FinScope Consumer Survey Botswana 2014

Transcription

1 FinScope Consumer Survey Botswana 2014 LAUNCH PRESENTATION 14 July 2015 Making financial markets work for the poor

2 Objectives of FinScope Botswana 2014 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 assess trends/changes over time (from 2009) To stimulate evidence-based dialogue that will ultimate lead to effective public and private sector interventions that will increase and deepen financial inclusion 2

3 Partnering for a common purpose Bankers Association of Botswana SC chair & Co-funder FinMark Trust Project management, technical assistance Statistics Botswana Statistical oversight, quality control Steering Committee (SC) Bankers Association of Botswana (Chair) Statistics Botswana Ministry of Finance and Development Planning Non-Bank Financial Institutions Regulatory Authority Consumer Watchdog Botswana Research House (RH) DCDM E&M Botswana Local Project Coordinator (LPC) Prof Salvatore Coscione 3

4 Research process Design Implementation Results SC Agreements (RH) Training of enumerators Data management (data entry, cleaning, weighting) SC Questionnaire design Pilot and questionnaire revision SC Data analysis Sampling, maps and field preparations Fieldwork n=1503 Launch and dissemination 4

5 Methodology - overview Respondent profile Universe: Adult population in Botswana Residents of Botswana who are 18 years and older Sample and methodology Sample drawn by Statistics Botswana, Representative on national, urban/rural 191 Enumerator areas (EAs) selected using probability proportional to size (PPS) sampling and household listing data 1503 Face-to-face pen and paper interviews ± 75 min. Fieldwork conducted by DCDM E&M Botswana (October December 2014) Quality control and data validation Quality control / field checks conducted by the research house, FinMark Trust, LPC Data validation against 2001, 2011 Census data and any other data sources Weighting of the data conducted by DCDM E&M Botswana, finalised by FMT 5

6 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 7

7 Understanding people s lives: 2014 demographics: Total adult (18+) population 1.3 million growth in adult population since 2009 ( up to ) 2. Urban areas growing with Urban/rural Gender Age Rural Urban Urban Village Male Female 61 and above 11 8

8 Understanding people s lives: 2014 demographics: (cont..) Main source of income Personal Monthly Incomes Salaries Money from other Piece job Own business Drought relief assistance State pension Rent Farming No income P150 P450 P800 P1250 P1750 P2500 P3500 P4500 P7500 P15000 Refuse Don't know Missing Modest increase in personal incomes points to difficult times Overall drop in the main sources of income 9

9 Understanding people's lives: Household livelihood difficulties - reduced In the past 12 months: Household involvement in farming [45%] Went without enough food to eat Farming only 12% Went without cash income Went without fuel for cooking No farming involvem ent 55% Farming and other work 33% Went without medicine

10 Possession of documentation - Requirements to get passport tightened - Fees to get passport gone up Individuals also depict a high possession of documentation Possession of documentation in own name [%] National ID Passport Bank statement Water bill Electricity bill Insurance policy Tax return

11 Understanding people's lives: Access to Infrastructure - improved 2009 Number of individuals from households with access to piped water (inside dwelling or compound) 79% (=931 thousand) Number of individuals from households with electricity (for lighting) 54% (=630 thousand) 2014 Number of individuals from households with access to piped water (inside dwelling or compound) 76% (=1.0 Million) Number of individuals from households with electricity (mainly used for lighting) 64% (= ) 17

12 Summary 10% growth rate in adult population since 2009 High urbanisation Adult Batswana are relatively young (30 years and younger) Improvement in education: adults with higher education increasing from 75% to 79% An improvement in adults living in household with access to: Piped water from 931 thousands to 1 million Access to electricity from 630 thousand to 844 thousand Slight drop in average personal monthly income due to: Decline in the number of adults who are salaried compared to 2009 About 3 in 7 adults come from households that are involved in farming 19

13 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 24

14 Defining financial inclusion Total adult population 18 years and older in Botswana Financially included = have/use financial products and/or services formal and/or informal Financially excluded = do not have/use any financial products and/ or services neither formal nor informal. Formally served = have/use financial products and/or services provided by a formal financial institution (bank and/or non-bank). A formal financial institution is governed by a legal precedent of any kind and bound by legally recognised rules. Informally served = have/use financial products and/or services which are not regulated and operate without legal governance that would be recognised, e.g. Motshelo, Burial society, Matshonisa. Banked = have/use financial products/ services provided by a bank, regulated by the Regulatory Authorities of Botswana. Served by other formal financial institutions = have/use financial products/services provided by other regulated (non-bank) financial institutions, e.g. a loan by a micro-finance institution or insurance products, PosoCards, Mobile money, etc. 25

