Publication: The dynamics of financial inclusion in Ethiopia: Diversifying delivery channels, expanding digital technology, and enhancing financial knowledge for greater financial inclusion
Loading...
Published
2025-04-29
ISSN
Date
2025-04-29
Editor(s)
Abstract
The report seeks to inform how the country can accelerate nationwide integration into the formal financial system to enable progress in poverty reduction, equality, and other relevant reforms under the HGERA. The report supports the ongoing reforms in the financial sector and identifies strategic priorities and types of interventions. The goal is to fully understand the extent to which individuals in the country access and use formal financial services. Measuring financial inclusion, quantifying the effectiveness of initiatives such as mobile banking, banking agents, and financial education programs, and identifying and understanding the pathways to enabling people to enter the financial system is essential for policymakers and practitioners working to develop and design policies and programs meant to promote financial inclusion. In this regard, the report emphasizes looking at various indicators simultaneously to measure the progress of financial inclusion. The objective of the study is to examine the evolution of the financial inclusion of individuals over time, identify the pathways that enable an individual’s decision to move out of being unbanked, define the channels people use to enter the financial system, and explore opportunities to drive up equitable financial inclusion. The study also measures financial inclusion in different dimensions and reviews their simultaneous development. It provides evidence to validate constraints to and enablers of financial inclusion in the context of gender and spatial disparities in the socioeconomic landscape. While the study explores the factors that contribute to or hinder financial inclusion, it emphasizes the role of human capital, which is financial knowledge and awareness, as well as technology, in promoting financial inclusion.
Link to Data Set
Citation
“Yonis, Manex B.; Ambel, Alemayehu A.; Di Salvo, Francesco; Rawlins, Marlon R.. 2025. The dynamics of financial inclusion in Ethiopia: Diversifying delivery channels, expanding digital technology, and enhancing financial knowledge for greater financial inclusion. © World Bank. http://hdl.handle.net/10986/43135 License: CC BY-NC 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Financial Inclusion in Ethiopia(World Bank, Washington, DC, 2021-06)Integrating a financial inclusion module into a multitopic household survey like the Ethiopia Socioeconomic Survey (ESS) makes it possible to explore how different community spatial, demographic, and socioeconomic characteristics affect the financial decisions of individuals and households. In addition, the survey data underpins financial inclusion policymaking and measurement, an agenda spearheaded by the National Bank of Ethiopia through the National Financial Inclusion Strategy (NFIS) efforts. The survey collected information from households and individuals on several financial matters including current levels of access to finance based on the prevalence of account ownership, use of financial services, types of institutions used, and their proximity to the household; household and individual financial decisions about savings, credit, insurance, and payments; and financial behavior, knowledge, and attitudes. The data provides a rigorous, multidimensional picture of where the country stands in expanding access to formal financial services and reaching the NFIS goals. This brief summarizes the ESS Financial Inclusion survey report, emphasizing on key findings on account ownership, gender gap, financial behavior and knowledge of financial institutions and products.Publication A Gendered Fiscal Incidence Analysis for Ethiopia(World Bank, Washington, DC, 2022-07)Using the Commitment to Equity methodology, this study investigates differences in the welfare impact of taxes and government spending on men and women in Ethiopia. It analyzes the incidence, progressivity, and pro-poorness of various taxes and transfers and their effects on income mobility, poverty, and inequality using individual-level data from the 2018/19 Ethiopia Socioeconomic Survey. The results show that the fiscal system as a whole is progressive, equalizing, and poverty-reducing. It moved about one in five individuals from one income group to another, and more women than men transitioned to a higher income group, making them relatively better off. However, some of its elements have differential effects on gender equality. Direct and indirect taxes have differential inequality-reducing and poverty-increasing effects for men and women. The inequality-reducing effects are stronger for men, whereas the poverty-increasing effects of some of them, including informal taxes and value-added taxes, are higher for women. On the transfer side, direct social protection transfers and indirect transfers, mainly spending on primary education and health services, promote gender equality better than other types of government spending.Publication Gender norms, landholdership, and rural land use fee and agricultural income tax in Ethiopia(Elsevier, 2022-10-01)Area-based land