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

Nzovwa  Banda; Beatrice  Matafwali; Austin  Mwange

doi:10.59413/eafj/v4.i1.5

Authors

Nzovwa Banda The University of Zambia, Graduate School of Business, Lusaka, Zambia Author
Beatrice Matafwali Professor, The University of Zambia, School of Education Author https://orcid.org/0000-0003-2028-180X
Austin Mwange The University of Zambia, Graduate School of Business, Lusaka, Zambia Author https://orcid.org/0000-0001-8568-3063

DOI:

https://doi.org/10.59413/eafj/v4.i1.5

Keywords:

Financial Inclusion, Village Banking, Regulatory Frameworks, Digital Financial Services, Microfinance, Developing Economies

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 like M-PESA in Kenya and digital record-keeping solutions in Ethiopia and Pakistan have improved financial accessibility, transparency, and efficiency within savings groups. However, challenges remain, including regulatory resistance, administrative burdens, and digital literacy gaps. To optimize financial inclusion, this study recommends the adoption of tiered regulatory frameworks, capacity-building initiatives, and enhanced regional cooperation to harmonize standards and share best practices. Future research should explore the role of emerging technologies such as blockchain and artificial intelligence in strengthening transparency, data security, and sustainability within village banking structures.

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