15 Financial inclusion: 1. million adults are financially included in 2014 up from 812 thousand in [%] 2014 [%] Formally served 61 Formally served 68 Banked 45 Banked 50 Other formal (non-bank) 37 Other formal (nonbank) 56 Informal 42 Informal 39 Excluded 31 Excluded 24 Increase across financial mechanisms: Banking up by 5 percentage points Uptake of other formal non-bank products increased by 19% points Uptake of informal financial products/mechanisms is down by 3% points, driven by decline in burial society Financial exclusion declined by 7% points 2009 weight revised (all other mechanisms are unchanged as reported in 2009 dissemination) 27

16 Financial inclusion: 2014 Landscape of Access Illustrate the extent to which financially included individuals have/use financial products/services Mobilisation of savings was sustained, with deposits growing by 10.8 percent in Transactional 2014, albeit slower than 15.4 percent in less 3.5 percentage 48 points,2 with higher interest rates for longer-dated deposits Insurance 68 In line with the Bank s commitment to encourage savings, commercial banks continued to offer and advertise the 91-day deposit facility or equivalent deposit Remittances Credit product which pays an interest rate that, at a minimum, is the prevailing Bank Rate The year-on-year increase in commercial bank credit eased from 15.1 percent in December 2013 to 13.5 percent in December 2014, due to a significant slowdown in growth of lending to the household sector, from 24.2 percent to 10.7 percent. In contrast, the annual increase in business credit rose from 4.6 percent in 2013 to 17.2 percent in 2014 Savings Botswana Landscape of Access is driven by savings, meaning Batswana are saving more than borrowing. The picture at Mortgages macroeconomic from 40.1 level percent might to 18.4 show percent the perception and in personal of a country loans from that 19.6 is percent borrowing to 7.4 Percent. more than saving. Source: Bank of Botswana 77 29

17 Overlaps: Consumers generally use a combination of financial products and services to meet their financial needs Excluded 24.2 Banked Informal 8.2 Other formal (non-bank) Only 7.3% of adults rely exclusively on banking services 31.2% use a combination of formal and informal mechanisms to manage their financial needs, thus indicating that their needs are may not be fully met by the formal sector alone 8.2% of the adult population ONLY rely on informal mechanisms such as village savings and loan groups to save or borrow money 31

18 Financial inclusion: Access Strand adults adults Banked Other formal (non-bank) Informal only Excluded Whilst ONLY adults are excluded, adults rely ONLY on informal mechanism to manage their financial needs 32

19 Financial inclusion: Access Strands 2014 by location and gender By location [%] City/town Urban village Rural By gender [%] Banked Other formal (non-bank) Informal only Excluded Female Male Banked Other formal (non-bank) Informal only Excluded Comparing the Access Strands by location and gender reveals that financial inclusion is higher among adults residing in cities/towns (86% are financially included) compared to urban villages (78%) and rural areas (64%), among male (79%) compared to female (73%). 33

20 Financial inclusion: Access Strands 2014 by Education and Age More than primary Primary or less Bank Other formal Informal Excuded Older than 30 years years and younger Bank Other formal Informal Excuded 34

21 Financial inclusion: Access Strands by livelihood Salary from public sector 99 1 Salary from private sector Remittances Own business (formal) Own business (informal) Piece jobs Money from others (within the household) Salary from farming sector Irregular income Unemployed Mobile money users Cellphone ownership Bank Other formal (non-bank) Informal Excuded 35

22 Financial inclusion: Access Strand across the region [%] Mauritius South Africa Namibia Swaziland Botswana Lesotho Zimbabwe Malawi Zambia Tanzania Mozambique DRC Banked Other formal (non-bank) Informal only Excluded 36

23 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has the number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 37

24 Banking: How many adults are banked? Number of banked adults in Botswana Number of previously banked adults in Botswana Number of never banked adults in Botswana (45%) (11%) (44%) (50%) (10%) (41%) Adult population grew by between 2009 and 2014 Banked population has increased by adults fell off the banking system between Number of unbanked adults in Botswana 653,081 (55%) 667,958 (50%) Total adult population 1,178,051 1,324,472 What drives the increase? 38

