The financial inclusion status of rural households in Eswatini
Date
2022-07
Authors
Nkambule, Maxwell Banele
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
Financial inclusion has become a focal point in nation building. It facilitates inclusive growth,
which contributes significantly to the economic development of the rural poor. However, the
existing financial inclusion dimension used by some researchers does not address the financial
inclusion problem in a multidimensional manner in Eswatini. Researchers mostly measure
financial inclusion using the access component, which does not provide a complete picture of
financial inclusion. Some studies have investigated financial inclusion in Eswatini, but
overlooked certain key factors that have been proven to assist in achieving a higher degree of
financial inclusion for rural people. The determinants of financial inclusion in Eswatini,
especially in rural households, have not been sufficiently addressed in the previous studies. To
address the above shortcomings, this study assessed the financial participation, financial
capability and financial well-being of rural households, and determined their contribution to
financial inclusion. The study also examined the determinants of the financial inclusion of rural
households.
A stratified two-stage sampling procedure was utilised to sample 2148 rural homes, headed by
both genders, from a Metadata of 2928 Eswatini FinScope Consumer Survey respondents. The
Alkire-Foster method was used in this study to develop a multidimensional financial inclusion
index. The study found that the financial exclusion rate for rural households is 69%, with
financial adequacy among rural people being 37.24%. This indicates that not every rural
household that has access to formal financial services is financially secure.
The study also found that, the financial well-being domain contribute the most (59%) to the
financial inclusion of the rural households as compared to financial participation (37%) and
financial capability (46%). The study also found that there is lower contribution in the usage,
consumer protection, financial situation, and financial resilience indicators when compared to
formal access. The study also determined that age, marital status, source of income, education
level, ease of access to formal financial services, and access to land were all positively
associated with the financial inclusion status of rural households. Gender and association
membership of the rural household, on the other hand, were not statistically significant,
implying that these factors gave fewer opportunities for rural households to participate in
financial inclusion.
It is on that score that this study recommends measuring financial inclusion not only by formal
bank account ownership, but also by the level of financial participation, financial capability,
and financial well-being among rural households. There is also a need to examine financial
literacy as a policy tool for encouraging rural households, particularly those of marginalised
groups such as rural youth and women, to participate in the access and use of formal financial
services. There is also a need for a robust approach to ensure that all women residing in rural
areas are financially included by simplifying the requirements for accessing formal financial
services.