Women's Efficiency and Financial Inclusion: Evidence from a Community Intervention in Southern Africa

Background: Gender disparity in developing nations is inextricably linked to economic empowerment. As such, financial inclusion (FI) interventions are thought to reduce gender disparities in poverty, wealth holding, and health. FI enables women to attain accessible and affordable opportunities for financial systems, services, and functions that lead to improved financial well-being. Financially empowering women and advancing their efficiency can enhance resilience skills in socioeconomic functioning and improve personal life outcomes, productivity, and growth. Few studies have examined the benefits of FI strategies targeting women's efficiency. This study examined the direct and indirect effects of the Village Savings and Loan Group (VSLG), a community-based informal group to support residents’ saving and borrowing, on low-income women's efficiency, access to credit, and ownership of household assets in central Mozambique.

Methods: The study collected program evaluation data based on a posttest-only comparison group quasi-experimental design in 2023 from central Mozambique. A multi-stage stratified sampling technique was employed, and 680 women were randomly selected to participate in the study, including 329 VSLG participants and 351 non-participants. The VSLG participation status was the independent variable (1= Yes and 0 =No). Efficiency was the dependent outcome variable, measured by a standardized scale (5-20) consisting of five Likert items (e.g., "I can manage to solve difficult problems if I can try hard enough”). Access to credit (borrowing) from formal and informal means and ownership of household assets were mediators. Structural equation modeling analyses were applied to test the mediation hypotheses, and demographic and socioeconomic characteristics were controlled in the analyses.

Results: Compared to the comparison groups, the VSLG participants had significantly higher means of efficiency (15.80, SD =2.90 p<.005), access to credit (3.25, SD= 2.43, p<.001), and ownership of assets (4.12, SD =3.20 p<.001). The SEM partial mediation result showed good model fit indices and the overall model explained a 20% (R²= 0.197) variance in efficiency. VSLG participation has statistically significant and positive impacts on access to credit (β = 0.18, p<.001) and ownership of household assets (β = 0.24 p< .001). Both cases showed statistically significant and positive mediators between VSLG participation and women’s efficiency. The indirect effects are (β = 0.15 p< .001) through access to credit, and (β = 0.20 p< .001) through asset ownership.

Conclusion: Financially empowering women is critical in fostering subjective and collective well-being against the complex effects of poverty. The FI strategy helps address the gender inequalities in wealth, income, and efficiency in Mozambique. The study uniquely contributes to the literature on women's empowerment by examining the influence of an informal financial inclusion intervention in enhancing women's efficiency in increasing access to credit and asset building.