taxes, a form of property tax, exist where rural land markets do not exist or do not function well. Understanding how these taxes affect different groups of landholders, including by men and women, is important since a tax based on the land size is likely to have an outsized effect on smaller landholders. However, survey data allowing for an individual- and household-disaggregated analysis has been scarce. Using newly available data on tax payments and self-reported individual land ownership from the Ethiopian Socioeconomic Survey 2018/2019, this paper assessed the gender implications of an area-based rural land use fee and agricultural income tax in Ethiopia. We found that female adult-only households were more likely than dual adult households to be smallholders with less than 0.5 hectare of land, and these smallholders faced the largest per-hectare tax rates. Female-headed- and female adult-only households faced a tax incidence that was 37 percent higher than it was for male-headed and dual-adult households. The gender land ownership patterns, norms limiting women’s role in agriculture, household structures, and gender agricultural productivity gaps are likely to result in lower consumption, and consequently, a higher tax burden for women. Finally, we simulated the effect of a hypothetical tax schedule with progressive per-hectare tax rates and exemptions for smallholders and found that while this would reduce women’s tax burdens, the tax remained to be regressive because of the prevalence of landholder ship among poor households. Our study highlights the difficulty of area-based land taxes to be progressive.Publication Gender and Tax Incidence of Rural Land Use Fee and Agricultural Income Tax in Ethiopia(World Bank, Washington, DC, 2021-06)The rural land use fee and agricultural income tax are major payments for rural landholders in Ethiopia. This paper examines the gender implications of these taxes using tax payment and individual land ownership data from the Ethiopian Socioeconomic Survey 2018/2019. It finds that the rural land use fee and agricultural income tax, which are assessed on the area of landholdings, are regressive. Female-headed- and female adult-only households bear a larger tax burden than male-headed and dual-adult households. Norms limiting women’s role in agriculture and gender agricultural productivity gaps are likely to result in lower consumption and accordingly, a higher tax burden for female-headed households than for male-headed households. Reducing the tax rates for smallholders can diminish the gender difference in tax burdens, but the tax continues to be regressive. This highlights the difficulty of area-based land taxes to be vertically equitable.Publication Gender Implications of Rural Land Use Fee and Agricultural Income Tax in Ethiopia(World Bank, Washington, DC, 2021-06)Land use fees and agricultural income tax in Ethiopia are levied on rural landholders according to the size of agricultural landholdings. Summarizing the evidence presented in the authors paper based on new, nationally-representative data on taxation of households and individual landholdings and rights in the Fourth Ethiopian Socioeconomic Survey, this brief discusses how area-based land taxes are regressive and the tax burdens for female-only households are larger than for dual-adult households. Social norms limiting women’s roles in agriculture and a gender agricultural productivity gap are likely to be a source of this gender bias. Lower tax rates for smallholders can reduce women’s tax burdens, but area-based land taxation would continue to be regressive.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Ethiopia Country Climate and Development Report, February 2024(Washington, DC: World Bank, 2024-02-27)The Ethiopia Country Climate and Development Report (CCDR) aims to support Ethiopia’s plans to achieve its development goals within the context of a changing climate. By quantifying the likely economic impacts of climate change on the economy between now and 2050, the report highlights the measures that the government of Ethiopia (GoE) needs to prioritize to prepare for these impacts and adapt to them most effectively, with a particular focus on actions that should be taken throughout the remainder of this decade. Opportunities for low-carbon growth as a co-benefit of development programs are also examined.Publication Global Economic Prospects, June 2024(Washington, DC: World Bank, 2024-06-11)After several years of negative shocks, global growth is expected to hold steady in 2024 and then edge up in the next couple of years, in part aided by cautious monetary policy easing as inflation gradually declines. However, economic prospects are envisaged to remain tepid, especially in the most vulnerable countries. Risks to the outlook, while more balanced, are still tilted to the downside, including the possibility of escalating geopolitical tensions, further trade fragmentation, and higher-for-longer interest rates. Natural disasters related to climate change could also hinder activity. Subdued growth prospects across many emerging market and developing economies and continued risks underscore the need for decisive policy action at the global and national levels. Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.