Project – Digital Financial Inclusion and Economic Empowerment of Rural Women: A Case Study of Selected Communities in Ogun State.

CHAPTER ONE

INTRODUCTION

TOPIC: DIGITAL FINANCIAL INCLUSION AND ECONOMIC EMPOWERMENT OF RURAL WOMEN: A CASE STUDY OF SELECTED COMMUNITIES IN OGUN STATE

1.1 Background to the Study

Digital financial inclusion has become an important instrument for promoting economic development, reducing financial exclusion and improving the economic participation of disadvantaged groups, particularly women living in rural communities. It refers to the provision and use of affordable, accessible and convenient financial services through digital technologies such as mobile phones, electronic payment platforms, internet banking, mobile money applications, automated teller machines and other technology-enabled financial systems. Digital financial inclusion enables individuals to save money, transfer funds, receive payments, access credit and conduct financial transactions without necessarily visiting traditional banking institutions. Its importance has increased with the development of financial technology and the growing recognition that access to financial services is essential for poverty reduction, entrepreneurship development and economic empowerment. The World Bank (2022), through its Global Findex Database, emphasised the growing role of digital payments and formal financial accounts in improving people’s participation in economic activities. Similarly, Ozili (2018) explained that digital finance has the potential to promote financial inclusion by reducing transaction costs, improving accessibility and extending financial services to previously underserved populations. For rural women, who often experience geographical, economic and social barriers to conventional banking services, digital financial inclusion provides opportunities to participate more actively in financial and productive activities. Therefore, the expansion of digital financial services represents an important development strategy for improving women’s economic independence and strengthening household welfare in rural Nigeria (Ozili, 2018; Demirgüç-Kunt et al., 2022).

Financial inclusion generally involves ensuring that individuals and businesses have access to useful and affordable financial products and services that meet their needs, including transactions, payments, savings, credit and insurance. Digital financial inclusion extends this concept by using technology to make financial services more accessible, particularly to individuals who live far from conventional banking institutions. In many rural communities, physical distance, transportation costs, inadequate banking infrastructure, low income and limited financial literacy prevent women from accessing formal financial institutions. Digital financial services can reduce some of these barriers by allowing users to carry out transactions through mobile phones, agent banking networks, electronic wallets and other digital platforms. However, meaningful financial inclusion involves more than simply opening a bank account or registering for a mobile money service; it also requires regular usage, affordability, security and the ability to benefit from available financial products. Demirgüç-Kunt, Klapper, Singer, Ansar and Hess (2022), in the Global Findex Database 2021, demonstrated the growing importance of account ownership and digital payments in expanding financial access globally. The Alliance for Financial Inclusion (AFI, 2021) also emphasised the importance of inclusive financial policies and digital innovations in extending financial services to underserved populations, particularly women and rural communities. These perspectives suggest that digital financial inclusion can improve rural women’s access to financial opportunities when the services are affordable, reliable and suitable for their economic circumstances (Demirgüç-Kunt et al., 2022; AFI, 2021).

Economic empowerment of women is another important concept in understanding the relationship between digital financial inclusion and rural development. It refers to the process through which women acquire the financial resources, economic opportunities, decision-making authority, skills and independence required to improve their living conditions and participate meaningfully in economic activities. Economically empowered women are better positioned to establish businesses, manage financial resources, make independent economic decisions, contribute to household income and invest in their personal development and that of their families. However, women in rural communities frequently encounter challenges such as limited access to productive resources, inadequate educational opportunities, restricted property ownership, insufficient capital and social barriers that affect their participation in economic activities. The United Nations Entity for Gender Equality and the Empowerment of Women (UN Women, 2018) identified women’s economic empowerment as an important component of gender equality and sustainable development, emphasising the need to improve women’s access to decent work, productive resources and economic opportunities. Similarly, the World Bank (2012), in its World Development Report on gender equality and development, explained that reducing gender inequalities in access to economic opportunities can improve productivity and contribute to broader development outcomes. Digital financial inclusion can support this process by providing rural women with opportunities to save, receive business payments, access financial information and participate in economic transactions with greater independence (World Bank, 2012; UN Women, 2018).

In Nigeria, digital financial inclusion has become increasingly important because a considerable number of women, particularly those in rural areas, continue to experience difficulties accessing formal financial services. Although the Nigerian financial system has expanded through commercial banks, microfinance institutions, mobile money operators, financial technology companies and agent banking networks, access to these services remains uneven across geographical locations and population groups. Rural women may encounter challenges associated with distance to banking facilities, low literacy levels, limited ownership of mobile devices, inadequate internet connectivity, transaction charges and insufficient knowledge of digital financial products. These challenges can prevent them from benefiting fully from financial services that could support their businesses and personal economic activities. The Central Bank of Nigeria (CBN, 2022), through its National Financial Inclusion Strategy, recognised the need to improve financial access among excluded and underserved populations through appropriate policies, technological innovation and stakeholder collaboration. Similarly, the Enhancing Financial Innovation and Access (EFInA, 2023) survey on access to financial services in Nigeria highlighted the importance of addressing financial exclusion and the differences in access to formal financial services across population groups. These developments demonstrate that digital financial inclusion is an important policy instrument for expanding financial opportunities among Nigerian women, although the actual benefits depend on accessibility, affordability, digital literacy and the ability of women to use available financial services effectively (CBN, 2022; EFInA, 2023).

