FinScope Consumer Survey Botswana 2014 Introduction The government of Botswana in collaboration with the private sector are actively supporting growth and development of the financial sector. Financial inclusion has been identified as a key area of activity to promote economic growth hence the government remains committed to the implementation of the Financial Sector Development Strategy of 2012. In recent years the public and private sectors have undertaken significant steps aimed at ensuring financial inclusion initiatives that give people access to appropriate and affordable financial services. Examples of the products that are aimed at the disadvantaged and low-income segments of society includes mobile financial services and PosoCards an electronic smart card that replaced the coupon system used to pay government social benefit allowances. About FinScope FinScope Consumer surveys have been implemented in South Africa since 2002 and conducted in 21 countries (12 in SADC, non-sadc Africa and 4 in Asia). This allows for cross-country comparison and sharing of findings which are key in assisting on-going growth and strengthening the development of financial markets. While core FinScope indicators (which are used for trend analysis) remain largely unchanged, FinScope itself is a dynamic study. The survey content is evaluated to ensure that the most recent financial market trends are being addressed and taken into consideration. The FinScope survey also takes the local context into account by using the expertise of the Steering Committee (SC) during the questionnaire discussion and any other SC inputs into different milestones. Objectives Republic of Botswana The objectives of FinScope Botswana 2014 were: n To measure levels of financial inclusion (i.e. the proportion of the population using financial products and services formal and informal); n To describe the landscape of access (the types of products and services used by financially included individuals); n To identify the drivers of, and barriers to, the usage of financial products and services; n To compare survey results with the 2009 FinScope consumer in Botswana and to provide an assessment of changes and reasons thereof (including possible impacts of previous interventions to enhance access); and n To stimulate evidence-based dialogue that will ultimately lead to effective public and private sector interventions in order to increase and deepen financial inclusion. Partnering for a common purpose FinScope Botswana is designed to involve a range of stakeholders engaging in a comprehensive consultation process. This process has enriched the survey and the results contribute meaningfully to members who have a common interest in financial inclusion. The FinScope Consumer survey is an important component of the Making Access Possible (MAP) methodology as it is the demand tool that assists in determining the levels of financial access in a country. A Steering Committee chaired by the Bankers Association of Botswana was set up which comprised representatives from the Bankers Association of Botswana (co-funder), Statistics Botswana, Ministry of Finance and Development Planning, Non-Bank Financial Institutions Regulatory Authority, FinMark Trust and Consumer Watchdog Botswana. The research house participated in the SC meetings.
Overview Methodology n Nationally representative individual-based sample of Batswana aged 1 years and older n Sampling frame and data weighting conducted by DCDM E&M Botswana, revised by FinMark Trust and approved by Statistics Botswana (weighted and benchmarked to Census 2001 and 2011) n 1 0 face-to-face interviews conducted by DCDM E&M Botswana (between October December 2014) n Quality control checks were conducted by the research house, FinMark Trust and the local project coordinator Understanding the lives of adult Batswana 1. million Total adult (1+) population Gender Age 1 0 years 9 Male 4 Female 2 1 40 years 2 41 0 years 1 Urban/rural 1 60 years 10 Rural 2 61 and above 11 Urban 2 Urban village 4 Understanding the lives of adult Batswana year perspective Five year perspective (2009 2014) 2009 2014 Urban/rural population 6 6 Total adult population (1+ years) 1 17 01 1 24 472 Receive money through salary 4 2 Average personal income P2 742 P2 2 Number of adults with no personal monthly income 27 22 Number of adults with formal education 7 79 Went without enough food to eat 4 22 2
