Regulatory Frameworks for Village Banking and Financial Inclusion: Comparative Lessons from Africa, South Asia, and the Middle East

Nzovwa Banda, Beatrice Matafwali and Austin Mwange
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Nzovwa Banda: Graduate School of Business, The University of Zambia, Lusaka, Zambia
Beatrice Matafwali: School of Education, The University of Zambia, Lusaka, Zambia
Austin Mwange: Graduate School of Business, The University of Zambia, Lusaka, Zambia

East African Finance Journal, 2025, vol. 4, issue 1

Abstract: Village banking is a crucial informal financial mechanism that fosters economic empowerment, financial inclusion, and poverty alleviation, particularly in low-income communities. However, the sustainability and growth of village banking groups are often hindered by governance challenges, financial risks, and inadequate consumer protection, necessitating well-structured regulatory frameworks. This study conducts a comparative literature review to analyze the financial inclusion regulatory frameworks governing village banking in Africa, South Asia, Southeast Asia, and the Middle East. The findings reveal diverse regulatory approaches, including tiered regulation models, voluntary registration systems, and digital financial service integration, which balance oversight with group autonomy. Notable regulatory frameworks, such as Uganda’s Tier 4 Microfinance Act, Tanzania’s tiered supervision, and Egypt’s multi-agency collaboration, demonstrate the benefits of structured yet flexible governance in enhancing financial inclusion. Additionally, mobile money platforms and digital record-keeping solutions have improved financial accessibility, transparency, and efficiency within savings groups. Despite these advances, challenges remain, including regulatory resistance, administrative burdens, and digital literacy gaps. The study recommends tiered regulatory frameworks, capacity-building initiatives, and enhanced regional cooperation to harmonize standards and promote sustainable financial inclusion.

Keywords: financial inclusion; village banking; regulatory frameworks; digital financial services; microfinance; developing economies (search for similar items in EconPapers)
JEL-codes: G21 G28 O16 O17 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:eafjke:2025-05

DOI: 10.59413/eafj/v4.i1.5

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