The Challenges And Benefits Of Financial Inclusion In Ethiopia

Business Administration In Finance Project Topics

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The past two decades have seen a rapid increase in interest in financial inclusion, both from policymakers and researchers. In recognition of the role of access to finance in contributing to rapid economic growth and poverty reduction, Ethiopia developed National financial Inclusion strategy for five-year from 2017 – 2022. In this study, the progress, challenges and benefits of financial inclusion in Ethiopia studied and analyzed based on access, quality, usage and Impact/welfare indicators of financial inclusion. In this study, information collected from secondary source, face-to-face interviews with regulatory and financial service providers, report reviews and literature reviews used. Primary data collected from Financial Service providers to assess their current practices in relation to financial inclusion. The findings of the study indicated the progress of financial inclusion in Ethiopia is behind other sub- African countries. Further, this study revealed that barriers to access and usage of financial services categorized under demand and supply-side constraints including enabling environment/governance, infrastructure and technology. The study also indicated the existence of gender gap where Female are still excluded and lack of meaningful coordination among the stakeholder listed in NFIS, 2017 are another barriers to achieve financial inclusion goals. Therefore, policymakers should emphasize strategies that foster access to and use of financial services. As highlighted under the recommendations of this study, addressing the root causes (barriers) identified and promoting new technologies, the elimination of challenges and expansion of financial inclusion tends to be possible. For example, digital financial services, diversification of access points, mobile banking, internet banking, and credit facilities improvement financial inclusion and in return all-inclusive economic growth. Use of biometric devices instead of Identification card (ID) can reduce costs, attract excluded persons, speed up transfers and increase the security of household transactions.

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The Challenges And Benefits Of Financial Inclusion In Ethiopia

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