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Making financial markets work for the poor
FinScope Consumer Survey Zimbabwe 2014
Launch Presentation 16 February 2014
Contents
1. Overview 2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
2
• To describe the levels of financial inclusion (i.e. levels of access to financial products and services – both formal and informal)
• To describe the landscape of access (i.e. the type of products and services used by financially included individuals)
• To identify the drivers of, and barriers to financial access
• To stimulate evidence-based dialogue that will ultimate lead to effective public and private sector interventions that will increase and deepen financial inclusion
• To compare survey results with the first FinScope Consumer Survey in Zimbabwe (2011) and to provide an assessment of changes and factors thereof (including possible impacts of previous interventions to enhance access)
Objectives of FinScope Zimbabwe 2014
3
Research process
4
Design Implementation Results
Agreements (SC, LPC, RH)
Questionnaire design
Sampling, maps and field
preparations
Training of enumerators
Pilot and questionnaire
revision
Fieldwork n=4000
Data management (data entry, cleaning
weighting)
Data analysis
Launch and dissemination
1 2 3
SC
SC SC
Methodology - overview
Respondent profile
Sample and methodology
Quality control and data validation
• Universe: Adult population in Zimbabwe
• Residents of Zimbabwe who are 18 years and older
• Sample drawn by ZIMSTAT, Representative on national, urban/rural, and provincial level
• Comprehensive LISTING in 667 EAs – listing 59369 eligible households
• 4 000 Face-to-face pen and paper interviews ± 75 min.
• Fieldwork conducted by Research Continental (July 2014 – September 2014)
• Quality control / field checks conducted by the Research House, FinMark Trust, ZIMSTAT and Africa Corporate Advisors
• Data validation against census data and FS Zimbabwe 2011
• Weighting of the data conducted ZIMSTAT
5
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
7
8
Determinants of financial inclusion Understanding people’s lives
Characteristics and socio-economic information of individuals, households, and communities in Zimbabwe, including:
• Age, gender, geographical distribution, education, sources of income, personal monthly income, infrastructure accessibility, services, decision making and financial advice, housing, agriculture, etc.
Understanding people’s lives: Demographics
Total adult (18+) population
7 million
• 70% reside in rural areas • 33% are under 30 years of age • 38% have primary education or less • 3% have no education
Urban/rural Gender Age Education
9
30
70
Urban Rural
43 57
Male Female
3
2
36
51
6
2
No formal education
Early Child Development(ECD)
Grade 1-7
Form 1 to 6
Diploma /certificate
Graduate / Post graduate
7
26
25
17
12
13
18-20 yrs
21-30 yrs
31-40 yrs
41-50 yrs
51-60 yrs
61 yrs +
2014
2011
Number of individuals in households with access to piped running water
(inside dwelling or yard/plot)
Total: 35 % Urban 82% : Rural 13%
Number of individuals with electricity (for cooking)
Total: 29 % Urban 81% : Rural 4%
Understanding people’s lives: Access to Infrastructure (household level)
Number of individuals with access to piped running water (inside dwelling or yard/plot)
Total:29 % Urban 68% : Rural 10%
Number of individuals with electricity (for cooking)
Total: 29 % Urban 75% : Rural 7%
10
Daily realities - contextualising the drive for greater financial inclusion
• Increase in borehole or protected well as the main source of drinking water in 2014 with 48%
• 68% reside in households that use firewood as the main source of energy for cooking
44
37
36
60
68
48
29
20
25
53
69
42
Had to skip a meal because of lack of money for food
Gone without treatment or medicine because of lack ofmoney
Not been able to send kids to school because of lack offees/uniforms
Gone without cash income and had to make a plan for dailyneeds
Use firewood as the main energy source for cooking
