Effect of financial literacy on financial inclusion in Zimbabwe. a case study of Mubayira growth point ward 4 (Chegutu district) Mashonaland West Province of Zimbabwe

Abstract

Financial literacy results in the efficient and effective utilisation of financial services and leads to economic development of a country. On the other hand, financial inclusion entails the accessibility and availability of affordable financial services to the citizens of a country. The purpose of this study was to assess the effect of financial literacy on financial inclusion in Zimbabwe. Previous studies on financial literacy and financial inclusion were mostly focusing on the supply sided determinants of financial inclusion thus prompting the researcher to carry out a further study on the effect of other determinants such as financial literacy which is a key demand sided determinant, on financial inclusion. Further, it is worth noting that other previous studies were done in developed nations and most of them have focused on both the relationship between financial literacy and other variables like demographic factors. This study is vital to the local citizens of Zimbabwe because financial literacy is key in helping people make more self-assured and sound financial decisions in their lives. The primary objective of this study was to understand whether, and to what extent, financial literacy influences financial inclusion in Zimbabwe. Primary data was used and collected through questionnaires from a targeted sample size of 384 respondents. The study revealed that the correlation coefficient of 0.253 is statistically significant (p-value < 0.01), indicating a moderate positive association between financial literacy and access to financial products and services. The correlation analysis showed the importance of financial literacy in promoting financial inclusion. Financial literacy was positively associated with access to financial products and services, usage of financial products and services, financial knowledge and skills, and financial attitudes and beliefs. This suggests that enhancing financial literacy can lead to greater financial inclusion and improved financial well-being. The study on financial literacy and financial inclusion in Ward 4, Chegutu will have huge and positive impact for policymakers, financial institutions, community organizations, and individuals. The study recommended implementation of robust and effective financial inclusion strategies that support financial education, microfinance institutions, and digital financial services such as allocation of resources for financial literacy programs and the promotion of fair lending practices which improves consumer protection