Financial Inclusion and Poverty Reduction among Women in Kenya

This study examines the effect of financial inclusion on poverty reduction among women in Kenya. Despite sustained government and private sector efforts to enhance financial inclusion through mobile money, savings groups and digital credit services, poverty among women remains persistently high. Using ordered logit models on a sample of 7982 rural and 4,337 urban women, the study investigates the effect of financial inclusion on poverty status classified as hardcore poor, poor and non-poor. The financial inclusion index is computed using principal component analysis. The dummy variables for having bank account, access to credit, having savings and insurance are used to compute the index. The index ranged from 0 to 100. The results show that financial inclusion significantly improves women’s welfare in both rural and urban areas, with odds ratios of 1.024 in rural areas and 1.02 in urban areas, indicating access to financial services is associated with higher probability of not being poor. The results suggest the need for government to deepen and broaden financial inclusion by expanding access to affordable digital financial services, strengthening women-targeted savings and credit products.