MAP Zimbabwe Stakeholder Workshop: Key Findings

Transcription

1 MAP Zimbabwe Stakeholder Workshop: Key Findings Presentation on the findings from the Making Access Possible (MAP) Diagnostic conducted in Zimbabwe Harare, Zimbabwe 14 December, 2015

2 Agenda MAP diagnostic components Key findings Options to extend financial inclusion

3 Agenda MAP diagnostic components Key findings Options to extend financial inclusion

4 MAP analyses demand, supply and regulation formal and informal Uncover discrete target markets and needs cases Product and provider landscape (informal and formal) Public policy objectives and regulatory context Demand Supply Regulation FinScope 2011 and 2014 FinScope MSME 2013 Consumer interviews Interviews Annual reports Product data Mystery shopping Interviews Regulatory and policy review Financial inclusion imperatives

5 Agenda MAP diagnostic components Key findings Options to extend financial inclusion

6 MAP Zimbabwe: 7 Key findings to advance financial inclusion Domestic Population: ~7 million adults in Zimbabwe Diaspora Population: 3.3 million Zimbabwean adults outside of Zimbabwe

7 MAP Zimbabwe: 7 Key findings to advance financial inclusion Finding 1: Declining income & employment depress use of formal financial services

8 MAP Zimbabwe: 7 Key findings to advance financial inclusion Finding 1: Declining income & employment depress use of formal financial services Finding 2: Dutch disease undermines credit but drives payments weak exports, strong imports

9 MAP Zimbabwe: 7 Key findings to advance financial inclusion Finding 1: Declining income & employment depress use of formal financial services Finding 3: Banks contribution to financial inclusion has declined business model changes required for banks to regain ground Finding 2: Dutch disease undermines credit but drives payments weak exports, strong imports

10 MAP Zimbabwe: 7 Key findings to advance financial inclusion Finding 4: Payments & Mobile Money platforms now dominate financial inclusion landscape

11 MAP Zimbabwe: 7 Key findings to advance financial inclusion Finding 5: Cross-border retail money flows major growth area fundamental for economy and households to survive

12 MAP Zimbabwe: 7 Key findings to advance financial inclusion Finding 6: Informal financial services soaring communities act collectively to survive Use informal financial services from: Use formal financial services from: Family and friends

13 MAP Zimbabwe: 7 Key findings to advance financial inclusion Finding 7: Private human capital development a priority financial services to support education

14 Key Findings 1: Declining income & employment depress use of formal financial services Finding 1: Declining income & employment depress use of formal financial services

15 Key Finding 1: Positive growth since 2010, but Inflation % 10.4% 198% 585% 11.4% 11.9% 10.6% 7.0% 23% 28% 1.1% 22% 56% 6.0% 3.1% 3.5% 3.7% 4.5% 1.6% 3.2% 3.3% % -0.5% -3.1% -3.5% -3.7% GDP Growth Rate -5.7% -8.9% -17.7% Source: World Bank, 2015; Zimstats 2014

16 Key Finding 1: Declining incomes at low end and 70% 60% 50% % of 40% adults 30% 63% 50% $134 $143 Average income decreased from $143 in 2011 to $134 in 2014 Demographic information ~ 7 million adults 70% rural 57% female 59% w/ secondary education or higher 20% 10% 0% 17% 7% No income US$1 - US$100 12% US$101 - US$200 13% 8% 7% US$201 - US$300 4% 5% US$301 - US$400 US$401 - US$ % 2% 1% 2% 3% 1% US$501 - US$1000 US$ US$2000 US$ US$3000 1% 0% 0% 0% US$ US$4000 US$4001 and above *adults are 18 years old and above Source: FinScope, 2011; FinScope, 2014

17 Average income (p.m.) Key finding 1: Generating target markets with stark differences Target market profiles $368 $ m 736 k 864 k Biggest target market (Migrants) outside of the country (3.3 million adults) Salaried workers most educated (34% tertiary education), but one of the smallest target markets and declining (~ ) MSMEs largely informal (~75% informal) $ m Farmers largest domestic market (2.5 million), but very low monthly incomes (US$ 77) $ k Survivalist workers report lowest average monthly income (US$ 69) $ m Remittance receivers (70%) and Dependents (84%) most skewed towards females Source: FinScope, 2014 $ k

18 Key finding 1: Target markets: Gender distribution 84% 43% Female 57% 49% Male 51% 50% 50% 30% 70% 35% 65% 60% 40% 16% Total popl. Survivalist workers Farmers Remittance receivers Dependents MSME Salaried workers 893 k 2.5 mil 1.0 mil 575 k 864 k 736 k Source: FinScope, 2014

