Project – Financial Inclusion and the Economic Empowerment of Market Women: A Study of Selected Markets in Ibadan, Oyo State

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Financial inclusion has become an important component of economic development because access to appropriate and affordable financial services enables individuals and businesses to save, make payments, obtain credit, manage financial risks and invest in productive activities. The concept extends beyond merely owning a bank account to include effective access to useful financial products and services that meet people’s needs and are delivered responsibly and sustainably. In developing economies such as Nigeria, financial inclusion is particularly important for low-income groups and informal-sector operators who may have limited access to conventional financial institutions. The Central Bank of Nigeria (CBN) recognises financial inclusion as an instrument for poverty reduction, employment generation, wealth creation and improved welfare, while the World Bank’s Global Findex framework similarly treats access to financial accounts, payments, savings, credit and financial resilience as important dimensions of financial inclusion (Central Bank of Nigeria [CBN], 2022; Demirgüç-Kunt et al., 2022).

Women constitute an important segment of Nigeria’s informal and micro-enterprise economy, including petty trading, food distribution, clothing, agricultural produce, household goods and other market-based commercial activities. For market women, access to financial services can provide opportunities to accumulate savings, obtain working capital, manage daily business transactions and respond to financial shocks. However, gender differences in access to formal financial services remain an important concern. The CBN’s strategy for leveraging agent networks for women’s financial inclusion noted that women had historically experienced lower levels of financial inclusion than men and identified women as one of the groups requiring targeted interventions. The World Bank’s Nigeria for Women Programme likewise identifies financial inclusion as an important mechanism for women’s economic emancipation because it can increase women’s control over income and expand their access to economic opportunities (CBN, 2022; World Bank, 2023).

The Nigerian financial inclusion landscape has recorded measurable progress, although access remains uneven across population groups. The Enhancing Financial Innovation & Access (EFInA) Access to Financial Services in Nigeria 2023 survey reported that formal financial inclusion increased from 56% in 2020 to 64% in 2023, while the proportion of financially excluded adults declined from 32% to 26% over the same period. Despite this progress, access to formal credit remains particularly limited for women. EFInA reported that only about 5% of adult women accessed credit from formal financial service providers in 2023, suggesting that the expansion of financial inclusion has not necessarily translated into equivalent access to productive credit for women. For market women whose businesses often require regular working capital, limited access to formal credit can constrain the ability to increase inventory, expand trading activities and invest in business assets (EFInA, 2023).

Financial inclusion can contribute to economic empowerment when women are able to use financial services to exercise greater control over income, increase productive investment and strengthen their capacity to make economic decisions. Economic empowerment is broader than access to money; it may involve increased income, ownership of productive assets, improved business productivity, greater control over resources and enhanced participation in financial decision-making. In a study of women in Ibadan, Okunlola, Babajide and Isibor (2020) examined access to microfinance, economic empowerment and social empowerment and reported a positive relationship between women’s access to microfinance credit and indicators such as income, asset ownership, investment and productivity. Their findings provide direct empirical relevance to the present study because they demonstrate that financial access can be associated with dimensions of women’s economic empowerment within the Ibadan context.

The importance of financial inclusion for women is also reflected in the development of targeted financial policies and delivery channels. Nigeria’s financial inclusion policy framework has increasingly recognised women as a priority segment and has promoted approaches such as agent banking, digital financial services, simplified access procedures and financial education. The CBN’s Strategy for Leveraging Agent Networks for Women’s Financial Inclusion was developed specifically to address barriers limiting women’s access to financial services and to expand the reach of financial service providers. The International Monetary Fund (IMF, 2023) also reported that Nigerian authorities had introduced several initiatives to increase women’s access to financial services, while noting that lower income, educational limitations and trust-related factors could affect women’s participation in formal finance. Such interventions are particularly relevant to market women because many operate in informal environments where proximity, transaction costs, documentation and convenience can influence the choice between formal and informal financial services (CBN, 2022; IMF, 2023).

Market women in Ibadan operate within a commercial environment where informal financial arrangements can play an important role in meeting short-term business financing needs. Traditional savings mechanisms such as ajo and esusu, rotating savings arrangements, cooperative finance and informal borrowing can provide liquidity where formal financial institutions are difficult to access or where formal credit requirements are considered unsuitable. Recent research on women traders in Ibadan found that informal credit arrangements based on trust, peer relationships and collective responsibility continue to function within traditional markets, demonstrating the importance of informal financial mechanisms in supporting women’s daily trading activities. At the same time, reliance on informal finance may not provide the same range of services as formal institutions, particularly for larger-scale investment, secure savings, insurance and structured business credit (Olajire, 2026).

