How to reach the unreached through financial inclusion financial inclusion June 2013 FinMark Trust Dr Prega Ramsamy Making financial markets work for the poor
About FinMark Trust and its Focus Areas � Independent trust formed in April 2002 � Initial and core funding from the UKAid Mission : “Making Financial Markets Work for the Poor” � Aim : Facilitating and catalysing development around access to financial services � How : move beyond data production, with an increased focus on being a catalyst to systemic change in � financial inclusion by providing support to transformation at a country level Focus Areas Focus Areas Information & Research Support Regional Finance Integration Consumer Financial Empowerment Retail Payment Systems Financial Policy and Regulation Micro- insurance Housing Finance Agricultural/Rural Finance Making financial markets work for the poor 2
Promoting financial markets which work for the poor Policies to promote pro-poor financial sector development must start with analysis of the current levels of trajectory of usage in a particular market. Next, the position of the current access frontier must be determined, together with its likely movement in the short to medium term. As shown below there are three zones of policy making, depending on where the current level of usage and the market trajectory is relative to the access frontier. Umax -100% Supra – market zone Access frontier future t usage Ua2 % market u Access frontier now Ua1 Un 0 Time T1 Now T2 Zone 3 Zone 1 • Market redistribution policies : Zone 2 • Market enabling policies: Policies for serving those unable • Market development policies : Policies which move usage to participate now or in the Policies which push the access from current levels up to foreseeable future in the market frontier outwards over time to position the current access frontier (Ua2 to Umax) due to lack of 2 (Ua1 to Ua2). e.g. product design (Un to Ua1): e.g. income. Promote employment, Making financial markets work for the poor and packaging as well as access communication communication cash transfer like SASSA card in 3 South Africa
FinScope surveys and their Objectives • The FinScope survey is a research tool , integrating demand-side and supply-side information • The demand-side component is a representative survey • The supply-side component provides information on service points and financial products available • The FinScope tool is a nationally representative survey on how individuals , aged above 16/18 years, source their incomes and how they manage their financial lives • Provides insight into attitudes and perceptions regarding financial products and services Consumer Surveys SMME Surveys Objectives Objectives Objectives • To measure the levels of financial inclusion (i.e. • To measure the levels of financial inclusion (i.e. • To assess the size and scope of small, medium and micro the proportion of the population using financial enterprises (SMME) products and services – both formal and informal) • To describe the levels and landscape of access to • To describe the landscape of access (i.e. the type financial products and services (both formal and of products and services used by financially informal) included individuals) • To identify the most binding constraints to SMME’s • To identify the drivers of, and barriers to the development and growth with a focus on access to usage of financial products and services financial markets • To stimulate evidence-based dialogue that will • To identify and describe different market segments with ultimately lead to effective public and private specific development needs in order to stimulate segment sector interventions that will increase and deepen related innovation financial inclusion strategies. • To propose recommendations regarding financial assistance to MSMEs and financial policies Making financial markets work for the poor 4
FinScope Surveys as Catalytic Tools 2 FinScope surveys namely: FinScope Consumer and Small Business Surveys FinScope research looks at areas around financial inclusion (esp. usage of financial Research services and products ) and the data is widely used by other researchers and institutions FinScope surveys create wealth of information FinScope surveys create wealth of information which is shared with different stakeholders and Information sharing policy makers in the countries the surveys are done FinScope surveys strongly encourage dialogue Dialogue and advocacy and advocacy through knowledge sharing and debate FinScope surveys encourage professional development through use the of FinScope data Professional development and also dialogue and debate resulting in market expansion and more financial inclusion of the broader population 5
