Digital and financial literacy plays a critical role in efforts to promote financial inclusion and digital transformation for improved financial security/ wellbeing, business sustainability and poverty reduction. The goal of this research was therefore to gather data that can inform policies and programs aimed at enhancing financial inclusion across the country. The results from the survey suggest low financial inclusion rate in Sierra Leone, which is associated with various factors as set out in the discussions below.

Financial inclusion and literacy

The financial inclusion rate among the Sierra Leonean adult population using four key indicators (bank account ownership, formal credit and savings, insurance) is approximately 15.1%, which suggests that over three- fourth of the adult population of Sierra Leonean are not adequately included in the formal financial system, limiting their ability to save, access credit and insurance coverage, and utilize financial tools. Meanwhile when account ownership-a combination of bank account and mobile money account is used to determine financial inclusion rate (as in the case of the 2021 World Bank Global Findex Database), the rate is 32.9%, showing an increase in the 2021 financial inclusion rate by 4%, but still suggests most of the adult population are unbanked or underbanked.

Only 15.7% of adults have bank accounts. which indicates that a significant portion of the population is unbanked. Similarly, the proportion of adults with access to credit (20.3%) is relatively low, notably due to barriers to borrowing, which include strict loan policies (including tight repayment schedule), lack of collateral, trust issues with loan officers and financial literacy gaps. Additionally, while 49% of the adult population regard themselves as long-term savers, only 15.9% of adults have savings at a financial institution, which highlights limited engagement with formal savings mechanism, negative perception about the formal banking systems, proximity of the financial institution and low level of awareness around consumer rights and responsibilities. As a result, the majority of adults claimed to have saved their money with an informal savings club. The most concerning figure is the 4.9% insurance coverage, indicating a severe lack of financial protection against risks such as health emergencies, accidents, property loss or crop failure. Across geographic settings and demographics, the rural adult population, women, those with lower educational standards and low-income earners are the most deprived for all dimensions of financial inclusion. Meanwhile, young people aged 25-35 years demonstrated better access to and use of financial services and products than any other age cohort.

The overall financial literacy score across the 16 administrative districts of Sierra Leone is 60.1 of 100 points, which is considered as moderate performance, and significantly falls 12 points below the current survey threshold score of 72 points (higher score at 75th%ile and above). Overall, only 30% of the adult population demonstrated higher performance of at least 72 of 100 points in financial literacy, which suggests that only a third of the adult population understand basic financial concepts and can apply this knowledge in their personal finances and dealings with the financial sector. The gender disparity is huge such that the proportion of men who demonstrated higher financial literacy (40%) is almost two times the proportion of their female counterparts (23%). Also, adults in urban areas, and adults with higher levels of education and income notably have higher level of financial literacy.

Digitalisation and digital literacy

Mobile phone and mobile network penetration is low across the country, which limits access to digital financial services and serves as barriers to financial literacy programmes. Only 48.7% of the adult population own a mobile phone of any type. More adults own a feature phone than smart phones. Meanwhile, among the mobile phone owners, 63% own a smart phone. Gender and rural-urban disparities are large regarding mobile phone ownership. The proportion of adults in urban areas who own mobile phones (67%) is almost two times the proportion those with mobile phones (35%) in rural areas. Additionally, the proportion of men with a mobile phone (60%) exceeds the proportion of their female counterparts with a mobile phone (38%) by 22%age points. However, mobile ownership is high among young adults (aged 18-35) than adults of age 36 or older. Also, less than half (47.1%) of the adult population have access to full mobile network. With more than half the adult population lacking mobile phones and reliable networks, the adoption of digital or mobile banking, mobile money and other digital financial services is slow across the country. This situation limits financial inclusion, particularly for the rural population, the majority of whom lack access to traditional banking infrastructure, further impacting their financial resilience and well-being.

Overall, the level of Digital Literacy is extremely low (26 of 100 points), explaining that performing basic digital tasks and activities (such as basic mobile usage, online activities, information literacy, content creation and cybersecurity awareness) is limited among the adult population in Sierra Leone. The scores are extremely low in Koinadugu (2.7 of 100 points) and Pujehun (8.5 of 100 points) districts, and moderately high in Western Area Rural (51.8 of 100 points) and Western Area Urban (41.5 of 100 points) districts. These scores are confirmed by the extremely low%age of adults who demonstrated the ability to independently save or delete contacts on a phone (25%) and send text messages (21.5%). Also, less than half (44.1%) of the adult population agreed they can independently make or receive calls. The use of online apps such as WhatsApp, Facebook, etc (21.1%) and internet (24.1%) is very low among the adult population. Furthermore, digital information sourcing and online activities are rare among adults in Sierra Leone. Almost 98% and 95% of adults did not complete online application forms and sought financial information (or guide) online respectively in the past three months preceding interviews. In addition, almost 85% of adults never conducted online searches in the past three months.

The level of proficiency in the use of digital content is also extremely low in Sierra Leone, where only less than 24% of all adults agreed that they personally downloaded a social media app (19.1%), sent or downloaded photos (21.5%), recorded video (23.6%) and downloaded music, videos or games (19.1%) in the past three months preceding the interviews.