Ibadan, the capital of Oyo State and one of the major commercial centres in southwestern Nigeria, provides an important setting for examining the relationship between financial inclusion and the economic empowerment of market women. The city contains established markets and large concentrations of women engaged in trading and informal commercial activities. Evidence from Ibadan is particularly relevant because Okunlola et al. (2020) specifically examined women’s access to microfinance and empowerment in the metropolis and reported that access to microfinance was positively associated with economic and social empowerment indicators. More recent research on women traders in Ibadan has also highlighted the continuing importance of informal credit mechanisms and the financial challenges faced by female traders. Therefore, examining selected markets in Ibadan can provide location-specific evidence on whether access to financial services, savings, credit, digital financial services and financial literacy contributes to the economic empowerment of market women (Okunlola et al., 2020; Olajire, 2026).

1.2 Statement of the Problem

Despite the increasing emphasis on financial inclusion in Nigeria, a considerable proportion of women continue to experience limitations in accessing formal financial services. Although EFInA’s 2023 data indicate an improvement in overall financial inclusion, formal access to credit among adult women remained very low. This is important for market women because trading activities commonly require regular access to working capital for purchasing goods, expanding inventory and responding to changing market opportunities. When formal credit is unavailable or difficult to obtain, women may depend on personal savings, family resources, informal borrowing and rotating savings arrangements, which may provide short-term liquidity but may not always be sufficient for business expansion. The problem is therefore not simply whether financial services exist, but whether market women can access and effectively use appropriate financial services for productive economic purposes (EFInA, 2023).

Another problem concerns the barriers that may prevent women from converting financial access into meaningful economic empowerment. Access to a bank account or mobile payment platform does not automatically result in increased income, asset ownership, business expansion or greater control over economic decisions. The IMF (2023) identifies factors such as income, education and trust in financial service providers as relevant to women’s financial inclusion in Nigeria, while the CBN’s women’s financial inclusion strategy identifies issues surrounding access channels, identification requirements and the availability of appropriate financial services. These barriers may be particularly significant for market women operating small businesses with irregular cash flows and limited formal documentation. Consequently, there is a need to examine whether financial inclusion among market women in Ibadan extends beyond access to financial services to actual economic empowerment outcomes.

A further problem relates to the continuing reliance of market women on informal financial arrangements despite the expansion of formal financial services. Informal mechanisms such as ajo, esusu and other rotating savings and credit arrangements can provide accessible finance based on trust and established social relationships. Recent research among women traders in Ibadan found that such informal credit mechanisms continue to provide liquidity for daily trading while also creating potential financial vulnerabilities through repayment pressures. Although informal finance can be useful, its capacity to support long-term business expansion, asset acquisition and sustained economic empowerment may differ from that of formal financial services. This creates the need to investigate whether increased access to formal savings, credit, payments and other financial services is associated with stronger economic empowerment among women operating in selected Ibadan markets (Olajire, 2026; Okunlola et al., 2020).

The specific problem addressed by this study is the limited location-specific evidence on how financial inclusion affects the economic empowerment of market women in selected markets in Ibadan, Oyo State. Existing studies have established the importance of women’s financial access and have examined microfinance and women’s empowerment in Ibadan, while national surveys have documented continuing gender-related gaps in access to formal credit. However, there remains a need to examine different dimensions of financial inclusion and their relationship with economic empowerment among women traders in selected markets. This study therefore seeks to examine the effect of access to formal financial services, access to credit, savings and digital financial services, and financial literacy on the economic empowerment of market women in selected markets in Ibadan, Oyo State. The findings may provide evidence useful to financial institutions, government agencies, market associations and other stakeholders seeking to improve women’s productive participation in the economy (Okunlola et al., 2020; EFInA, 2023; CBN, 2022).

1.3 Aim and Objectives of the Study

The main aim of this study is to examine the effect of financial inclusion on the economic empowerment of market women in selected markets in Ibadan, Oyo State.

The specific objectives are to:

1. Examine the effect of access to formal financial services on the economic empowerment of market women in selected markets in Ibadan, Oyo State.
2. Determine the effect of access to credit on the economic empowerment of market women in selected markets in Ibadan, Oyo State.
3. Assess the effect of access to savings and digital financial services on the economic empowerment of market women in selected markets in Ibadan, Oyo State.
4. Investigate the effect of financial literacy on the economic empowerment of market women in selected markets in Ibadan, Oyo State.

