Publication:
The dynamics of financial inclusion in Ethiopia: Diversifying delivery channels, expanding digital technology, and enhancing financial knowledge for greater financial inclusion

Loading...
Thumbnail Image
Files in English
English PDF (3.22 MB)
32 downloads
English Text (302.94 KB)
8 downloads
Date
2025-04-29
ISSN
Published
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.
Associated URLs
Associated content
Report Series
Other publications in this report series
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    Financial Inclusion in Ethiopia
    (World Bank, Washington, DC, 2021-06) Achew, Mengistu Bessir; Ambel, Alemayehu A.; Gradstein, Helen L.; Tsegay, Asmelash Haile; Ul Haq, Imtiaz; Varghese, Minita M.; Yonis, Manex Bule
    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
    Gender and Tax Incidence of Rural Land Use Fee and Agricultural Income Tax in Ethiopia
    (World Bank, Washington, DC, 2021-06) Komatsu, Hitomi; Ambel, Alemayehu A.; Koolwal, Gayatri; Yonis, Manex Bule
    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 norms, landholdership, and rural land use fee and agricultural income tax in Ethiopia
    (Elsevier, 2022-10-01) Komatsu, Hitomi; Ambel, Alemayehu A.; Koolwal, Gayatri; Yonis, Manex Bule
    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
    A Gendered Fiscal Incidence Analysis for Ethiopia
    (World Bank, Washington, DC, 2022-07) Ambel, Alemayehu A.; Tesfaye, Wondimagegn M.; Yonis, Manex B.
    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 Implications of Rural Land Use Fee and Agricultural Income Tax in Ethiopia
    (World Bank, Washington, DC, 2021-06) Komatsu, Hitomi; Ambel, Alemayehu A.; Koolwal, Gayatri; Yonis, Manex Bule
    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
    Infrastructure Monitor 2024
    (Washington, DC: World Bank, 2025-04-28) World Bank
    The Infrastructure Monitor report covers global trends in private investment in infrastructure to inform investors, policy-makers and other practitioners. The objective is to deliver global insights on global infrastructure trends across key topics such as investment volumes, performance, blended finance, and ESG drivers, facilitating the monitoring of private infrastructure investment and its performance. These insights aim to support policymakers, investors, and other stakeholders in developing sustainable, resilient, and inclusive infrastructure while fostering effective partnerships with the private sector. Acknowledging the significant infrastructure data gap — with notable variations in coverage, quality across countries and income groups, and differences in the availability of regional breakdowns — our approach leverages the best available aggregated data from leading infrastructure databases to generate market insights while also providing context on its limitations. 2025 will be the fifth version of the report, the first under the World Bank.
  • Publication
    Air Quality Management in Central Asia
    (Washington, DC: World Bank, 2025-05-02) World Bank
    This report aims to enhance the understanding of the priorities, needs, and solutions for improving air quality (AQ) in Central Asia (CA) through local action and regional collaboration. It focuses on key components of holistic air quality management (AQM): evidence-based analytics to identify the main sources of air pollution in CA, application of modern tools to assess the impact of cost-effective measures to improve AQ, assessment of the institutional and governance setup for AQM in CA with recommendations to strengthen it, and approaches to financing AQ improvement. Given the lack of comprehensive systematic and validated emission inventories of all PM2.5 precursor emissions, the technical assessment employs the regional emission inventory of the Greenhouse Gas - Air Pollution Interactions and Synergies (GAINS) model. Input data were updated for this study based on recent energy statistics and relevant national surveys. This report addresses emissions and the regional transboundary flows of pollution between Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. Subsequently, the resulting PM2.5 concentrations in ambient air throughout CA were computed with the atmospheric chemistry and transport calculations of the GAINS model. Employing the source apportionment results of the GAINS model, the analysis then examines the contributions to PM2.5 population exposure. The report also presents source apportionment analyses for important air pollution hot spots in CA: Dushanbe (Tajikistan), Bishkek (the Kyrgyz Republic), Tashkent (Uzbekistan), Samarkand (Uzbekistan), Astana, and Almaty (Kazakhstan).
  • Publication
    State of Social Protection Report 2025
    (Washington, DC: World Bank, 2025-04-07) World Bank
    Social protection goes well beyond cash transfers; it includes policies and programs that bridge skill, financial, and information gaps, aiding people in securing better jobs. The three pillars of social protection—social assistance, social insurance, and labor market programs—support households and workers in handling crises, escaping poverty, facing transitions, and seizing employment opportunities. But despite a substantial expansion over the past decade, 2 billion people remain uncovered or inadequately covered across low- and middle-income countries. Drawing from administrative and household survey data from the World Bank’s Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE), the "State of Social Protection Report 2025: The 2-Billion-Person Challenge" documents advances and challenges to strengthening social protection and labor systems across low- and middle-income countries, analyzing the evolution of expenditure, coverage, and adequacy of support. This report details four policy action areas governments can embrace to maximize the benefits of adequate social protection for all: extending social protection to those in need; strengthening the adequacy of social protection support; building shock-proof social protection systems; and optimizing social protection financing. The report discusses how the path of reforms will depend on country context, capacity, and fiscal space. The rising frequency of shocks and crises calls for major investments in the adaptability and preparedness of social protection and labor systems. Amid a world in transition, social protection is more important and necessary than ever.
  • Publication
    Cities’ Partnership Initiative
    (Washington, DC: World Bank, 2025-04-24) World Bank
    Sustainable urban development is one of the key areas of development policy in Poland, which is in line with global trends. Sustainable urban development requires an integrated approach that takes into account the complexity and dynamics of phenomena and processes taking place in the urban environment. Meeting the challenges of urban development requires, on the one hand, a steady increase in the capacity of cities to plan and implement development projects, and on the other hand, a favorable regulatory and financial framework and support instruments that are an adequate response to the needs of urban centers. The Cities’ Partnership Initiative (CPI) is a flagship project of the Ministry of Development Funds and Regional Policy of Poland (MDFRP) aimed at supporting sustainable urban development. This final report is the third product of the Reimbursable Advisory Service Agreement on Sustainable Urban Development - Cities’ Partnership Initiative concluded between the MDFRP and the World Bank on January 28, 2022. The report summarizes the project work, including the results of the work of 30 CPI-participating cities, and presents conclusions and recommendations on the three thematic networks and the CPI formula itself.
  • Publication
    Europe and Central Asia Economic Update, Spring 2025: Accelerating Growth through Entrepreneurship, Technology Adoption, and Innovation
    (Washington, DC: World Bank, 2025-04-23) Belacin, Matias; Iacovone, Leonardo; Izvorski, Ivailo; Kasyanenko, Sergiy
    Business dynamism and economic growth in Europe and Central Asia have weakened since the late 2000s, with productivity growth driven largely by resource reallocation between firms and sectors rather than innovation. To move up the value chain, countries need to facilitate technology adoption, stronger domestic competition, and firm-level innovation to build a more dynamic private sector. Governments should move beyond broad support for small- and medium-sized enterprises and focus on enabling the most productive firms to expand and compete globally. Strengthening competition policies, reducing the presence of state-owned enterprises, and ensuring fair market access are crucial. Limited availability of long-term financing and risk capital hinders firm growth and innovation. Economic disruptions are a shock in the short term, but they provide an opportunity for implementing enterprise and structural reforms, all of which are essential for creating better-paying jobs and helping countries in the region to achieve high-income status.