Determinants of Financial Inclusion of Female Entrepreneurs in Somalia.

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Abstract Financial inclusion is a vital driver of business development that enables the business to build capital over time and seize investment opportunities. The purpose of this study is to examine the determinant of the financial inclusion of female entrepreneurs in Somalia. We measure financial inclusion to the ownership of the formal account, Saving to the account, and access to borrowing from the bank. The determinants considered in this study; are age, education, business age, the form of the business, and the type of the business. This study used a cross-sectional research design to observe the population at one designated point in time and collect the data from a sample of 385 women entrepreneurs using a structured questionnaire. This study employs Probit regression models and presents the marginal effect of each observation. We found that 86% of the female entrepreneurs have a bank account, 59% saved money in a bank account in the last 12 months, and only 19% received loans from the bank. This study shows that female entrepreneurs over 30 years are 4% more like to have an account, 2% less likely to save for the account, and 12% less likely to get a loan from the bank. We also find that the level of education determines female financial inclusion. The female entrepreneur with a university degree is 1% more likely to have the account, 6% more likely to save to the account, and 12% more likely to borrow from the bank than the one that has only completed secondary school or has not attended the formal education. This study confirms that a high education level is associated with the high usage of financial services. We suggest to the government and development institutions work on the improvement of the financial literacy of women entrepreneurs to enable them to access financial services.

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