The Effects of Domestic Remittances on Financial Inclusion in South Sudan

Abstract

This paper evaluates the impact of domestic remittances on Financial Inclusion in South Sudan, with primary objectives centered around examining their influence on account ownership, evaluating their effects on access to credit, and providing policy recommendations for enhancing financial inclusion in the country. Financial inclusion plays a crucial role in realizing objectives such as poverty reduction, financial deepening, economic growth, and improved living standards in the economy. The research employed the cross-sectional data sourced from the World Bank Data – Global Findex database 2021, specifically the financial inclusion survey comprising around 1,000 observations. The data relevant to South Sudan was extracted from this dataset. Employing the logit model, the key findings highlight that individuals with a higher educational level are more likely to have access to credit and own accounts at formal financial institutions. Regarding employment status, a significant observation is that employed individuals are more inclined to own accounts and access credit from lending agencies compared to their unemployed counterparts. Notably, internet access, government transfer payments, and agricultural support emerged as highly significant factors in achieving financial inclusion in South Sudan. On policy recommendations, the study proposes that the government should formulate and implement policies aimed at encouraging individuals or households to open accounts. This is particularly crucial as a significant number of households currently do not possess accounts at formal financial institutions. Additionally, the study suggests creating a conducive environment for private sector development to facilitate the seamless flow of domestic remittances across the country. Notably, the research indicates that a majority of surveyed households in South Sudan did not receive domestic remittances. Moreover, the study highly advocates for collaboration between the National Communication Authority (NCA) and Mobile Network Operating Companies to expand telecommunication activities to more extensive regions of the country. This expansion would enable the public to benefit from internet services and mobile money offerings such as M-gurush and MTN MoMo. Additionally, the study emphasizes the need for the effective implementation of enterprise funds targeting at supporting women engaged in business activities, aiming for inclusive development in the country.