Determinants of participation of Msunduzi local municipality’s peri-urban households in the digital finance economy
Authors:   , Nyide Nelisiwe Fortunate 
Published: October 2024

Digital finance is an instrument that has the potential of improving access to finance to underprivileged groups such as peri-urban communities. Digital financial tools are capable of achieving traditional crisis management objectives with greater potency and accuracy than was historically possible. The financial services sector is in a process of accelerating change by adopting new business models based on convergent technological developments to increase customer participation in periurban areas. Therefore, the financial services sector can use digital finance to improve the availability of household financial services through diversified financial products, thus promoting the growth of household consumption. However, several studies maintain that determinants of digital finance participation of marginalised households, including peri-urban households, are generally underdetermined. Moreover, there is limited literature on the participation of South African households in the digital economy. Scholarly literature asserts that the level of participation of South Africans in digital finance is concerning. This is largely due to a lack of awareness and knowledge of digital financial services that are available to South African households. This study seeks to bridge that gap by examining the determinants of participation of peri-urban households in digital finance in the financial services sector in KwaZuluNatal, South Africa. A quantitative research approach was adopted to answer the research questions. This method was found to be suitable for this study given that the research objectives can be best measured using a structured survey that is quantitative in nature. The target population of this study consisted of peri-urban households located in the Greater Edendale area, which is the largest peri-urban area within the Msunduzi Local Municipality. The sample size for this study was 384 periurban households which were selected using purposive sampling, derived from nonprobability sampling. The questionnaires were in English and were also translated into isiZulu in order to make it easier for respondents to participate in this study. The Statistical Package for the Social Sciences (SPSS) was used to compile the descriptive statistics. The results of this study indicate that the general public in economically disadvantaged communities participates in digital financial transactions in the financial services sector on a regular basis. A Spearman correlation analysis found a substantial positive link between the usage of digital platforms by peri-urban families and their degree of participation in digital finance. This association was shown to be statistically significant (r = .649, n = 315, p < .001). However, the results of a Mann-Whitney U test showed that there was no statistically significant difference between genders with regard to involvement in digital finance (Z = -1.804, p = .071). A correlation analysis was undertaken to determine whether peri-urban households’ awareness of digital financial services influenced their adoption of digital platforms. The Spearman correlation analysis (r = .768, n = 315, p < .001) showed a strong and significant relationship between peri-urban households’ knowledge and awareness of digital financial services and their use of digital platforms. Additionally, a Spearman correlation analysis (r = -.524, n = 315, p < .001) revealed a significant negative association between peri-urban households’ adoption of digital financial platforms and their digital literacy. This is despite the fact that literature argues that in South Africa, the adoption of digital financial services is negatively affected by a lack of information and knowledge which is prevalent among marginalised communities.