Furthermore, digital financial inclusion can contribute to the economic empowerment of rural women through improved access to savings facilities, credit opportunities and financial management services. Many rural women engage in small-scale businesses such as petty trading, food processing, agricultural production, craft making, tailoring and other income-generating activities. However, the growth of these businesses is often restricted by inadequate working capital, limited access to formal credit and difficulties in managing financial transactions. Digital financial services can help address some of these challenges by enabling women to receive business payments electronically, save money securely, transfer funds to suppliers and access financial products through digital channels. Suri and Jack (2016), in their influential study of the expansion of mobile money in Kenya, found that access to mobile money services contributed to poverty reduction and improved the economic position of households, with particularly important effects among female-headed households. Their findings demonstrated that digital financial services could improve women’s economic choices and facilitate occupational changes. Similarly, the World Bank (2022) reported that digital payments and formal financial account ownership provide opportunities for individuals to participate more effectively in economic activities. Although these findings provide important evidence of the potential benefits of digital finance, the extent to which rural women in Nigeria can translate access to digital financial services into improved income, business expansion and financial independence requires further investigation (Suri & Jack, 2016; Demirgüç-Kunt et al., 2022).

Despite the potential benefits of digital financial services, several barriers continue to limit the effective participation of rural women in digital financial systems. These barriers include inadequate digital literacy, poor network coverage, unreliable electricity supply, high transaction charges, limited access to smartphones, cybersecurity risks, financial fraud and cultural restrictions that may affect women’s control over financial resources. In some rural communities, women may possess mobile phones but lack the necessary knowledge to use banking applications, mobile money platforms and other electronic financial services independently. Others may depend on male relatives or intermediaries to carry out digital transactions, thereby limiting the independence that financial inclusion is expected to promote. The GSMA (2024), in its Mobile Gender Gap Report 2024, highlighted the continuing gender gap in mobile ownership and mobile internet usage, particularly in low- and middle-income countries. Similarly, the World Bank (2022) observed that although digital financial services have expanded, barriers relating to affordability, connectivity, identification and financial capability continue to affect access and usage among disadvantaged groups. These challenges suggest that the availability of digital financial services does not automatically translate into women’s economic empowerment. Rather, the benefits depend on whether rural women possess the resources, knowledge, confidence and freedom required to access and use these services effectively (GSMA, 2024; Demirgüç-Kunt et al., 2022).

Ogun State provides a relevant geographical context for examining digital financial inclusion and the economic empowerment of rural women because of its combination of urban centres, semi-urban settlements and rural communities with different economic and infrastructural characteristics. The state has significant agricultural, commercial, manufacturing and trading activities, with many women participating in farming, food processing, petty trading, cooperative societies, local markets and other small-scale economic activities. However, rural women engaged in these activities may face difficulties obtaining affordable credit, accessing formal savings facilities and conducting financial transactions because of geographical distance, limited financial infrastructure and inadequate digital capabilities. Digital financial services could provide opportunities for these women to receive payments, save income, access financial information and manage their businesses more effectively. Nevertheless, the level of access and actual economic benefits may differ among communities depending on mobile network availability, financial literacy, educational background, household circumstances and the presence of digital financial service providers. The CBN (2022) emphasised the need to extend financial services to underserved populations, while EFInA (2023) highlighted the importance of understanding financial access and usage across different demographic and geographical categories in Nigeria. Therefore, examining selected rural communities in Ogun State will provide an opportunity to understand how digital financial services influence women’s participation in economic activities and the extent to which such services contribute to their financial independence, income generation and general economic welfare (CBN, 2022; EFInA, 2023).

1.2 Statement of the Problem

Despite the growing importance of digital financial services in promoting financial inclusion and economic development, many rural women in Nigeria continue to experience difficulties accessing and effectively using formal financial services. A considerable number of women engaged in agriculture, petty trading, food processing, handicrafts and other small-scale economic activities operate with limited financial resources and depend on informal savings arrangements, family support and local borrowing to finance their activities. Although mobile banking, mobile money, electronic payment systems and agent banking have expanded the opportunities for financial transactions, these services have not necessarily reached all rural women equally. Factors such as geographical isolation, inadequate telecommunications infrastructure, low digital literacy, limited access to mobile devices and insufficient awareness of available financial products continue to restrict their participation. EFInA (2023) reported that although formal financial inclusion in Nigeria increased from 56% in 2020 to 64% in 2023, a significant proportion of the adult population remained financially excluded. This indicates that progress in financial inclusion has not eliminated the barriers preventing disadvantaged groups, including rural women, from accessing and using formal financial services. The persistence of these barriers raises concerns about whether existing digital financial inclusion initiatives are sufficiently accessible and beneficial to women in rural communities.

