The financial inclusion status of rural households in Eswatini

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. xii 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.