The Role of Financial Inclusion in Eliminating Household Poverty: Evidence from the Rural Wa West District of Ghana

Abstract

It has been acclaimed that financial inclusion is one sure way of moving the poor out of poverty. In Ghana, poverty levels are particularly high in the Northern regions. In the Wa West district of the Upper West Region, the poverty incidence rate is as high as 92.4% (GSS, 2015). In this study, the researchers survey 378 households across the Wa West district to ascertain and examine the level of poverty and financial inclusion among households. Specifically, we examine the extent to which financial inclusion affects household income in the district. The study confirmed high levels of poverty and extremely low levels of financial inclusion among households in the district. The findings showed that households that had less access to financial products and services, had low levels of household income making them poor. Our findings confirm that in our sample, financial inclusion is a significant factor in determining household income and by extension, poverty levels. Secondly, using ordinary least squares (OLS) estimation adjusting for robustness, we found that access to credit and withdrawal frequency significantly affect household expenditure, a proxy for poverty. We also found very low levels of education in our sample but ironically, the households did not consider education a major intervention to improve their standard of living, rather preferring farming and livestock support. We recommend that governments and other policymakers adopt a two-pronged approach by increasing financial inclusion in rural areas whilst tackling low poverty level issues.