Assessing the Influence of Financial Inclusion on Poverty Reducation in Zambia: Moderating Effect of Mobile Money

Abstract

The aim of this study is to enhance understanding of how financial access influences poverty reduction in Zambia, particularly through the use of mobile money in Chongwe district. Notable progress has been made, with information access rising from 59.3 percent in 2015 to 71.5 percent in 2023. However, a theoretical link between financial inclusion and poverty alleviation, particularly regarding the role of mobile money, remains to be thoroughly explored. Self-administered questionnaires were distributed to 251 respondents, resulting in an overall response rate of 94%, as determined by a quantitative correlational research method. This study employed both exploratory and conclusive statistics, utilizing multiple regression analysis to estimate the relationships among financial inclusion, mobile money, and poverty reduction. All in all, the findings show a direct positive effect of mobile money on both measures of poverty reduction on fresh data (r = 0.389, p < 0.001) and direct and moderating effects of mobile money that moderate significantly the relationship between financial inclusion with poverty reduction on old data (r = 0.278, p < 0.001). The results revealed that basic numeracy (M=3.86), regardless of the availability of infrastructure (M =3.82), and public confidence in financial institutions (M = 3.74) are critical moderating variables. The study proves that the connection with the traditional financial services which is brought through mobile money enhances poverty reduction opportunities in the rural markets in particular. Others include recommended policies for government to invest in digital technologies to enhance financial literacy among the citizen, for the financial institutions to provide integrated services, and for the citizens to harness the new opportunities in the MFSs. This research contributes to the literature on digital financial inclusion and poverty eradication and the results could be of interest to policy makers and financial firms in Zambia and other comparable nations. Keywords: Financial Inclusion, Poverty Reduction, Mobile Money, Digital Financial Services, Financial Literacy