ASSESSING THE ROLE OF DIGITAL FINANCIAL SERVICES IN ENHANCING FINANCIAL INCLUSION IN ETHIOPIA

Abstract

Digital Financial Services (DFS), including mobile money platforms, digital wallets, and fintech-based banking solutions, are reshaping financial access in Ethiopia, where a large proportion of the population remains unbanked and traditional banking infrastructure is limited. This study assesses the role of DFS in enhancing financial inclusion, with a focus on both urban and rural contexts. Using a mixed-methods approach, the research combined a structured survey of 30 DFS employees, semi-structured interviews with senior managers, regulators, and selected end-users, and secondary data from institutional reports and national strategies. This design allowed for triangulation of perspectives on adoption patterns, operational challenges, and regulatory frameworks. Findings indicate that DFS have significantly improved access to financial services, with platforms such as Telebirr reaching 34 million registered users by 2024 and facilitating over 2 million daily transactions. However, adoption remains uneven: rural access rates are below 30%, and persistent barriers include low digital literacy, limited infrastructure, platform interoperability gaps, and gender disparities. The study concludes that while DFS hold transformative potential for advancing financial inclusion and economic empowerment, targeted interventions are required. These include expanding rural agent networks, investing in digital literacy programs, improving regulatory coordination, and promoting inclusive product design for underserved groups, especially women and low-literacy users.