Determinants of financial inclusion in Sierra Leone: Evidence from Findex surveys

Abstract

Despite financial inclusion playing a critical role in achieving sustainable development goals in many developing countries including Sierra Leone, studies on key determinants of financial inclusion are scarce. Thus, the objective of this paper is to examine the factors affecting financial inclusion in Sierra Leone between 2017 and 2021, using micro-level data from the World Bank's Global Financial Inclusion Findex surveys. Estimating probit models, the findings show that richer, older, and formally employed people are more likely to have financial access, usage, and innovation, with more pronouncement in the post-Covid-19 period than in pre Covid-19 period. However, informal borrowing, remittances, and transfers from individuals and governments negatively affect financial inclusion, while individuals with savings are more likely to access credit. Although there is no significant gender inequality in the two survey waves, younger and educated individuals are more likely to have financial access than older and uneducated individuals. The study recommends measures to promote financial access, such as enhancing access to financial institutions and promoting mobile money adoption, to be effective in reducing inequality and poverty. Additionally, the study emphasises the need for targeted policies prioritising financial inclusion to under-represented groups and access to basic financial services such as opening bank accounts and using mobile money for transactions in Sierra Leone.