Indigenous Versus Digital: A Battle of Mutually Exclusive Benefits? How Digitalization Powers Inequality in Indigenous Financial Practices. A Case Study of Village Banking in Zambia

Abstract

As a space as unique as indigenous financial practices enters the digital era, there are plenty of questions and virtually no answers. Based on our exploratory approach to the effects of digitalization on these practices, this paper focuses on an emergingly important issue in the space: inequality. It identifies key features of indigenous financial practices, such as basis in community and inclusiveness, and views them through the lens of the digital divide and related theories. Using the case study of village banking in Zambia, the paper explains how digitalization can address some of the difficulties plaguing these practices – for those who can handle it. On the back of this, however, it also points to axes of exclusion from far-reaching dynamics of increased access to social networks and finance enabled by digital solutions. The potential of these dynamics may well drive a socioeconomic stratification of their respective communities - in this sense, digitalization may be set to undermine the aforementioned key features of indigenous financial practices, endangering them in the long term. What the net effect on inequality is and whether or how what may be lost to digitalization should be protected is a matter of further debate.