Financial Inclusion and Resilience to COVID-19 Economic Shocks: Evidence from Kenya, Nigeria, and Uganda

This analysis examines whether and how financial inclusion may help mitigate the effects of the COVID-19 pandemic on households’ economic behavior and well-being in three Sub-Saharan African countries: Kenya, Nigeria, and Uganda. We rely on cross-sectional high-frequency data collected via phone between April and October 2020. To address sampling bias and low response rates associated with phone-based surveys we rely on multilevel regression with poststratification (MRP), a state-of-the-art approach for creating representative estimates from a nonrepresentative sample by using reference data from large population surveys. We find households experienced substantial economic shocks in all three countries, with a majority reporting reduced income compared with the same time last year and between 18 and 65 percent reporting that someone in their household had skipped meals on at least two days over the past week. Financially included households are managing better through the pandemic: they are less likely to report reduced incomes or skipping meals in all countries. We see limited evidence, however, that households are using their financial access to weather the pandemic shocks. The evidence of financial access giving households the tools to cope with shocks is strongest in Nigeria, where financially included households are more likely to rely on savings and remittances, and weakest in Kenya, where we see no evidence of those households using financial services to pay for expenses. We do not see financially included households relying on loans as a coping mechanism in any country. Our analysis appears to reveal a story of non-financially included households being more economically disadvantaged. Our methodology controls for assets as a measure of economic well-being, but without more comprehensive income or expenditures data, we are unable to fully control for well-being.