19 Key Finding 1: With most people dependent on farming to live No. of adults in target market % of adults reporting farming as a secondary or primary source of income % 0.04% 99.96% Commercial farming Subsistence farming - 15% 15% 19% 32% Salaried Workers Dependents MSME's Remittance receivers 38% Survivalist Workers Farmers Type of farming activity % of adults that report farming as a source of income

20 Aspiration Key Finding 1: And microenterprises the other survival strategy Education Demographics Struggling go-getters $ % Driven achievers $ % 76% informal 22% of MSMEs in farming Survivalist $ 186 Reluctant entrepreneur $ % 24% 60% female Source: FinScope, 2012

21 Key Finding 1: And microenterprises the other survival strategy 100% $1 141 $1 200 % of MSMEs 90% 80% 70% 60% 50% 40% 30% 72% $297 $635 25% $1 000 $800 $600 $400 Average month income (US$) 20% 10% 0% Individual (0 employees) Micro enterprises (1-5 employees) 3% SME (> 6 employees) $200 $0 Average income % of MSME population Source: FinScope Zimbabwe MSME Survey, 2012

22 Key Finding 1: Resulting in fewer formal services used Access Strand 30% 39% 7% 16% 8% Reverse Access Strand 8% 73% 4% 14% 1% 0% 20% 40% 60% 80% 100% % of adults Legend: Banked: Adults with bank accounts Formal: Access provided by nonbank formal FSPs, i.e. mobile money, insurers & MFIs Informal: Usage of informal providers, e.g. savings groups and moneylenders Family and friends: Services provided by family and friends, or self Excluded: No current access to formal or informal financial services

23 Key Finding 1: Fewer employed = Fewer formal services used Credit Strand Salaried workers Survivalist Workers 7% 7% 26% 59% Remittance Receivers 8% 6% 29% 56% 736,000 adults (2014) 2% Dependents 3% MSME's 11% 8% 6% 10% 27% 24% 53% 56% ~ 1.2m adults (1998*) Farmers 5% 7% 21% 66% Salaried workers 22% 18% 6% 16% 38% 0% 20% 40% 60% 80% 100% Bank Other formal Informal Family & Friends Excluded Source: Southern African Migration Report*, 2008; FinScope, 2014

24 Key Finding 2: Dutch disease undermines credit but drives payments weak exports, strong imports Finding 1: Declining income & employment depress use of formal financial services Finding 2: Dutch disease undermines credit but drives payments weak exports, strong imports

25 Dutch Disease: the deindustrialization of a nation s economy that occurs when the discovery of a natural resource raises the value of the nation s currency, making manufactured goods less competitive with other nations, increasing imports and decreasing exports. Sources: Handbook of Development Economics (2009)

26 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 USD Key Finding 2: Dutch disease undermines credit but drives payments Trade Statistics USD Foreign Currency Exchange Rates (select SADC trade partners) Exports/ Bn Imports/ Bn Trade Balance/ Bn USD/ MZM USD/ ZAR USD/ BWP Source: World Bank, 2015; Oanda, 2015

27 Key Finding 2: Dutch disease undermines credit but drives payments Income (US$ ) % 16% 14% 13% 37% 37% 12% 42% 45% 10% 8% 7% 6% 63% 63% 57% 58% 6% 4% 5% 4% 3% 55% 4% 4% 2% 3% 4% 3% 3% 2% 43% 0% Funded income Non-funded income Zimbabwe NPL South Africa NPL Mozambique NPL 18% 16% Nonperforming loans (% of total loans) Source: RBZ, 2014

28 Key Finding 2: Dutch disease undermines credit but drives payments Zimbabwe 2014 Lesotho 2011* Swaziland 2014 Botswana 2014 Zambia 2015 DRC 2014 Mozambique 2014 South Africa 2014 Malawi 2014 Mauritius % 57% 45% 40% 39% 34% 23% 23% 19% 6% 42% 43% 55% 60% 61% 66% 77% 77% 81% 94% South Africa 2014 Zimbabwe 2014 Lesotho 2011* Zambia 2015 Malawi 2014 Mozambique 2014 Tanzania 2013* 78% 57% 38% 30% 19% 16% 12% 22% 43% 62% 70% 82% 84% 88% 0% 20% 40% 60% 80% 100% Access to remittances Excluded 0% 20% 40% 60% 80% 100% Access to transactions Excluded Zimbabwe ranks 1 st in remittances Remittances 40% Adults (2011) remittances 58% (2014) Zimbabwe ranks 2nd in transactions Transactions 26% (2011) 57% (2014) Source: FinScope Consumer Surveys

