FinScope Lesotho 2011 Launch Irma Grundling, Trevor Kaseke 12 - PowerPoint PPT Presentation

FinScope Lesotho 2011 Launch Irma Grundling, Trevor Kaseke 12 October 2011 Making financial markets work for the poor

Presentation layout Background Understanding people’s lives Defining financial inclusion Lesotho financial inclusion Saving Borrowing Insurance Remittance 2

Background • FinMark Trust was established in March 2002 as an independent trust whose purpose is ‘making financial markets work for the poor’ • FinMark Trust promotes and supports institutional and organisational development which will increase access to financial services for the unbanked and under banked in South Africa • FinScope is the most comprehensive national survey of financial services needs and usage amongst consumers. The aim is to establish credible benchmarks and highlight opportunities for innovation in product and service delivery • FinScope has been tracking the changing landscape of access to financial services since it’s inception in 2003. The survey covers all areas of financial interest from examining quality of life and poverty to attitudes towards and usage of technology, as well as measuring levels of financial literacy • FinScope surveys have now been implemented in 16 African countries 3

FinScope Lesotho 2011 objectives • To determine levels of access to financial services • Nationally • Urban/rural • Ecological zones • To describe the current landscape of access • To identifies barriers to financial inclusion • To facilitate debate around the demand for financial services and barriers to access • To stimulate financial sector intervention: • By policy makers and regulators to address barriers to access • By financial services providers to develop innovative products and services to meet the demand • To serve as a benchmark to assess the impact of interventions over time 4

Sampling and methodology • Sample by Lesotho Bureau of Statistics • Multistage random sampling procedure • Geographical (200 enumerator areas) • Household (10 Households selected) • Individuals (18 years and older) • Sample representative at: • National • Urban-rural • Ecological zone level • Total sample achieved of 2,000 5

Understanding people’s lives financial inclusion in context

Age and Gender 18-20 yrs 9,5 21-25 yrs 16,9 26-30 yrs 12,7 61,9 31-35 yrs 8,4 36-40 yrs 5,6 41-45 yrs 6,9 38,1 46-50 yrs 7,3 51-55 yrs 7,0 56-60 yrs 7,6 Male Female 61+ yrs 18,0 7

Geographical distribution 10,0 14,1 51,2 68,8 24,7 31,2 Lowlands Foothills Mountains Senqu River Valley Urban Rural 8

Source of Water Urban/Rural 41,9 Piped water on community stand: less than 200m away 15,2 28,4 Spring 6,2 19,2 Piped water on community stand: more than 200m away 7,5 7,4 Borehole 5,1 4,4 River/stream 0,4 2,7 Rain-water tank 1,5 2,6 Piped water inside yard 48,5 1,5 Dam/pool/stagnant water 0,3 0,6 Piped water in dwelling 12,9 0,5 Water vendor 8,2 9 Rural Urban

Access to Sanitation Rural vs. Urban 8,5 Flush toilet 0,3 89,4 Other toilet 64,3 4,9 None 35,6 10 Urban Rural

Source of energy for cooking 1,8% 2,5% ,4% 9,2% 16,5% 54,5% 75,1% 49,6% 12,2% 22,7% 10,2% 24,4% 10,5% 8,7% 1,7% Total Rural Urban 11 Electricity Gas Paraffin Wood Coal/Animal dung

Connectivity – usage Urban/Rural 80,1 Mobile phone 59,6 40,8 Public phone 20,3 13,4 Landline phone 0,7 11,6 Internet 0,5 12 Urban Rural

What would help improve the lives of people in my community... Rural vs. Urban 50,2% Better roads 68,6% 29,5% Drinking Water 45,1% 23,5% Electricity 47,0% 13,7% Healthcare facilities / Local Clinics 22,7% 14,2% Agricultural inputs (eg seed, fertilizer) 21,1% 9,1% Schools 14,9% 5,3% Reliable public transport 13,3% 2,0% Sanitation 9,6% 5,5% Housing 3,2% 5,7% Cooperatives / community projects 2,3% 0,6% Markets / shops 3,5% 1,2% Water for farming 2,2% 1,3% Transportation of goods to markets 1,1% 1,5% Government grants / support 0,4% 13 Urban Rural

Income generation activities Rural vs. Urban 18,5% Farming activity 37,2% 34,0% Salary or wages 9,0% 12,5% Private pension 12,5% 11,7% Money sent from family or friends 12,0% 13,0% You have your own business 10,1% 5,2% Government pension 10,1% 3,4% Government grants 7,0% 14 Urban Rural

