial inclusion is the process of bringing currently financially excluded and underserved populations into the mainstream (Mhlanga and Denhere, 2020;Mhlanga, 2021). Between 2011 and 2017, significant headway was achieved toward the goal of financial inclusion, and the number of adults around the world who have access to a bank account increased by 1.2 billion.…”