25 Banking: Where is the growth/decline? Money through bank account Bankcard payments An ATM card Credit card A savings book Savings/transaction account Current/cheque account Fixed deposit bank account Cell phone banking Internet banking Bank overdraft Mortgage bond Vehicle loan from a bank Personal loan from a bank Loan from Bank last 12 months Savings account in a bank Remittances Totals Looking at the total numbers, uptake of the following products showed significant increase in: Transaction products such as Cheque account Savings /transactions account Savings account in a bank Decline in overall credit/loans However, the overall bank accounts increased to 2.8 million from 2 million in 2009, suggest the practice of Cross-Selling within the sector. Average of 4 banking products/services per adult 39

26 Banking: Barriers to (50%) unbanked adults Do not have a job 54 Do not have regular income 45 Do not have money to save 22 Earn too little 17 Bank is too far 7 Do not know how to open an account 7 Do not believe I need unbanked adults are unemployed, while about have irregular or low incomes (average Monthly Income of P968,21) 43

27 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 44

28 Savings and investments: What drives decline in savings other formal (Non-bank institutions)? The retirement/pension fund industry declines from 299K to 219K since 2009 Other formal products [%] Retirement products Saving policies Posocards Unit Trust/Off-shore adults have some kind of retirement products (down from in 2009). Could this be the result of the decline in the salaried workforce? adults voluntary contribute to a pension, provident or retirement annuity. An increase from in adults had replaced coupon system with smart card (PosoCard) during the time of field work adults have saving policy or endowment policy with an insurance 46

29 Savings and investments: Saving barriers is monetary driven Barriers [%] 37% of adults DO NOT save Do not have an income - no money to save 55 No money after paying for expenses 43 Prefer to spend money when have it 8 Other 2 48

30 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 49

31 Borrowing and credit: There has been a decrease in credit consumption ( drop) 45% ( ) adults agree that it is very hard to get a loan from most places these days 2009 [%] 2014 [%] Bank products 25 Bank products 16 Other formal (non-bank) 2 Other formal (non-bank) 2 Informal 2 Informal 3 Family/friends 5 Family/friends 5 Not borrowing 69 Not borrowing 74 The year-on-year increase in commercial bank credit eased from 15.1 percent in December 2013 to 13.5 percent in December 2014, due to a significant slowdown in growth of lending to the household sector, from 24.2 percent to 10.7 percent. In contrast, the annual increase in business credit rose from 4.6 percent in 2013 to 17.2 percent in 2014 Overall drop in the following bank categories: Vehicle loan by Personal loan Credit card Loan from bank past 12 months % adult population have formal borrowing (5% higher compared to Global Findex Botswana 2014 data) Mortgages from 40.1 percent to 18.4 percent and in personal loans from 19.6 percent to 7.4 Percent. Source: Bank of Botswana 50

32 Borrowing and credit: There has been a decrease in credit consumption ( drop) 45% ( ) adults agree that it is very hard to get a loan from most places these days Credit Strand [%] Bank products Other formal Informal Family/friends only Not borrowing Female Salaried Farming Money from others Piece jobs Urban Urban village Rural Credit Access Strand 2014 by demographics Male

33 Borrowing and credit: Reasons for borrowing in Botswana are far more likely to be developmental Drivers [%] 26% have borrowing/credit products Developmental credit 50 Buying a car / vehicle 17 Farming expenses Paying off debts adult population receive their income from farming activities Buying furniture / electric goods 7 Buying food / clothing General household expenses 5 5 Wedding expenses 3 **Developmental include borrowing for: Education, business, buy land, build house and for farming 52

34 Borrowing and credit: Barriers to credit access in Botswana are far more likely to be monetary adults were refused a loan over the past year Barriers [%] Income too low 53 No pay slip Unemployed Could not provide security No credit reference 8 9 Did not have a down payment Have too many other debts

35 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 54

36 Insurance and risk management: Insurance sector in Botswana continues to be driven by funeral insurance Insured adults grew from in 2009 to in 2014, however, more people are NOT insured compared to year [%] 2014 [%] Formal products 25 Formal products 26 Informal 13 No insurance coverage Insurance Strand [%] 67 Informal No insurance coverage Formal Informal only No insurance coverage 30% of adults have insurance Uptake of insurance products is driven by: Formal funeral insurance 67% Burial society 20% Medical aid 28% Life assurance policy 15% 70% of adults do not have any kind of financial product covering risk Main barrier to the uptake of insurance: Do not have income chief reason Do not understand how it works Do not need it 55