Defining financial inclusion

Defining Financial Inclusion The FinScope methodology uses financial product USAGE to segment the adult population Financially Excluded = adults who do not have/use any financial products and /or services – if borrowing, they rely only on friends/family; and if saving, they save at home Total Adult Population = minimum age defined by the age at which individuals can enter into a legal financial transaction in their own Financially Included = adults capacity who have/use financial products and/or services - formal and/or informal 16

Defining Financial Inclusion Formally served = adults who have/use financial products and/or services provided by a Financially Included = adults who have/use regulated financial institution financial products (bank and/or non-bank) and/or services - formal and/or informal Informally served = adults who have/use financial products and/or services which are not regulated, e.g. cooperatives, farmers associations, savings clubs/groups, private moneylenders

Defining Financial Inclusion Banked = adults who have/use financial products and/or services provided by a commercial bank regulated by Formally the central bank served Served by Other Formal financial institutions = adults who have/use financial products and/or services provided by regulated non-bank formal financial institutions (e.g. regulated microfinance institutions, insurance companies, retail credit providers, remittance service providers)

Defining Financial Inclusion Financial Inclusion Have/use Formally only bank Have/use only Have/use bank served products non-bank AND non-bank formal formal products Informally products served Have/use bank Have/use bank AND products AND non-bank formal informal products AND products informal products Have/use non- bank formal Have/use products AND only informal products informal products

Financial inclusion in Lesotho

Inclusion overview 659 000 Formally served (total - bank and/or non-bank) 58,1 Have/use bank product/service 435 000 38,4 Have/use non-bank formal product/service 519 000 45,8 Use informal mechanisms 62,4 707 000 Financially excluded 19,1 217 000

Inclusion overview Rural vs. Urban 254 000 71,9% 205 000 57,9% Urban 199 000 56,3% 189 000 53,5% 57 700 16,3% 404 000 51,8% 230 200 29,5% 320 000 Rural 41,0% 519 000 66,5% 159 000 20,4% Formally served (total - bank and/or non-bank) Have/use bank product/service Have/use non-bank formal product/service Use informal mechanisms Financially excluded

What drives banking? Banked population Transactional products 86,6% Savings products 85,6% Credit products 9,8% Remittance 42,1%

What drives banking? Banked population Rural vs. Urban 87,9% Transactional products 85,5% 85,9% Savings products 85,3% 12,5% Credit products 7,4% 50,1% Remittance 35,1% Urban Rural

What drives non-bank formal product usage? Savings 18,2% Credit 31,1% Insurance 81,2% Remittance 3,1%

What drives non-bank formal product usage? Rural vs. Urban 27,9% Savings 12,1% 22,5% Credit 36,5% 87,2% Insurance 77,5% 3,9% Remittance 2,7% Urban Rural

What drives informal activities? Savings 46,6% Credit 52,3% Burial societies 59,8% Remittance 17,6%

What drives informal activities? Rural vs. Urban 47,2% Savings 46,3% 51,0% Credit 52,7% 42,7% Burial societies 66,0% 23,6% Remittance 15,5% Urban Rural

Financial Inclusion Overlaps Banked Formal other 8.6 4.7 5.2 17.4 14.6 7.6 22.8 Excluded Informal 19.1

Access Strand Lesotho 2011 Total 38,4% 19,7% 22,8% 19,1% Rural 29,5% 22,3% 27,8% 20,4% Urban 57,9% 14,0% 11,8% 16,3% Have/use bank products/services Have/use non-bank products/services (no bank products) Use only informal mechanisms Have & use no financial products/services

Access Strand Lesotho 2011 Income generating activities Salary or wages (17%) 70,3% 11,5% 8,4% 9,8% You have your own business (11%) 31,8% 27,7% 27,5% 13,0% Farming crops 39,1% 35,5% 18,2% 7,1% Farming activity (31%) Farming livestock 22,8% 20,7% 32,3% 24,1% Livestock byproducts 24,0% 23,5% 23,9% 28,7% Have/use bank products/services Have/use non-bank products/services (no bank products) Use only informal mechanisms Have & use no financial products/services

Access Strand Lesotho 2011 Gender Male 37,7% 20,0% 18,8% 23,4% Female 38,7% 19,5% 25,3% 16,4% Total 38,4% 19,7% 22,8% 19,1% Have/use bank products/services Have/use non-bank products/services (no bank products) Use only informal mechanisms Have & use no financial products/services