29 Key Finding 3: Banks contribution to financial inclusion has declined business model changes required for banks to regain ground Finding 1: Declining income & employment depress use of formal financial services Finding 3: Banks contribution to financial inclusion has declined business model changes required for banks to regain ground Finding 2: Dutch disease undermines credit but drives payments weak exports, strong imports

30 Key Finding 3: Banks share of financial inclusion declines Access strand 30% 39% 7% 16% 8% Access strand 24% 14% 22% 24% 16% 0% 20% 40% 60% 80% 100% Legend: Banked: Adults with bank accounts Formal: Access provided by nonbank formal FSPs, i.e. mobile money, insurers & MFIs Informal: Usage of informal providers, e.g. savings groups and moneylenders Family and friends: Services provided by family and friends, or self Excluded: No current access to formal or informal financial services Source: FinScope Consumer Survey 2011; 2014

31 Key Finding 3: Banks share of financial inclusion declines % of banked adults by frequency usage % of bank accounts 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 25% 9% 14% 32% 64% 61% 70% 65% 25% 23% 4% 3% Deposits Withdrawals Dormant (0 trans.) Mailbox (1-2 trans.) Used (3+ trans.) Source: Findex, 2011; Findex, 2014

32 Percentage of adults Key Finding 3: Banks share of financial inclusion declines 80% 70% 66% 67% 73% 60% 50% 40% 30% 24% 30% 26% 41% 25% 20% 16% 10% 8% 0% Banked Other formal Informal Family and Friends / At home Excluded Source: FinScope Consumer Survey 2011; 2014

33 Key Finding 3: Banks share of financial inclusion declines Profile of borrowers by institution 2500 $450 Total number of borrowers ( 000) $ $177 $ $369 Family and Friends Informal credit Mobile credit Bank Microfinance Institutions 38.4 $400 $350 $300 $250 $200 $150 $100 $50 $- Average income (USD) Total Borrowers Average Income Source: FinScope Consumer Survey 2014

34 Key Finding 3: and less trusted than MMOs Preferred provider for most adults in Zimbabwe MMOs 30% 42% 12% 3% 14% Banks 26% 37% 17% 11% 8% Retirement funds 9% 32% 21% 9% 30% Insurance companies 6% 27% 22% 11% 34% Cooperatives 5% 27% 25% 19% 25% MFIs 2% 10% 16% 20% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Most trusted Trusted Slightly trusted Not trusted Dont Know

35 Key Finding 3: Consumer perceptions of pricing models put banks on the back foot We do not need banks anymore because we now have EcoCash -Survivalist worker: Farm labourer at a pig farm The bank eats into your money -Government worker

36 Key Finding 4: Payments & Mobile Money platforms now dominate financial inclusion landscape Finding 4: Payments & Mobile Money platforms now dominate financial inclusion landscape

37 % of adult population Key Finding 4: Payments dominate financial services needs 100% 90% 80% What is a need case? A need case is a discrete consumer need that can be satisfied by one or more formal or informal financial services. 70% 60% 50% 40% 30% 20% 10% 0% Local payment Bill payment Risk mitigation Consumption smoothing Encashment Farming inputs RDTV Asset accumulation Education Investment in Business RCTV RCTV Remote cross-border transfer of value RDTV Remote domestic transfer of value Save Credit Payment Insurance Overlap Source: FinScope Consumer Survey, 2014

38 Key Finding 4: How needs are met by providers Asset Accumulation Banks Informal Mobile Money Remote Cross-border transfer of value Remote domestic transfer of value Farming inputs Enterprise Finance Education Local Payments Bill Payments Risk Mitigation Consumption Smoothing Encashment Intensity of usage Low usage Average usage High usage

39 Value of transactions (Millions of USD) Millions of transactions Key Finding 4: Mobile Money now dominates payments Mobile POS ATM POS (Value USD) ATMs (Value USD) Mobile (Value USD) (2014) (2013) +72% growth in mobile money subscriptions 5.3m 3m Mobile money subscriptions POS (No. of transactions) ATMs (No. of transactions) Mobile (No. of transactions) 72% Source: RBZ, 2015

40 Key Finding 4: Providers of remittances Remote cross-border transfer of value 20% 64% 5% 11% Remote domestic transfer of value 2% 81% 6% 11% Consumption Smoothing 5% 67% 13% 15% Education 6% 79% 10% 5% Asset Accumulation 8% 68% 7% 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Banked Formal non-bank Informal Family and friends Source: FinScope Consumer Survey, 2014