Another major problem is the limited ability of many rural women to obtain adequate financial resources for establishing, managing and expanding their economic activities. Women involved in farming, petty trading, food processing and other small businesses often require access to savings facilities, affordable credit, secure payment systems and financial information to improve their productivity and income. However, the absence of accessible financial services may restrict their ability to accumulate savings, obtain business capital, manage financial risks and expand their enterprises. Although digital financial platforms provide opportunities to overcome some traditional banking barriers, access to these platforms does not automatically guarantee improved economic outcomes. Suri and Jack (2016) demonstrated that mobile money access in Kenya contributed to poverty reduction and improved the economic position of women, particularly through increased savings, financial resilience and occupational opportunities. Similarly, Demirgüç-Kunt et al. (2022) explained that access to financial accounts and digital payment systems can improve individuals’ capacity to save, receive and transfer money and manage financial emergencies. Nevertheless, the extent to which rural women in selected communities in Ogun State can translate access to digital financial services into increased income, business development and financial independence remains an issue requiring empirical investigation.

Furthermore, the effective utilisation of digital financial services among rural women is constrained by technological, educational, social and institutional challenges. Many rural communities experience inadequate network coverage, unreliable electricity supply and limited availability of financial service agents, making digital transactions difficult or unreliable. In addition, some women have limited knowledge of mobile banking applications, electronic payment systems and digital financial security procedures. The fear of fraudulent transactions, unauthorised withdrawals, identity theft and loss of money may also discourage women from using digital financial platforms. The GSMA (2024) identified affordability, limited digital skills and other access-related barriers as important factors affecting women’s adoption and use of mobile services in low- and middle-income countries. The Central Bank of Nigeria (2018), through its revised National Financial Inclusion Strategy, also recognised the need to strengthen digital financial services, expand agent networks and address the financial exclusion of priority groups, including women and rural populations. These challenges suggest that the existence of digital financial infrastructure alone may not be sufficient to achieve meaningful economic empowerment unless rural women can access, understand, trust and independently use the available services.

The problem is particularly relevant to selected rural communities in Ogun State, where women participate in different economic activities but may experience unequal access to financial resources, digital technologies and business development opportunities. Although digital financial inclusion has the potential to improve women’s savings behaviour, access to financial transactions, business capital and economic decision-making, the actual extent of these benefits within rural communities is not sufficiently established. There is a need to understand whether access to mobile banking, mobile money, agent banking and electronic payment services has improved women’s income-generating activities, savings capacity, access to credit and financial independence. Existing studies, including Suri and Jack (2016) and Demirgüç-Kunt et al. (2022), provide evidence of the broader benefits of digital financial services, but their findings do not automatically explain the experiences of rural women in the selected communities in Ogun State. Consequently, the central problem of this study is the uncertainty surrounding the extent to which digital financial inclusion contributes to the economic empowerment of rural women, particularly in terms of income generation, business development, savings mobilisation and financial decision-making. This study therefore seeks to examine the relationship between digital financial inclusion and the economic empowerment of rural women in selected communities in Ogun State.

1.3 Objectives of the Study

The main objective of this study is to examine the relationship between digital financial inclusion and the economic empowerment of rural women in Nigeria, using selected communities in Ogun State as a case study.

The specific objectives are to:

1. Examine the effect of access to digital financial services on the income-generating activities of rural women in selected communities in Ogun State.

2. Assess the influence of digital financial services on the savings and access to financial resources of rural women in selected communities in Ogun State.

3. Determine the relationship between the utilisation of digital financial services and the growth of women-owned businesses in selected communities in Ogun State.

4. Examine the effect of digital financial inclusion on the financial independence and economic decision-making of rural women in selected communities in Ogun State.

1.4 Research Questions

The following research questions will guide the study:

1. What is the effect of access to digital financial services on the income-generating activities of rural women in selected communities in Ogun State?

2. How do digital financial services influence the savings and access to financial resources of rural women in selected communities in Ogun State?

3. What is the relationship between the utilisation of digital financial services and the growth of women-owned businesses in selected communities in Ogun State?

4. To what extent does digital financial inclusion affect the financial independence and economic decision-making of rural women in selected communities in Ogun State?

1.5 Research Hypothesis

The following null hypothesis will guide the study and will be tested at a 0.05 level of significance.