1.4 Research Questions

The following research questions will guide the study:

1. To what extent does access to formal financial services affect the economic empowerment of market women in selected markets in Ibadan, Oyo State?
2. How does access to credit affect the economic empowerment of market women in selected markets in Ibadan, Oyo State?
3. To what extent does access to savings and digital financial services affect the economic empowerment of market women in selected markets in Ibadan, Oyo State?
4. How does financial literacy affect the economic empowerment of market women in selected markets in Ibadan, Oyo State?

1.5 Research Hypothesis

The following null hypothesis will be tested at the 0.05 level of significance:

H₀: Financial inclusion has no statistically significant effect on the economic empowerment of market women in selected markets in Ibadan, Oyo State.

1.6 Significance of the Study

The study is expected to be beneficial to market women, financial institutions, government agencies, market associations, development organisations, researchers and students.

For market women, the study may provide greater understanding of how formal financial services, credit, savings, digital financial services and financial literacy can support business activities and economic advancement. The findings may also help identify financial barriers that limit the ability of women to expand their businesses and improve their financial security.

For financial institutions, the study may provide information about the financial needs and challenges of women operating in markets. Such evidence may assist banks, microfinance banks, fintech companies and other financial service providers in developing products and delivery channels that are more suitable for women traders.

For government agencies and policymakers, the findings may provide evidence for assessing policies and programmes aimed at increasing women’s financial inclusion. The study may be useful to institutions involved in financial inclusion, women’s economic development, entrepreneurship and poverty reduction.

For market associations, the findings may demonstrate the importance of financial literacy, savings arrangements and responsible access to credit among their members. Market associations may use the findings to support financial education and facilitate appropriate relationships between traders and financial service providers.

For development organisations and non-governmental organisations, the study may provide information that can support programmes designed to improve women’s livelihoods, entrepreneurship, financial resilience and economic participation.

For researchers and students, the study may contribute to the existing literature on financial inclusion, women’s economic empowerment and informal-sector entrepreneurship in Nigeria. It may also serve as a reference for future research involving market women and other financially underserved groups.

1.7 Scope of the Study

The study focuses on financial inclusion and the economic empowerment of market women in selected markets in Ibadan, Oyo State.

Geographically, the study is restricted to selected markets within Ibadan, Oyo State, Nigeria.

The study examines four dimensions of financial inclusion: access to formal financial services, access to credit, access to savings and digital financial services, and financial literacy.

The dependent variable is economic empowerment, which will be examined using indicators such as business income, business expansion, asset ownership, savings capacity, investment capacity and participation in economic decision-making.

The study will obtain data from market women operating businesses within the selected markets. The respondents will provide information concerning their access to financial services, use of financial products and perceived economic outcomes.

1.8 Operational Definition of Terms

Financial Inclusion: The availability, accessibility and effective use of appropriate and affordable financial products and services, including payments, savings, credit and other financial services, by individuals and businesses.

Economic Empowerment: The process through which individuals, particularly women, gain greater control over financial resources and economic decisions and improve their capacity to generate income, accumulate assets and participate productively in economic activities.

Market Women: Women who engage in buying, selling, distribution or other commercial activities within established markets.

Formal Financial Services: Financial products and services provided by regulated financial institutions such as commercial banks, microfinance banks and other licensed financial service providers.

Access to Credit: The ability of market women to obtain loans or other forms of formal or regulated credit for business and productive purposes.

Savings: The practice of setting aside part of one’s income or business proceeds for future use through formal or informal financial mechanisms.

Digital Financial Services: Financial services accessed or delivered through digital technologies, including mobile banking, electronic transfers, mobile money, digital payments and related platforms.

Financial Literacy: The knowledge and skills that enable an individual to understand and make informed decisions concerning financial products, savings, credit, payments, budgeting and other financial matters.

Economic Empowerment of Market Women: The extent to which market women experience improvements in income, business growth, asset ownership, savings, investment capacity and control over economic decisions.

Business Income: The monetary earnings generated by a market woman’s trading activities after considering relevant business costs.

Asset Ownership: The possession or control of productive or valuable resources such as business equipment, inventory, property or other assets used for economic purposes.

Financial Access: The ability of an individual to reach, obtain and use financial products and services that are appropriate to their needs.

Financial Exclusion: A situation in which individuals or groups lack adequate access to appropriate formal financial products and services.

Market Association: An organised body representing the interests of traders or business operators within a particular market.

Project – Financial Inclusion and the Economic Empowerment of Market Women: A Study of Selected Markets in Ibadan, Oyo State