There is a very low level of knowledge and uptake of digital safety and security among adults in Sierra Leone. Approximately 94% of adults do not have virus protection on their phone or digital devices, 88% agreed they can use same password for different accounts, and 80% lack the knowledge to lock a digital device (mobile phone).

Digital financial inclusion and digital financial literacy

The computed Digital Financial Inclusion Index is 0.21 across the 16 administrative districts in Sierra Leone, which suggests a very low financial inclusion due to poor digital infrastructure, and lack of financial services to most adults in the country. Districts with extremely low indices include Koinadugu (0.01) and Pujehun (0.06), while Western Area Urban (0.38), Moyamba (0.31), Western Area Rural (0.29), Tonkolili (0.26) and Port Loko (0.25) have digital financial indices above the national average. The low national digital financial index reflects on an observed limited access and use of digital financial services and products in Sierra Leone. Only 25.4% of adults own mobile money account/wallet, and 3% hold a mobile money account linked to a bank. Also, 13.1% saved in mobile money account and 3.8% had ever received loan or borrowed from fintech online lenders. In addition, 4.7% hold ATM card, and 11.3% have performed digital/ mobile money transactions with own phone. Notably adults in urban areas, men, young adults aged 18-24 years, adults with tertiary level of education and higher income are better advantaged with access and use of digital financial services and products.

Digital Financial Literacy (DFL) score, which was computed based on knowledge and behaviour around safety measures and awareness related to safe and efficient use of digital financial services (DFS) is generally discouraging across the country, which is at 8.7 of 100 points. This result reflects the very low responses observed from item analysis which shows that over 86% and 94 of the total adult population respectively lack the knowledge to cancel or reverse financial transactions and correct financial errors using digital devices. Also, the proportion of adults agreed they can keep record of pin numbers or passwords is extremely low (23.8%). Behaviour towards website authenticity checks and digital monitoring of savings and debit presented even more discouraging results. Approximately 98% claimed they do not have to check website security before making digital or online transactions, as in the case of online monitoring of bank spending and savings. Overall, these results underscore the relative risk adult unconsciously face using DFS and suggest there is high potential for exposure to risks such as unauthorized access to digital accounts, fraud and identity theft and increased vulnerability to cyber threats (including phishing and hacking) that will question the effectiveness of DFS provision in Sierra Leone.

The DFS usage rate among the adult populations is extremely low (9.5 of 100 points), which shows a positive relationship with findings on digital financial inclusion and digital financial literacy. This finding indicates that Sierra Leone is still a largely cash-based economy where digital inclusivity and access and use of digital financial services remain as a critical concern among the adult population. Even among mobile phone owners, the frequency of use of several digital services and products is very limited. For instance, the proportion of mobile phone owners who often use a mobile phone to pay utility bills is 13.6% (6.7 % of all adults). Also, only 7.2% of mobile phone owners (3.6% of all adults) claimed they often use their device to pay for goods at a physical shop, and 6.8% of mobile phone owners (3.3% of all adults) have often received loans from an online fintech lender. In addition, 7.3% of mobile phone owners (3.3% of all adults) claimed to have frequently pay for something online, while only 2.7% (1.2% of all adults claimed to have often performed digital banking (B2W). Meanwhile a moderately high proportion of mobile owners (27.9 %) agreed to have frequently performed mobile money transactions (12.4% of all adults).

Despite the low DFS usage rate, perception about DFS among adults is encouraging. Over 82% of adults agreed that DFS is very useful for mobile money transactions, and over 70% claimed DFS makes it easier to receive any form of payment. Further, over half (53.5%) agreed DFS reduces costs for small business. Meanwhile, over half the adult population (50.2%) lack trust in DFS, claiming the services are risky for ordinary people.

Digital financial services outcomes and financial wellbeing

The Digital Financial Services (DFS) outcome score is relatively low (0.301), which confirms that most of the adult population face several socio-economic barriers that limit their ability to access and use digital financial services and products in Sierra Leone. In comparison to situation about 12 months back, approximately 80% argued that they are not treated better now by financial services providers, 72% worry more about scam now, 78% disagreed they frequently use mobile money/ mobile banking now, 70% disagree they save more money now, 72% claimed they lack an understanding of consumer rights, 71% disagreed they currently have better access to formal loans, 74% claimed they still lack trust in financial services providers, and over half the adult population (58%) disagreed the currently manage money better than before. Across districts, only Bombali district has a moderately high DFS outcome score of 0.544, while Pujehun, Kailahun, Kenema and Bonthe districts have very low DFS outcome scores. The results across demographics are relatively even, although adults with higher income exhibited higher outcome than other demographic groups.

The Financial Wellbeing Score computed is 0.269, which is significantly low, suggesting that about 1 of every 3 adults in Sierra Leone face severe financial challenges that limit their ability to save, invest, manage financial commitments, meet daily financial needs, and handle unexpected expenses or emergencies, etc. A more in-depth analysis showed that only 12.3% of adults are satisfied with their current financial situation and 89% claimed that their financial situation limits their ability to do things that are important. Also, 85% of adults claimed they rarely have money left over at the end of the month, and about 84% are always worried about paying normal living expenses. The financial wellbeing score is almost consistent across demographics even though there is evidence of slight increases by level of education and income.