H₀: There is no significant relationship between digital financial inclusion and the economic empowerment of rural women in selected communities in Ogun State.

1.6 Significance of the Study

This study will be significant to rural women, government, policymakers, financial institutions, digital financial service providers, non-governmental organisations, researchers and the general public.

Rural Women: The study will provide useful information on how digital financial inclusion can improve the economic conditions of women living in rural communities. It will help women understand the importance of mobile banking, electronic payment platforms, mobile money and digital savings facilities in managing their financial resources. The findings may encourage rural women to embrace digital financial services as instruments for improving their income-generating activities, savings habits, business development and financial independence.

Government and Policymakers: The study will provide relevant information that may assist government at federal, state and local government levels in developing policies that promote financial inclusion and women’s economic empowerment. The findings may help policymakers identify the challenges preventing rural women from accessing digital financial services and develop appropriate interventions relating to digital infrastructure, financial literacy, affordable financial products and rural economic development.

Financial Institutions: Commercial banks, microfinance banks and other financial institutions may benefit from the findings by gaining a better understanding of the financial needs and challenges of rural women. The study may encourage financial institutions to develop accessible, affordable and user-friendly digital financial products that address the circumstances of women engaged in agriculture, trading and other small-scale economic activities.

Digital Financial Service Providers: Mobile money operators, financial technology companies and electronic payment service providers may use the findings to understand the factors affecting rural women’s adoption and utilisation of digital financial platforms. The study may encourage the development of secure, reliable and affordable digital financial services that are suitable for individuals with limited digital literacy and financial resources.

Non-Governmental Organisations and Development Agencies: Organisations involved in women empowerment, poverty reduction, entrepreneurship development and rural transformation may benefit from the findings. The study will provide information that could guide the design of financial literacy programmes, digital skills training, entrepreneurship support and other interventions aimed at improving women’s economic opportunities.

Researchers and Students: The study will contribute to existing academic literature on digital financial inclusion, financial technology, gender equality and economic empowerment. It will serve as reference material for students and researchers interested in examining the relationship between financial technology and women’s economic development. It may also provide a foundation for further research on digital financial services in rural communities.

The General Public: The study will increase public awareness of the importance of digital financial inclusion in promoting economic development and improving the welfare of rural households. It will also encourage greater recognition of the contribution of women to household income, entrepreneurship and community development.

1.7 Scope of the Study

This study focuses on digital financial inclusion and the economic empowerment of rural women in Nigeria, using selected communities in Ogun State as a case study.

Geographical Scope: The study will be conducted in selected rural communities in Ogun State, Nigeria. The state is selected because of its agricultural and commercial activities and the participation of women in different income-generating ventures.

Content Scope: The study will examine digital financial inclusion as the independent variable and economic empowerment as the dependent variable. Specifically, it will investigate access to digital financial services, savings and access to financial resources, growth of women-owned businesses, financial independence and economic decision-making.

Population Scope: The study will focus on rural women residing in the selected communities in Ogun State, particularly women involved in agriculture, petty trading, food processing, small-scale businesses and other income-generating activities.

Institutional Scope: The study will consider digital financial services provided through commercial banks, microfinance institutions, mobile money operators, agent banking networks and other recognised electronic financial platforms.

1.8 Operational Definition of Terms

Digital Financial Inclusion: The availability, accessibility and utilisation of affordable financial services through digital technologies such as mobile banking, mobile money, electronic payment platforms and internet-based financial services.

Economic Empowerment: The process through which individuals acquire the financial resources, opportunities, skills and decision-making authority required to improve their economic conditions and achieve financial independence.

Rural Women: Women who reside in rural communities and participate in agricultural, commercial, entrepreneurial, domestic and other socioeconomic activities.

Financial Inclusion: The ability of individuals and businesses to access and use appropriate, affordable and useful formal financial products and services.

Mobile Banking: The use of mobile phones and related applications to access banking services, transfer funds, make payments and manage financial transactions.

Mobile Money: A digital financial service that allows users to store, send and receive monetary value through mobile devices.

Financial Independence: The ability of an individual to generate, control and manage personal financial resources without excessive dependence on other people.

Income-Generating Activities: Economic activities undertaken by individuals to earn money and improve their financial conditions, including trading, farming, food processing and other small-scale businesses.

Savings: The portion of an individual’s income that is set aside for future use, emergencies, investment or business development.

Women-Owned Businesses: Commercial and entrepreneurial establishments owned, managed or substantially controlled by women for income generation and economic advancement.

Economic Decision-Making: The ability of women to independently participate in decisions concerning income, savings, investments, business operations and the utilisation of financial resources.

Project – Digital Financial Inclusion and Economic Empowerment of Rural Women: A Case Study of Selected Communities in Ogun State.