EFInA Innovation Forum Global Perspectives on Financial Inclusion 4 - PowerPoint PPT Presentation

EFInA Innovation Forum Global Perspectives on Financial Inclusion 4 November 2010 M odupe Ladipo Chief Executive Officer, EFInA

EFInA Access to Financial Services in Nigeria 2010 Survey Key Findings

Contents Page A. Background 3 B. Overview of Sample Demographics 6 C. Banking 11 D. Financial Access 22 E. Savings 27 F . Loans & Credit 32 G. Insurance 37 H. Remittances 41 I. T echnology and M obile Phone Usage 45 J. Financial Literacy 49 K. Trend Analysis: 2010 vs. 2008 52 L. Conclusions 58 M . Data Dissemination Options 61

A. Background

Key Objectives The broad objective of the EFInA Access to Financial Services survey is to generate relevant and reliable data on the demand for and usage of a range of financial products (both formal and informal) by the adult population in Nigeria. The survey aims to:  Provide credible data that can support evidence based financial inclusion policies and highlight opportunities for policy reform  Establish credible benchmarks and indicators of financial penetration in Nigeria  Document usage of financial products across both formal and informal sectors  Provide a comparison of access to financial services in Nigeria from 2008 to 2010  Provide insights into regulatory and market obstacles to growth and innovation in the financial sector  Identify the financial needs of the adult population and thereby give service providers the opportunity to develop innovative products to serve them  Analyse the market potential of the low income segment 5

Coverage and M ethodology  Nationally representative sample of Nigerian adults (18+) across all 36 states plus FCT Abuja  Target sample selection involved three stages. The first was at the Enumeration Area (EA) level with a sample of 1,200 EAs, the second was at Household (HH) level with a sample of 20 HHs in each EA and the third was at Individual level with 1 individual sampled in each HH  Target sample size = 24,000; Total Achieved = 22,569 (Response rate = 94%)  Results were weighted at the three levels to provide the total adult population. This was also benchmarked to National population estimates for verification  Sample design, household listing and weighting conducted by the National Bureau of Statistics (NBS)  Fieldwork was conducted from July to August 2010 by Research & M arketing Services The survey is based on the FinScope  M ethodology   The questionnaire was translated into Hausa, Y oruba, Igbo and Pidgin English  Sampling of questionnaires was based on proportional representation (i.e. population size) per State as follows: No of questionnaires Population per State Population < 3 m 400 Population ≥ 3 m but < 4 m 600 Population ≥ 4 m but < 5 m 800 Population ≥ 5 m but < 7 m 1,000 Population ≥ 7 m 1,200 6

B. Overview of Sample Demographics

Demographic Profile of the Adult Population  The total adult population (18 years and above) is 84.7 million  70% of the adult population live in rural areas while 30% live in urban areas  51% are male and 49% are female Geopolitical zone North Central 13% North East 10% North West 22% South East 14% 19% South South South West 22% Gender Male 51% Female 49% Urban 30% M etropolitan area Rural 70% Level of education 21% No formal education Some primary/ primary 20% Some secondary/ secondary 41% 17% Some University/ Polytechnic Vocational/ technical/ Islamic College 1% Age 18-24 25% 25-34 28% 35-44 19% 45-54 14% 55-64 9% 65+ 6% Source: EFInA Access to Financial Services in Nigeria 2010 survey 8 8

M ain Source of Income  The main source of income for 19.5 million adults is from their own business  15.2 million adults get their income from family/ friends  10.7 million adults are salaried Own business (non farming) 23.1% Subsistence/small scale farming 18.7% Family/ friends 17.9% No Response 13.5% Salaries/ wages 12.6% Trading of goods and services (non farming) 6.6% Commercial/ large scale farming 5.3% Pensions 1.1% Return on investments 0.5% Rent 0.4% Source: EFInA Access to Financial Services in Nigeria 2010 survey 9

Personal M onthly Income  23.6% of the adult population earn N6,000 or less per month – this is the equivalent of approximately USD 2 per day 1) , which is the international poverty line 21.4% 12.1% 12.0% 10.9% 9.9% 9.4% 7.6% 6.1% 4.1% 3.2% 2.0% 0.7% 0.7% 1) Assumes 20 working days per month Source: EFInA Access to Financial Services in Nigeria 2010 survey 10

