Assessing the determinants of Financial Inclusion among selected Micro, Small and Medium Enterprises in Agriculture and Trade in Chipata District

Abstract

Financial inclusion for Micro, Small and Medium Enterprises (MSMEs) in trade and agriculture is receiving global and regional attention, however, knowledge regarding the specific traits that influence financial inclusion is lacking, particularly in Zambia. This research sought to examine the relationship between financial literacy and awareness, access to financial services, quality of financial services, and financial service affordability, and financial inclusion among MSMEs in agriculture and trade in Chipata District. The study used a quantitative research approach with a correlational study design and a cross-sectional time horizon. The study targeted MSMEs in trade and agriculture in Chipata District and employed a homogeneous purposive sampling technique. Both primary and secondary data collection methods were used. The data was collected using a closed-ended questionnaire, and the findings were examined using regression analysis and correlation analysis. Regression analysis results show no statistically significant relationship between financial inclusion and affordability (β = 0.043, p = 0.561), quality of financial services (β = 0.072, p = 0.214), access to financial services (β = 0.054, p = 0.482), and financial literacy and awareness (β = 0.101, p = 0.302). The results of the correlation study, however, showed a strong positive correlation between financial inclusion and knowledge (r = 0.234, p < 0.05), as well as between the degree of financial inclusion (r = 0.301, p < 0.01), the quality of financial services (r = 0.213, p < 0.05), and the ability to obtain financial services. The study's conclusions led to the formulation of the following policy recommendations: financial service providers should prioritise raising service quality in order to better meet the needs of MSMEs; government should create and implement integrated financial education programmes targeted at MSMEs to improve awareness and literacy; policies should improve MSMEs' access to financial services; and investigate ways to make financial services more affordable for MSMEs. Key Words: Financial Inclusion, financial literacy and awareness, access to financial services, quality of financial services, and financial service affordability