The FinScope approach: Summary SCOPE MARKET- CONTRACT & DEFINE STRATEGY NEEDS AND TRAIN AND METHOD CAPACITY RESOURCES FOCUS GROUPS EA MAP SAMPLING, QUESTIONNAIRE PILOT/REVISE FIELD PREPARATION FIELDWORK – QUALITY DEVELOPMENT QUESTIONNAIRE CONTROL DATA CAPTURE, DATA CAPTURE, WEIGHTING, ANALYSIS Policymakers QUALITY/ PRESENTATION INTEGRITY/ AND PACKAGING COST EFFECTIVE/ Service Providers RELEVANT/ INSIGHTFUL Academics FEEDBACK Consultants CHANGING THE FACE CYCLE SUPPORT USERS IN OF FINANCIAL ANALYSIS SYSTEMS Market Research AND INTERPRETATION Donors 6
FinScope Footprint First cycle: Currently • Pakistan underway: • Malawi • Thailand • Mozambique • Myanmar • Ghana • Lesotho Planned for 2013: • Swaziland • Angola • Zimbabwe • Zimbabwe • India • India • DRC Repeat cycle: • Repeat • South Africa • Zambia Mozambique • Tanzania SMME: • Botswana • South Africa • Kenya • Zambia • Uganda • Malawi • Nigeria • Tanzania • Namibia • Zimbabwe • Rwanda • Mozambique 7
Promoting financial markets which work for the poor Policies to promote pro-poor financial sector development must start with analysis of the current levels of trajectory of usage in a particular market. Next, the position of the current access frontier must be determined, together with its likely movement in the short to medium term. As shown below there are three zones of policy making, depending on where the current level of usage and the market trajectory is relative to the access frontier. Umax -100% Supra – market zone Access frontier future t usage Ua2 % market u Access frontier now Ua1 Un 0 Time T1 Now T2 Zone 3 Zone 1 Zone 2 • Market redistribution policies : • Market enabling policies: Policies for serving those unable to • Market development policies : Policies Policies which move usage participate now or in the foreseeable which push the access frontier outwards from current levels up to the future in the market (Ua2 to Umax) over time to position 2 (Ua1 to Ua2). e.g. current access frontier (Un to due to lack of income. Promote product design and packaging as well as Ua1): e.g. communication employment, cash transfer like access SASSA card in South Africa 8
Lessons from South Africa: Summary of household factors in South Africa TOTAL adults in SA (2012 results) 33.7 4% 4% 10% million No tap water No toilet No electricity Impoverished pockets Impoverished pockets 1.2 6 LSM 3-4 in SA (adults) LSM 1-2 in SA (adults) million million No electricity No tap water No tap water No electricity No toilet No toilet 23% 27% 88% 14% 11% 30% 9
What drives banking in South Africa? 2012 results % Transaction products 99 Credit/loan products 19 Saving products 17 Funeral products 12 Insurance products 12 Remittance products 11 10
Banking Summary in South Africa 2012 results 47% 30% 12% say having a bank say that ? $$$ say it is too account only makes banking fees complicated to sense if money is are too open a bank received regularly and expensive. account. reliably 39% 39% 34% 34% 61% 61% R3000 claim have a savings banked people own an ATM or or money market withdraw all their debit card account. money in one go 54% 25% 83% registered on new banked get cash banked people SASSA system agreed at store till using prefer using bank with the statement a card at least cards instead of that the cheapest way once a month. cash to buy things. to withdraw money from a shop till is using the new SASSA Across people registered on new SASSA system, 87% said they like it. MasterCard. 11
Comparing Access Strand in Africa where Consumer FinScope surveys were conducted South Africa 2012 67 6 8 19 Namibia 2011 62 3 4 31 Swaziland 2011 44 6 13 37 Botswana 2009 41 18 8 33 Lesotho 2011 38 23 20 19 Ghana 2010 Ghana 2010 34 34 7 7 15 15 44 44 Nigeria 2010 30 6 17 47 Zimbabwe 2011 24 14 22 40 Kenya 2009 23 18 26 33 Rwanda 2012 23 19 30 28 Uganda 2010 21 7 42 30 Malawi 2008 19 7 19 55 Zambia 2009 14 9 14 63 Tanzania 2009 12 4 28 56 Mozambique 2009 12 1 9 78 12 Banked Non-bank formal Informal only Financially excluded
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