Borehole or protected well as the main source of drinkingwater
2014
2011
11
12
Understanding people’s lives: Ownership of assets (household level)
Increased ownership in: • Solar panels • Cell phone • Farming equipment • Car/truck
Decreased ownership in: Electrical stove
6
7
17
21
25
27
34
31
30
21
39
49
43
71
71
6
11
21
24
27
31
32
32
33
36
41
54
57
76
82
Generator
Car/Truck
Ox-cart
Refrigerator
Bicycle
Wheelbarrow
Electric stove
Plough
Lounge suite
Solar panel
Television
Wardrobe
Radio
Bed
Cellphone
2014
2011
Understanding people’s lives: Income / livelihoods
• 66% of households are involved in farming – 28% of them farm mostly for selling their produce; with maize, tobacco, and vegetables bringing the most income
• 50% of the adults claim farming as a source of income with 36% claiming it to be their main source of income
• 65% of adults personally earn $100 or less per month (including ‘no income’) Income Source Most Relied On Personal monthly income
13 3
2
2
2
7
8
8
10
10
14
36
Other
State Pension
Buying and selling
Rental Income
Household member pays
Get money from HH member
Remittances from family
Piecework
Self-employed
Salary/Wages
Money from farming 7
58
11 7
4
3
2
1
1
6
17
50
13
8
5
2
3
1
0
0
No income
$1 - $100
$101 - $200
$201 - $300
$301 - $400
$401 - $500
$501 - $1000
$1001 - $2000
Refused
Don't know
2014
2011
Adults visiting destination
Take 30 minutes or
less
Main mode of travel
92% 78% 90% walk
44% 73% 90% walk
68% 69% 64% walk
9% 69% 56% Kombi
9% 67% 52% walk 34% Kombi
17% 63% 25% walk 56% Kombi
Infrastructure accessibility
14
Nea
rest
1
2
3
4
5
6 7
Percentage of people who go to destination and take 30 minutes or less to get to destination
Public transport/ Bus stop
Mobile money agent
Nearest school
ATM machine
Post office
Bank branch Fu
rthe
st
PROXIMITY
More changes in the population profile between 2011 and 2014: Decrease in the urban population from 35% to 30% Increase in male population from 40% to 43%
Improvements in education: percentage of people with no education decreased from 7% to 3% in 2014 Adults with no income has decreased, although the majority earn USD
100 or less Changes in access to infrastructure:
Access to running water has decreased by 6 percentage points in 2014 mainly in urban areas Accessibility to common destinations is mainly by walking and
public transport Farming remains the most important source of income with half the
adult population dependent on income from farming activities
Summary
15
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability 4. Financial inclusion overview: Access Strands, total product uptake,
Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
Dimensions of financial capability
Managing money
Planning ahead
Choosing and using products
Accessing information
Keeping track: Focuses on an individual’s ability to monitor his/her financial situation. • Do people plan/budget how to spend their money? Keep to the plan? Keep records of your
spending?
Making ends meet: Focuses on an individual’s ability to cope financially. It looks at whether people are able to make their money last until the end of the month while covering essential items and financial commitments. • How often do people run out of money • How easy/difficult is it to keep up with financial commitments?
Deals with an individual’s state of preparedness for future events or risks (planned and unplanned). • Unexpected events – coping mechanisms • Expected events – how do people plan to pay for it? • Strategies for meeting expenses in old age?
Incorporates how people have chosen or would go about choosing products or mechanisms that enable them to meet financial goals or objectives. • Which factors do people take into account when selecting a financial institution/specific product?
Explores how well an individual is informed about financial matters, how aware they are of information channels, and the steps they take to stay informed. • Where do people usually get financial advice?