37 Risk management: Response to major events 33% ( ) of adults claim to have experienced a major event or expense in the past year Costly events experienced in past year [%] Main way responded [%] Household property theft 9 Did nothing 37 Death / funeral expenses for family member 9 Used family savings 20 Serious illness of household member Business failure/poor economic situation 8 6 Asked for donations Looked for paid work 9 8 Bankruptcy Household member losing job Theft of crop / livestock Other Borrowed from family / friend Cut down on household expenses Borrowed money from other source None 67 Other 6 56

38 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2008? 4. Banking: Has number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 57

39 Remittances 2009 [%] 2014 [%] Bank 12 Bank 13 Other formal 22 Other formal 26 Informal 2 Informal 1 Friends/family 2 Friends / family 5 No remittances usage 68 No remittances usage 60 Remittances Strand [%] Banked Other formal Informal only Friends / family / other No remittance usage 58

40 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has number of banked declined? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10. Conclusions and recommendations 59

41 Ownership of communication devices Access to cell phone is at 94% Access to mobile phones is high 94% 10% However, less adults have access to a computer / laptop / tablet, or the internet Computer / laptop / tablet access 13% Internet access 10% 60

42 Mobile money About 94% of individuals have access to a cell phone 22% of Batswana use mobile money. What are the reasons for the 72% of Batswana with cellphone access who do not use it? Not interested 38 Do not have enough information 32 Do not have money to send / receive 17 Proportion of adults using mobile money in the SADC region Complicated Not thought about it 5 Prefer other ways to send/receive money 4 78 Do not trust it 3 No dealers / agents in area 3 Do not use mobile money Use Mobile money 61

43 Mobile money Transactions normally conducted by and drivers for the 22% ( ) who use mobile money Transactions Drivers Buying airtime 50 Convenience 77 Sending money to someone from bank account 50 Sending money to someone through mobile money 45 Cheap 36 Checking bank balance 24 Do not need to pay for transport 31 Paying bills from bank account 16 Quick 30 Receiving money 10 Transfer money 9 Keep money privately 19 62

44 SADC Region trends in mobile money uptake About 27.6 million adults (22%) in the region use mobile money Uptake of mobile in SADC Use of mobile money in SADC Tanzania 2013 Zimbabwe Remittances/Money transfers 69 **Botswana But airtime 54 **South Africa Swaziland Store/Save money 24 Zambia 2015 DRC 2014 Mozambique Checking bank statements Pay bills/other noncash payments Malawi 2014 Mauritius Not using mobile money FinScope surveys did not include mobile money sections (Lesotho & Namibia) **Botswana 29% and SA 24% figures are inclusive of mobile banking/mobile money figures Source: Cross Country Comparison book 63

45 Mobile money Are countries that are characterized by a high rural populace likely to register relatively higher mobile money usage because the technology offers an effective and cost-efficient alternative for money transfer, often the only option available for low-income earners? Is there a war in the mobile payment between banks versus Mobile Network Operators or both players are enriching the game and their targets are totally different? Is having different rules for MNOs and their mobile money and Banks with their Mobile offering a further cause for concern? Are the playing fields levelled? Should Botswana/South Africa employ a different strategy compared to countries such as Tanzania and Zimbabwe? Could it be that the South African sophisticated banking system, different customer demographics and/or highly restrictive regulatory environment be the main gaps? According to FinScope Botswana 2014, 50% of adults are unbanked. 64

46 Contents 1. Understanding people s lives: Have people s lives changed? 2. Financial capability 3. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access what has changed since 2009? 4. Banking: Has it increased? 5. Savings and investments: Do people manage to save? 6. Borrowing and credit: Has the usage in credit increased? 7. Insurance and risk management 8. Remittances: Who is sending/receiving money? 9. Mobile money 10.Conclusions/Recommendation 65

47 Financial Inclusion Priorities 1. Continued enabling regulatory environment 2. Further investment in mobile money is needed to build strong foundations for mobile money services to grow to the next level (creating digital financial ecosystem) 3. Insurance to better manage impact of risks (beyond funeral cover) 4. Deepening bank reach to better meet needs of the low-income customers 5. Engage with credit suppliers, regulators to understand access to credit and multiplicity in borrowing 6. Customer education 70

48 Thank you FinMark Trust For more information on FinScope Consumer Survey Botswana 2014 please contact: Dr Kingstone Mutsonziwa Mr Abel Motsomi Mr Jabulani Khumalo Tel: