The Role and Impact of Digital Financial Services (DFS) in Advancing Financial Inclusion in Ethiopia
| dc.contributor.advisor | Dr. Eyob Nigussie | |
| dc.contributor.author | Daniel Derese | |
| dc.date.accessioned | 2026-11-06T04:58:57Z | |
| dc.date.available | 2026-11-06T04:58:57Z | |
| dc.date.issued | 2026-11 | |
| dc.description.abstract | Financial inclusion—access to affordable formal financial services—is a key driver of poverty reduction and inclusive growth. In Ethiopia, Digital Financial Services (DFS) have grown rapidly since 2020, especially after regulatory reforms and the launch of Telebirr. This study examines six DFS channels (atms, POS, mobile banking, internet banking, agent banking, mobile money) and their impact on financial inclusion between 2020 and 2025 Using official UN population data (mid-2025 total: 135.47 million; adult 15-64: 78.5 million) and regional shares from the Ethiopian Statistical Service (ESS, 2024), the Sarma Index of Financial Inclusion (IFI) – Euclidean distance formula – suggests the national IFI increased from 0.087 (Low) in 2020 to 0.663 (High) in 2025, a 6.6-fold increase. Regional differences are substantial with Harari leading (0.748 Very High) while Oromia is the lowest (0.081 Low) followed by Amhara (0.092) and Central Ethiopia (0.193). , Low). Combined, agent banking and mobile money are the biggest drivers of IFI progress, accounting for 43%. The IFI is a good predictor of active usage (β = 56.38, p < .001, R2 = .722). However, 60% of mobile money accounts are dormant and women are substantially less included (male IFI 0.718 vs female 0.452). Scenario simulations show that the national IFI would increase to 0.75 by 2028 with active adult inclusion at 62% with full policy optimization. The study indicates that although DFS has greatly extended access, the next phase must focus on activating dormant accounts, reducing the gender gap and reaching lagging regions. Evidence-based, channel-specific suggestions are presented for regulators, financial institutions and development partners | |
| dc.identifier.uri | https://etd.aau.edu.et/handle/123456789/9373 | |
| dc.language.iso | en_US | |
| dc.publisher | Addis Ababa University. | |
| dc.subject | DFS | |
| dc.subject | Financial Inclusion | |
| dc.subject | Sarma IFI | |
| dc.subject | Ethiopia | |
| dc.subject | Mobile Money | |
| dc.subject | Agent Banking | |
| dc.subject | Gender Gap | |
| dc.subject | Regional Disparities | |
| dc.title | The Role and Impact of Digital Financial Services (DFS) in Advancing Financial Inclusion in Ethiopia | |
| dc.type | Thesis |