18
68
91
37
Plan/budget on how to spendyour money
Keep to the plan you makefor using the money
Keep records of yourspending
Financial capability – Managing money
Difficulty with keeping up with financial commitments
Planning and tracking
4
14
45
36 Easy
Relatively easy
Difficult
Very Difficult
Source of financial advice Desired financial education
19
Financial capability- Accessing information
1
1
2
3
19
23
51
Other
Someone at your workplace
Bank or other financialprofessional
Someone senior in yourcommunity
Spouse or partner
Friend or family
Do not go anywhere to ask foradvice
99.7% of adult Zimbabweans felt they needed more information about managing money
45
43
30
28
14
7
5
5
4
How to save
How to budget
How to invest
How to obtain a loan
Financial services available
Terms and conditions of financialproducts
How to choose financial products
How to use financial products
Other
Financial capability - Planning for major future events and decision making
Mechanism for paying for planned major expense
Responsibility for financial decision making
20
11
11
29
49
You and otherhousehold or family
member
You are not involved
You make decisionsalone
You and partner/spousemake decision
7
1
2
21
23
50
Other
Rely on community
Borrow from the bank orany other financial…
Rely on money from familyand friends
Sell something to covercosts
Savings
• 4.1 mil (59%) adults expect a major event in the next 12 months
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
21
Defining financial inclusion
Total adult population = 18 years and older in Zimbabwe
Financially included = adults who have/use financial products and/or services – formal and/or informal
Financially excluded = adults who do not have/use any financial products and/or services – formal and/or informal
Formally served = adults who have/use formal financial products and/or services provided by a financial institution (bank and/or non-bank)
Informally served = adults who have/use financial products and/or services which are not regulated
Banked = adults who have/use financial products/ services provided by a bank
Served by other formal financial institutions = adults who have/use financial products/services provided by regulated non-bank financial institutions 22
Financial inclusion: “More people have been brought into banking/formal inclusion in 2014”
2011 2014
40
41
26
24
38
Excluded
Informal
Other formal
Banked
Formally served
23
• Banking is up by 6 percentage points and continues to be mainly driven by the uptake of transactional products
• Uptake of other formal non-bank products is up by 41 percentage points and is largely driven by mobile money services and remittances
• Uptake of informal financial products/mechanisms is down by 4 percentage points
• Financial exclusion has been decreased by 17 percentage points
69
30
67
37
23
Formally served
Banked
Other formal
Informal
Excluded
Banked 1.4
Other formal 23.4
Informal 7.8
Excluded 23.1%
0.6 13
15.9
14.8
24
Overlaps: “Consumers generally use a combination of financial products and services to meet their financial needs”
• 1% of adults rely exclusively on banking services yet 23% rely exclusively on other formal mechanisms
• 30% use a combination of other formal and informal mechanisms to manage their financial needs, thus indicating that their needs are not fully met by the formal sector alone
• 8% of the adult population ONLY rely on informal mechanisms such as savings groups (Mukando), Chimbadzo or Burial Societies to save or borrow money or cover risk
Financial inclusion: Financial Access Strand 2014
25
24
30
14
39
22
8
40
23
2011
2014
Banked Other formal Informal only Excluded
46
23
40
39
3
10
11
28
Urban
Rural
Banked Other Formal non-bank Informal only Excluded
26
Financial inclusion (Consumer Access Strand)
85
75
62
54
41
38
30
27
14
14
12
3
5
8
10
18
23
39
7
9
43
1
2
6
3
9
8
20
8
15
14
16
9
10
14
27
27
33
19
23
51
63
27
78
Mauritius 2014
South Africa 2014
Namibia 2011
Swaziland 2014
Botswana 2009
Lesotho 2011
Zimbabwe 2014
Malawi 2014
Zambia 2009
Tanzania 2013
Mozambique 2009
Banked Other formal (non-bank) Informal only Financially excluded
27
12
14
27
14
41
38
54
30
62
75
85
1
9
7
43
18
23
10
39
8
5
3
9
14
15
16
8
20
9
8
3
6
2
78
63
51
27
33
19
27
23
27
14
10
Mozambique 2009
Zambia 2009
Malawi 2014
Tanzania 2013
Botswana 2009
Lesotho 2011
Swaziland 2014
Zimbabwe 2014
Namibia 2011
South Africa 2014
Mauritius 2014
Banked Non-bank Formal Informal only Financially excluded
Financial inclusion (Consumer Access Strand) Ranked by formally included
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased? 6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
28
Banking: How many adults are banked?
2011 2014
No. of banked adults in Zimbabwe
1.45 mil
(24%)
2.08 mil
(30%)
No. of unbanked adults in Zimbabwe
4.53 mil
(76%)
4.89 mil
(70%)
Total adult population 5.98 mil 6.99 mil
29
Banking: Where is the growth?
