National Financial Inclusion Strategies (NFIS) typically set financial inclusion targets for the country’s population as a key metric of success. The availability of that data often underpins successful measurement of national financial inclusion progress and the impact of policy actions undertaken through the NFIS. Household surveys are useful tools to collect data on consumer behavior to measure progress in financial inclusion and inform policies and programs in this area. However, collecting demand-side data through standalone household surveys can be costly and resource-intensive.
In some cases, global resources, such as the Global Findex Survey, can be leveraged for financial inclusion tracking. But for policymakers looking to build larger modules that provide additional indicators, collect data more frequently or who prefer data customized to their country context, an effective and increasingly popular approach is integrating financial inclusion indicators and modules into existing, relevant and established surveys which are often run by national statistical offices or local research entities. Such agencies can be leveraged to provide periodic financial inclusion data either by developing specific financial inclusion surveys or by integrating financial inclusion modules into already-existing household or individual surveys. Moreover, the additional demographic and intra-household related variables available when integrating a financial inclusion module with existing multi-topic household surveys will also allow conducting a more detailed analysis of its predictors and drivers as well as constraints and opportunities.
In the context of Ethiopia’s National Financial Inclusion Strategy (NFIS), launched in October, 2017, the National Bank of Ethiopia was tasked to measure national financial inclusion progress periodically. One core target of Ethiopia’s NFIS is to increase account ownership from 22 percent in 2014 to 60 percent by 2020. However, during the development of Ethiopia’s NFIS, there did not yet exist a comprehensive, periodic source of financial inclusion data available nationally.
As part of the World Bank’s comprehensive Financial Inclusion Support Framework (FISF), providing $3 million in technical assistance towards Ethiopia’s national financial inclusion goals, the Ethiopian authorities worked to bridge their financial inclusion data gap by leveraging the Ethiopia Socioeconomic Survey (ESS)’ conducted by the Ethiopian Central Statistics Agency (CSA) every two years in collaboration with the World Bank Living Standards and Measurement Study (LSMS) team. Conducted since 2011, the ESS aims at improving the availability of multi-topic panel household level data. FISF aims to accelerate and initiate financial sector reforms and policy actions that advance progress towards the World Bank Group’s initiative of Universal Financial Access (UFA) by 2020. Filling the gap in financial inclusion data was especially important given that Ethiopia is also one of the 25 priority countries under the UFA initiative.
In 2015, the National Bank of Ethiopia, supported by the World Bank through FISF, collaborated with the CSA and World Bank LSMS team to integrate a financial inclusion module to the ESS. The module covers account access, barriers to access, savings, loans, informal finance, insurance, financial capability, and consumer protection. It provides the NBE with a full range of financial inclusion indicators that helps them track and evaluate the progress of Ethiopia’s NFIS over time. The Ethiopian NFIS results framework used the module as a source of biennial data to measure progress towards financial inclusion. The FISF program was thus instrumental in reinforcing the importance of evidence-based, data-driven policy development and implementation in the context of financial inclusion in Ethiopia. The fourth wave of ESS is currently being implemented in the field. The current (2018/19) survey instrument also includes additional indicators around financial capability to complement Ethiopia’s upcoming National Financial Education Strategy and to measure the impact and progress of financial capability over time.
Policymakers like financial sector authorities should continue to connect and exploit these natural synergies in order to develop comprehensive sources of financial inclusion indicators without exhausting capacities and financial resources. For policymakers trying to measure progress towards financial inclusion and establish an evidence-based approach to overall policy development, the Ethiopian case serves as a good example to replicate in other countries.