Financial Inclusion in Ethiopia

This paper analyzes the demand and supply side data to show the status of financial inclusion in Ethiopia. Using a set of survey instruments on demand side and data on supply side of financial inclusion, we first analyzed the demand side survey on account, saving, credit, payment, insurance and financial resilience as well as barriers to financial inclusion. Then, we determined and analyzed the supply side of the financial inclusion such as trends in the number of deposit accounts and loan accounts, branch per capita, branch density, ATMs per capita and ATMs density and the retail payment instruments penetration. The analysis of supply side study covered the data for the period from 2006 to 2015. We find that in Ethiopia 33.86 percent of adults has an account at formal financial institution in the year 2016. They use their account to keep money safe, send and receive payments, and to get credit services and foreign exchange services. Using the data on the supply side of financial inclusion in Ethiopia as of December 2015, we find that the branch per capita and branch density of 5.54 and 3.09 respectively. We find that barriers to financial inclusion such as lack of money, distance, fixed cost, and documentations are important obstacles in Ethiopia.