Banking products/usage 2011 2014
ATM/Cashpoint 660 000 960 000
Savings account 884 000 834 000
Income through bank account 598 000 933 000
Cellphone banking 40 000 560 000
Online/card payments 51 000 180 000
Current/cheque account 87 000 156 000
30
4
3
7
8
15
20
20
23
39
67
Other
Don't know
Safe way of sending money toothers
Easy way of sending money toothers
You can get interest on savings
Help you to get access to loans
Safe way of receiving moneyfrom others
Easy way of receiving moneyfrom others
Salaries can be deposited byemployers
Money is safe from theft
Banking: Drivers and barriers
30% of adults are banked in 2014 70% of adults are not banked in 2014
31 5
2
2
3
4
4
5
6
7
10
18
74
Other
Does not have documentationrequired
Can get services needed elsewherein the community
Do not understand how banks work
Lost money through bank
Banks are not for people like me
Banks are too far away
Does not trust banks
Bank service charges are too high
Cannot maintain minimum balance
Income coming in as cash butinsufficient balance
Insufficient funds to sustain account
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest? 7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
32
Savings and investments: Overview – Other formal growth is driven by pensions and mobile money savings
2011 2014
33
Savings Strand 10
17
10
4
15
30
12
12
53
37
2014
2011
Bank products Other formal Informal Family/friends Excluded
21
17
13
42
27
Formal Savings
Banked
Other Formal
Informal
At home
20
10
16
23
23
Formal savings
Banked
Other Formal
Informal
At home
34
Savings and investments: Where is the change (also in absolute numbers)?
Saving mechanisms 2011 2014
Savings at bank (all savings products at bank) 17% 10%
Savings through investing in cattle or livestock 20% 15%
Savings with a membership organisation (Mukando) 12% 11%
Saving through investing in your own business 7% 5%
Savings in a secret place or at home 24% 21%
Investing mechanisms 2011 2014
Unit trusts 23557 2728
Treasury bills and government bonds 2964 18129
Shares 49902 12864
Buying something to sell later at a profit 10% 4%
Notable increases: • Increase in adults with pension of 12% (734 000 ) in 2014 from 9% (623 000) in 2011 • Mobile money savers 390 000 (6%)
Not aware of investment terms
Savings and investments: Why are people not using formal investment products?
1
2
4
40
74
Lack of customer focusedproducts
Cumbersome accountopening requirements
Lack of investorprotection
Lack of awareness andeducation
Limited disposableincome
99% do not invest formal products Formal investments are commonly driven by an acute of awareness of their benefits (financial education)
40
73
81
90
92
Other formalinvestments
Shares
Stock exchange
Unit trusts
Capital markets
35
Savings and investments: Adults who save mainly for developmental reasons (38%) in 2014
47% of adults save 53% of adults do not save
36
1
4
19
69
Very low income
All money is put intohousehold pot
Do not have an income - nomoney to save
No money after livingexpenses
5
5
5
7
11
19
21
29
Buying or building a dwelling tolive in
Funeral expenses
Farming expenses
Starting or expanding ownbusiness
Medical expenses / emergency
Emergency (non-medical)
Education or school fees
Living expenses
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased? 8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
37
Borrowing and credit: Overview
2011 2014
38
3
4
2
9
14
7
33
22
48
58
2011
2014
Bank products Other formal Informal Family/friends only Not borrowing
Credit Strand
5
3
3
16
43
Formal credit
Banked
Other formal
Informal
Friends/family
13
4
10
9
30
Formal credit
Banked
Other formal
Informal
Friends/family only
Borrowing and credit: Drivers and barriers
42% have borrowing/credit products 58% do not borrow
39 3
4
4
3
4
3
8
12
45
48
Interest on debt is too high
Do not know where toborrow money
Do not belive in borrowingmoney
No collateral to secure loan
Not allowed to borrowmoney by spouse, famil…
Have noone to borrow from
Do not want to be adefaulter or known as one
Do not need credit
Worried about ability to payback the money
Fear of debts40
36
18
11
3
3
3
3
7
Developmental reasons
Living expenses
Non-medical emergency
Medical expenses or emergency
Borrowing for another person
To take care of a sick relative(s)
Buying a bicycle/motorcylce etc.
Buying household goods orfurniture
Other
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittance: Who is sending/receiving money?
10. Mobile money
11. Financial Inclusion Priorities
40
Insurance and risk management: ‘Insurance sector in Zimbabwe continues to be driven by funeral insurance/cover and medical aid
41
30% of adults have insurance Of those insured uptake of insurance products is driven by: • Funeral cover/insurance 82% • Medical aid (constant) 30%
70% of adults do not have any kind of financial product covering risk
Main barrier to the uptake of insurance: • Claim they cannot afford it / it is perceived
too expensive (68% of the time) • Claim they do not need insurance (30%) • They do not know how insurance works
(10%)
2014 2011
**LITERACY**
30
19
16
70
Insured
Formal insurance
Informal insurance
Not insured
30
26
8
70
Insured
Formal Insurance
Informal Insurance
Not Insured
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money? 10. Mobile money
11. Financial Inclusion Priorities
42
Remittances: Overview of those that claimed to remit in the past 12 months
2011 2014
43
The composition of people remitting has significantly changed owing to mobile money services. People previously remitting through the bank, informally and through friends and family have started to use to mobile money remittance services.
12
8
5
8
23
Formal remittances
Banked
Other formal
Informal
Friends/family
48
5
47
10
11
Formal remittances
Banked
Other formal
Informal
Friends/family
Remittances
• There has been significant changes in the level of adults remitting in Zimbabwe since 2011
• Other formal products uptake such as Moneygram, Western Union and Mukuru have increased in 2014
• Mobile money services is a big remittance tool growing the number of adults with other formal products
44 Base: 18 years or older
8
5
4
43
7
5
21
5
60
42
2011
2014
Bank products Other formal Informal Friends/family only Do not remit
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance remain its importance?
9. Remittance: Who is sending/receiving money?
10.Mobile money 11. Financial Inclusion Priorities
45
Mobile money
91% (6.7 million) know about mobile money, but only 45% (3,15 million) are registered and only 3% (9o thousand) using another person’s mobile account
46
Of those who are registered (3,15 mil): • 80% use it to remit • 46% transact
through mobile money (pay utility bills, buy airtime, etc.)
72
57
32
20
20
14
9
3
2
Receive money
Send money
Cash withdrawals
Airtime purchase
Cash deposits
Cash transfer
Savings
Utility payments
Receiving payment for goods andservices
Mobile Money: Drivers and barriers
45% use Mobile Money Services 55% do not use Mobile money
3
23
24
36
65
Other
Its the only one accessibleservice in the area
I trust it
It is cheap
It is convenient (takes lesstime)
47
26
16
13
10
7
6
4
4
4
No money to send/receive
Do not have a cell phone
I have not thought about it
Do not have enough information
Nothing specific
Do not own a sim card
No mobile money agents in myarea
I cannot afford the sevices
Othet
Banking vs. Mobile Money A comparison
48
Banking Mobile Money
Transactional 81% 31%
Remittance services 18% 80%
Savings products 33% 9%
Credit products 12% 0.4%
No. of adults with a product in Zimbabwe
30% 45%
Could trust be a limiting factor to financial inclusion?
Level of trust with financial institution A comparison
12
32
33
41
64
72
Micro-financeinstitution
Cooperative
Insurance
Pension institutions
Banks
Mobile money The level of trust with mobile money is the highest. People still trust the banks
49
Contents
1. Overview
2. Understanding people’s lives: Have people’s lives changed?
3. Financial capability
4. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2011?
5. Banking: Has it increased?
6. Savings and investments: Do people manage to save/invest?
7. Borrowing and credit: Has the usage in credit increased?
8. Insurance and risk management: Did medical insurance retain its importance?
9. Remittances: Who is sending/receiving money?
10. Mobile money
11.Financial Inclusion Priorities
50
Financial Inclusion Priorities
1. Continued enabling regulatory environment
2. Mobile money – helping consumers understand the product beyond remittances
3. Increased remittances as a channel to support vulnerable dependents – do we need to continue a diaspora strategy?
4. Insurance to better manage impact of risks - insurance is driven by funeral cover and non-funeral insurance by salaried workers . Innovative funeral products that extend cover to other non-funeral risks
5. Deepening bank reach to better meet needs – how can an increase in banking translate into savings?
6. Reduce credit costs and educate about good credit for developmental purposes
7. Consumer education and financial literacy are real issues in Zimbabwe – interaction with securities and insurance is encumbered are largely financial illiteracy
