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1. Introduction
ICT can contribute to poverty reduction, if it is tailored to the needs of the poor and if it is used in the right way and for the right purposes.
Kelles-Viitanen (2003)
What are the roles of mobile phones and internet in the relationship between financial inclusion and the informal economy? Also, what are the functions of mobile phones, internet and financial inclusion in the relationship between the informal economy and poverty reduction? These questions and more will be answered in this study.
Sisi is a street vendor in Makoko, a slum in Lagos, Nigeria. At 42, she is her family's primary source of income and responsible for supporting her senile father and four children. Her four children are street vendors as well, moving between lanes of traffic in the scorching sun to sell to commuters stuck in gridlock. In recent months, Sisi has acquired an internet-enabled phone, a way for her to connect to the web and have instant access to marketing tools, small business education, social media, mobile banking, a vast customer base and more. For her, a smartphone is not a way to Instagram pictures of a vacation on Miami beach. It's an investment indispensable to her economic empowerment.
All over Africa, millions of poor people like Sisi are engaged in the informal economy, a diverse and complex area of activity, for their means of sustenance [1]. The informal economy is associated with private enterprise, resilience and resource-efficiency (Abegunde, 2011; DeMaria, 2012; Walsh, 2014; Alonso, 2015; Gichuki, Mutuku and Kinuthia, 2015; Boegenhold and Fachinger, 2016; Tillmar, 2016; Nwosu et al., 2019). It has further become increasingly clear that if endeavours for inclusive growth and poverty reduction are to succeed, a sound understanding of the informal economy is essential. However, many studies have highlighted that banks shy away from serving low-income customers, who are the largest segment of the population in developing countries (CGAP, 2009; Diniz et al., 2012). Provision of financial services to low-income people has always been considered difficult and costly (Ivatury, 2006), due mainly to disproportionately higher transaction costs of managing small amounts of money and the difficulty of delivering services to sparsely populated areas. Most of the population in African countries (who are engaged in...