Household M onthly Expenditure  33.4% of households spend between N2,501-N10,000 per month on food  23.0% of households spend between N2,501-N10,000 per month on clothing  18.8% of households spend between N2,501-N10,000 per month on school fees Food 3.3% 18.4% 33.4% 17.2% 4.3% 23.4% Transport 6.8% 46.3% 17.2% 2.4% 27.0% Clothing 7.2% 38.0% 23.0% 3.8% 27.3% M edical expenses 15.3% 36.1% 12.8% 2.9% 32.6% School fees 19.90% 18.1% 18.8% 11.3% 5.4% 26.5% M obile phone expenses 21.7% 40.8% 10.3% 1.3% 25.7% Electricity 28.7% 40.8% 5.0% 24.7% Fuel 42.8% 14.4% 10.8% 2.4% 28.9% Nothing Below N2,500 N2,501-N10,000 N10,001-N25,000 >N25,000 Don’t Know Source: EFInA Access to Financial Services in Nigeria 2010 survey 11

C. Banking

Banking Profile of the Adult Population  63.5% of adult males are unbanked  76.8% of adult females are unbanked  78.8% of the rural population is unbanked  Only 30.0% of the adult population currently has a bank account, which is equivalent to 25.4 million 30.0% people  67.2% of the adult population have Currently never been banked, which is Banked equivalent to 56.9 million people  2.8% of the adult population were previously banked, which is Never Previously equivalent to 2.4 million people Banked Banked 2.8% Banked definition: 67.2% Currently have access to or use a deposit money bank, in addition to having any of these products: ATM card, credit card, savings account, current account, fixed deposit account, mortgage, overdraft, loan, or Islamic banking product Source: EFInA Access to Financial Services in Nigeria 2010 survey 13

Current Usage of Banking Products  Of the 25.4 million adults who are banked – 23.6 million have a savings accounts, 15.9 million have ATM cards and 6.5 million adults have current accounts  Of those that have a savings account, 2.2 million of them opened it because of a savings promotion Of those who have it now and use it Savings Account 93.0% ATM Card 62.6% Current Account 25.5% Fixed Deposit Account 4.9% Prepaid/ Cash Card 3.9% Credit Card 2.4% Overdraft 1.1% M ortgage 0.7% 0.4% Islamic Products Source: EFInA Access to Financial Services in Nigeria 2010 survey 14

Deposit M oney Banks Used M ost Often  UBA and First Bank are the top two currently used and main banks  12.7 million adults currently use UBA and First Bank 26.6% 23.4% 20.8% 19.2% 14.5% 13.7% 11.6% 9.9% 9.2% 8.3% 6.5% 6.6% 5.7% 5.1% 3.9% 3.6% 4.4% 3.1% 3.5% 2.0% UBA First Bank Oceanic Intercon- GT Bank Union Skye Bank PHB Diamond Zenith tinental Bank Currently use M ain bank Source: EFInA Access to Financial Services in Nigeria 2010 survey 15

Penetration of Banking Products  UBA is the top bank for customers with Savings accounts and ATM cards  First Bank is the top bank for customers with Current accounts Of those who have it now and use it SAVINGS ACCOUNTS ATM CARDS CURRENT ACCOUNTS UBA 25.4% UBA 25.5% First Bank 23.2% First Bank 21.2% First Bank 19.2% UBA 19.3% Oceanic 13.2% Oceanic 15.9% Oceanic 12.5% Intercontinental 12.7% Intercontinental 15.6% Intercontinental 9.5% GT Bank 8.7% GT Bank 11.4% 8.4% Union Bank Union Bank 7.4% Skye 5.9% GT Bank 6.8% Skye 5.0% Diamond 5.1% Bank PHB 5.1% 4.4% Bank PHB Bank PHB 5.1% Zenith 4.4% Diamond 4.0% Union Bank 4.9% Skye 4.3% Zenith 2.5% Zenith 2.9% Afribank 4.0% Source: EFInA Access to Financial Services in Nigeria 2010 survey 16

Reasons for Choice of M ain Bank Of those that are currently banked:  The most important criteria for the selection of a main bank is stability  36.9% of the adult population chose their main bank because of its reputation and 36.4% because of its location 45.3% 36.9% 36.4% 21.7% 21.2% 19.3% 19.2% Bank stability Bank Bank location Security Knowledge- Staff attitude Interest rates reputation for able safe- staff keeping Source: EFInA Access to Financial Services in Nigeria 2010 survey 17

Reasons for not Having a Bank Account  The main barriers to having a bank account are irregular income, unemployment and distance to the bank branch  Bank proximity is of greater concern to the rural population TOTAL URBAN RURAL 46.7% Irregular income 47.5% 47.7% Unemployed 33.4% 33.6% 33.6% 27.2% 31.7% 10.9% Too far Illiterate 13.7% 7.3% 15.5% Transport costs 15.0% 13.2% 6.9% Expensive 9.7% 10.2% 9.6% 8.3% Lack of trust 8.5% 8.2% Too much 5.8% 7.8% 5.2% documentation Source: EFInA Access to Financial Services in Nigeria 2010 survey 18