41 Key Finding 4: Shift to agents with mobile leading the way Agents No. of instruments POS No. of agents ATM Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Axis Title Bank agents MMO agents Mobile Banking Agents ATMs POS Source: RBZ, 2015

42 Key Finding 4: But mobile money a key consumer protection concern Individual consumers do not receive deposit protection Legally binding regulations for MMOs still to be passed No banking recourse for individual consumers Interoperability not yet mandated

43 Key finding 5: Cross-border retail money flows major growth area Finding 5: Cross-border retail money flows major growth area fundamental for economy and households to survive

44 Key Finding 5: Cross-border retail money flows major growth area 13% 6% 3.3 million (47% of adult population) live outside of Zimbabwe 2% 1% 1% South Africa 7% 70% UK Botswana Elsewhere in Africa USA & Canada Australia and New Zealand Elsewhere in the World , 000 (13% of adults) received remittances in 2014 USD 300m Remittances USD 770m Source: FinScope 2014, IOM, 2012; Southern African Migration Report, 2008, UNDP, 2010 & World Bank 2014

45 Key Finding 5: Banks selling directly cross-border to diaspora Insurance Banking services Investment services Credit services Home mortgages Savings accounts Transaction accounts Credit card Equity Bonds Property Retirement

46 Key Finding 5: Main MSME sector is cross-border trade % of MSME population 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4% 48% 22% 26% 72% 16% 11% Driven achievers Reluctant entrepreneurs Struggling go-getters Survivalist Manufacturing Service industry Trade Finance Other 47% 20% 32% 64% 14% 22% Source: FinScope Zimbabwe MSME Survey, 2012

47 Key finding 6: Informal financial services soaring Finding 6: Informal financial services soaring communities act collectively to survive Use informal financial services from: Use formal financial services from: Family and friends

48 Key Finding 6: Providers for savings 80% of local transactions happen in cash Planned risk mitigation 16% 14% 21% 50% Consumption smoothing 13% 13% 20% 54% Education 15% 13% 22% 50% Asset accumulation 18% 15% 24% 44% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of total use cases met by provider Banked Formal non-bank Informal Family and friends / at home Source: FinScope Consumer Survey, 2014

49 Key Finding 6: Informal provision dominates So, if something went wrong who would you think of as the first contact to get a loan from? It would be family. I am saying it because I cannot think of any financial institution that I could go to; to get money because you cannot get any financial assistance from any institution. They are not lending. If they are lending, then they have so many strings attached. Can you think of something that went wrong? I would have to rely on family. Even when we had to bury my dad, his children and family contributed money for most of the requirements. Of course we also made use of the burial society funds. Private Sector Worker: PETER Pharmaceutical Wholesaler (High Income)

50 Key finding 7: Private human capital development a priority Finding 7: Private human capital development a priority financial services to support education

51 % of adult population Key Finding 7: Strong drive for accumulation of non-financial assets 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Local payment Bill payment RCTV Remote cross-border transfer of value RDTV Remote domestic transfer of value Risk mitigation Consumption smoothing Encashment Farming inputs RDTV Save Credit Payment Insurance Overlap Asset accumulation Education Investment in Business RCTV Source: FinScope Consumer Survey, 2014

52 % of MSME population Key Finding 7: Private human capital development a priority makes for resilient microenterprises 60% Zimbabwe Malawi Mozambique 50% 40% 30% 20% 10% 0% Driven achievers Reluctant entrepreneurs Struggling go-getters Survivalist Source: FinScope Zimbabwe Consumer Survey, 2012, FinScope Malawi Consumer Survey, 2012 & FinScope Mozambique Consumer Survey, 2012

53 Agenda MAP diagnostic components Key findings Options to extend financial inclusion

54 Options to extend financial inclusion 1. Focus on where you can drive financial inclusion given current conditions 2. Facilitate transaction based revenue for banks 3. Strengthen underpinnings of the credit market 4. Enhanced interoperability at retail payments level 5. Facilitate cashless payments for cross-border traders 6. Facilitate formal remittances and cross-border services for migrants 7. Facilitate products to build human and physical capital

55 Thank You! MAP is a comprehensive market assessment of retail financial services. The purpose of MAP is to assist the Government to identify key priorities and opportunities to extend access to financial services. The MAP framework has been developed in partnership between Cenfri, FinMark Trust and the UNCDF and is intended to become a public good that can advance the global financial inclusion agenda. Please contact us at Wadzi Machena wadzi@cenfri.org Hennie Bester hennie@cenfri.org