Sources of income Personal monthly income 2014 Salaries Money from other 21 21 2 4 No income P10 P40 4 22 22 Piece job n/a Own business n/a 9 14 P00 P1 20 P1 70 7 10 11 Drought relief assistance State pension 1 P2 00 P 00 P4 00 6 Rent Farming 4 P7 00 P1 000 Refused/do not know 4 n 2009 n 2014 Education level n 2009 n 2014 0 6 2 24 1 11 10 10 9 6 11 1 No formal education Some primary Primary school completed High school completed Post secondary University Access to basic amenities Number of individuals from households with access to piped running water (inside dwelling compound) 2009 2014 79 (=91 thousand) 76 (=1 million) Number of individuals with electricity 2009 2014 4 (=60 thousand) 64 (=44 thousand)
Financial inclusion Analytical framework Total adult population = 1 years and older in Botswana Financially included = adults who 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 ly 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 microfinance institution or insurance products, PosoCards, mobile money, etc. 4
Overview n 6 of adults (1 years and older) are formally served, including both banked and other formal non-bank financial products/services [= increased, 61 in 2009] n 0 are banked [= increased, 4 in 2009] n 6 have/use other formal (non-bank) products/services [= increased, 7 in 2009] n 9 have/use informal mechanisms to manage their finances [= decreased, 42 in 2009] n 24 have/use non-financial products/services to manage their finances. If they save, they keep their money at home, and if they borrow they only rely on family and friends [= declined, 1 in 2009] 2009 2014 Formally served 61 Formally served 6 Banked 4 Banked 0 Other formal (non-bank) 7 Other formal (non-bank) 6 42 9 Excluded 1 Excluded 24 What drives banking? Overlaps Transactional products Savings 64 Credit 2 Remittances 27 Insurance 2 What drives the use of other formal (non-banking) products? Savings 7 Remittances 46 Insurance 4 Mobile money 40 90 Consumers generally use a combination of financial products and services to meet their financial needs an individual could have a bank account and also belong to a burial society. n Only 7. of adults rely exclusively on banking services n 1.2 use a combination of formal and informal mechanisms to manage their financial needs, thus indicating that their needs may not be fully met by the formal sector alone n.2 of the adult population ONLY rely on informal mechanisms such as village savings and loans groups to save or borrow money Banked Other formal (non-bank) 7. 17.4 11.7 What drives the use of informal products? 4.6 20. 6. Savings Burial society Credit Remittances 4 16 94 Excluded 24.2.2 n Banking is driven by the uptake of transactional products and savings n Uptake of other formal non-bank products is driven by savings (mainly retirement products) n financial products/mechanisms is driven by savings groups
Financial inclusion Access Strand In constructing this strand, the overlaps in financial product/services usage are removed, resulting in the following segments: n Financially excluded adults, i.e. they do not use any financial products/services neither formal nor informal to manage their financial lives (24) n Adults who have/use informal mechanisms only but NO formal products/services () n Adults who have/use formal non-bank products/services but NO commercial bank products (1) they might also have/use informal mechanisms n Adults who have/use commercial bank products/services (0) they might also have/use other formal and/or informal mechanisms Access Strand across the SADC region Mauritius 2014 South Africa 2014 Namibia 2011 Swaziland 2014 Botswana 2014 Lesotho 2011 7 62 4 0 2 10 1 9 20 2 10 6 14 27 27 24 19 Overall Access Strand Zimbabwe 2014 0 9 2 2014 0 1 24 Malawi 2014 27 7 1 1 2009 4 17 7 1 Zambia 201 21 17 21 41 n Banked n only n Excluded Tanzania 201 14 4 16 27 Mozambique 2009 12 1 9 7 Access Strand by location DRC 2014 12 24 12 2 City 71 12 14 n Banked n only n Excluded Urban village 4 1 6 22 Rural 26 2 1 6 n Banked n only n Excluded Key findings Access Strand by gender Male Female 4 7 n Banked 22 14 n only n Excluded 27 21 n Increase across financial mechanisms: o Banking up by percentage points o Uptake of other formal (non-bank) products increased by 19 percentage points o Uptake of informal financial products/mechanisms is down by n Financial exclusion declined by 7 percentage points since 2009 n Comparing the Access Strands by location and gender reveals that financial inclusion is higher among adults residing in cities/towns (6 are financially included) compared to urban villages (7) and rural areas (64), among male (79) compared to female (7) n In terms of financial inclusion, Botswana ranks number in the SADC region 6
Banking 0 of adults are banked Drivers 0 of adults are not banked (Neither direct nor indirect) Barriers How many adults (1 years or older) are banked? 2009 2014 Number of banked adults in Botswana 24 969 4 66 614 0 Banked people opened their bank accounts: Main barriers to banking relate to monetary reasons (affordability): Number of previously banked adults in Botswana 11 94 11 12 021 10 n For safety reasons (67) n To receive salary/deposit money from an employer (9) n It is an easy way to receive money from others (2) n To help one obtain easy access to loans (20) n Do not have a job (4) n Irregular income (4) n No money to save (22) n Earn too little (17) n Bank is too far (7) n Do not know how to open an account (7) Number of never banked adults in Botswana Number of unbanked adults in Botswana 21 1 44 9 97 41 6 01 667 9 0 Total adult population size 1 17 01 100 1 24 472 100 n Only 7 of the unbanked use Mobile Money Profiling the unbanked population Banking status n Adult population grew by 146 421 between 2009 and 2014 n Banked population has increased by 11 64 n Between 2009 2014 about 12 021 adults fell off the banking system Male 41 Female 9 Rural 47 Urban 14 Urban village 9 74 22 4 Primary school and less Secondary Other 1 7 7 20 4 Wages or a salary working for private individuals/farms 79 000 Money from others (parents, partners, other family) 24 26 Receive a state pension 4 27 Piece jobs 11 12 Own business 49 77 Unemployed 9 9 7
Savings and investments Borrowing and credit Overview 2014 Banking products Other formal products Save with household member/at home Not saving 1 2 2 7 7 Overview 2014 Bank products Other formal (non-bank) Family/friends Not borrowing 2 16 74 Overview 2009 Banking products Other formal products Save with household member/at home Not saving 6 22 9 7 Overview 2009 Bank products Other formal (non-bank) Family/friends Not borrowing 2 2 2 69 n 2 of adults save in banks (increased from 22 in 2009); n 2 of adults have a formal savings product from a non-bank financial institution (this includes retirement products and PosoCards); n 7 use other informal savings mechanisms such as savings clubs/motshelo (declined from 9 in 2009); and n 1 of adults claim to save at home (increased from 6 in 2009) Savings Strand n 16 of adults claim to borrow from banks (declined from 2 in 2009) n 2 of adults have formal credit facilities from non-bank financial institutions n have informal credit, e.g. use a matshonisa n of adults claim to borrow from friends and family n 74 of adults claim to be not borrowing Credit Strand 2014 2 14 1 4 7 2014 16 2 74 In constructing this strand, the overlaps in savings product/services usage are removed: n 7 of adults do not save [= static, 7 in 2009] n 4 keep all their savings at home, i.e. they do not have/use formal or informal savings products or mechanisms [= increased, 1 in 2009] n 1 only rely on informal mechanisms such as savings clubs (they might also save at home, but they do not have/use any formal savings products) [= decreased, 17 in 2009] n 14 have/use other formal non-bank savings products (they might also have/use informal savings mechanisms and/or save at home, but they do not have/use savings products from a commercial bank) n 2 have/use savings products from a commercial bank (they might also have/use other formal and/or informal mechanisms, and/or save at home) [= significantly increased, 22 in 2009] 2009 22 2 17 1 7 n Bank products n 6 of adults save (mainly saving informally) Drivers n Developmental* (42) n To cover living expenses (9) n Funeral expenses (29) n Emergencies (non-medical) (26) n Save at home/household member only n Not saving 7 of adults do not save (mainly due to lack of income) Barriers n Do not have an income no money to save () n No money after paying expenses (4) *Developmental includes saving for: education, business, buying land, building a house and farming 2009 2 21 69 n Bank products n In constructing the credit strand, the overlaps in financial products/services usage are removed: n 74 of adults do not borrow n rely on friends and family only, i.e. they do not have/use any credit products (neither formal nor informal) n rely on informal mechanisms such as money-lenders (they might also borrow from friends and family, but they do not have any formal credit products) n 2 have/use formal non-bank credit products (they might also have/use informal mechanisms, but they do not have/use credit products from a commercial bank) n 16 have/use credit/loan products from a commercial bank (they might also have/use other formal and/or informal mechanisms, or borrow from friends and family) 26 of adults borrow (mainly from friends and family) Drivers n Developmental* credit (0) n Buying a car/vehicle (17) n Farming expenses (1) n Paying off debts () n Family/friends only n Not borrowing 6 of adults refused loans (in the past year) Barriers n Income too low () n No payslip (1) n Unemployed (17) n Could not provide security (9) *Developmental includes borrowing for: education, business, buying land, building a house
Insurance and risk management Remittances Overview 2014 Formal products 26 Overview 2014 Banked 1 products No insurance coverage 6 70 Other formal Friends/family 1 26 Overview 2009 No remittances usage 60 Formal products products No insurance coverage 1 2 n 2 of adults have formal insurance from formal regulated financial institutions. This could be in the form of insurance from an insurance company, bank or funeral cover from an undertaker n 6 belong to a burial society (informal) n 70 of adults are not insured Insurance Strand 2014 26 4 2009 2 6 69 n 70 69 n No insurance In constructing this strand, the overlaps in financial product/services usage are removed: n 70 of adults do not have any kind of financial product covering risk n 4 rely only on burial societies (declined from 6 in 2009) n 26 have some formal funeral cover from formal institutions (they might also have/use burial society) Overview 2009 Banked Other formal Friends/family No remittances usage 2 2 12 Incidences of remittances n 40 of adults claimed to have remitted within 12 months prior to the survey (increased from 2 in 2009): o 26 used other formal non-bank products/services such as mobile money, Moneygram, Western Union, etc. o 1 send or received money through banking channels; and o sent/received money through family/friends Remittances Strand 2014 1 22 1 4 22 2009 12 1 1 6 n Banked n Formal (non-bank) n 60 n Family/friends only n Do not remit 6 n Formal remittances increased through banking products 0 of adults have insurance Drivers Of those insured, uptake of insurance products is driven by: n Formal funeral insurance (67) n Burial society (20) n Medical aid (2) n Life assurance policy (1) 70 of adults do not have insurance Barriers Main barriers to the uptake of insurance: n Do not have income (main reason) n Do not understand how it works n Do not need it 9
Mobile money n About 94 of individuals have access to a cellphone n 22 (294 977) of Batswana use mobile money n Similar to that of most other developing countries, mobile money users in Botswana use it for remote payments (purchase airtime 0) and remittances Landscape of Access The Landscape of Access is used to illustrate the extent to which financially included individuals have/use financial products/services (excluding those borrowing from family/friends and those who save at home/hiding in secret place) Mobile money usage Buying airtime Sending money to someone from bank account Sending money to someone through mobile money Checking bank balance Paying bills from bank account 16 24 4 0 0 Remittances 4 Transactional 6 Credit 29 Receiving money 10 Transfering money 9 22 of adults use mobile money services 7 of adults do not use mobile money services Drivers Barriers Insurance Savings Batswana mainly use mobile money services as: Batswana do not use mobile money services mainly because: 40 77 n It is convenient (takes less time) (77) n It is cheap (6) n No need to pay for transport (1) n It is quick (0) n One can keep money privately (19) n Not interested () n Do not have enough information (2) n Do not have money to send/receive (17) n Complicated (12) n Not thought about it () n The financial landscape (included population) of Botswana is driven by savings, i.e. Batswana save more than they borrow. Savings through formal institutions increased significantly since 2009 n Increase in formal remittances due to mobile money usage 10
Summary n Adult Batswana are relatively young (0 years and younger) n Improvement in education: adults with higher education increased from 7 to 79 n An improvement in adults living in household with access to: o Piped water from 91 000 to 1 million o Access to electricity from 60 000 to 44 000 n Slight drop in average personal monthly income in 2014 due to a decline in the number of adults who are salaried compared to 2009 n About in 7 adults come from households that are involved in farming n Financially excluded adults decreased by 7 from 1 in 2009 to 24 in 2014 n Banked population increased by the growth is largely driven by: o Number of people with transaction products (mobile and internet banking, ATM/bank cards including current/cheque account) o Number of adults with bank saving products (however, savings book recorded a decline in this category) o There are 12 000 adults who churned out of banking since 2009, due to job losses and irregular or low personal monthly income levels increased from 7 to 6 driven by PosoCards, usage of remittances channels, and mobile money 11
FinScope footprint FinScope Consumer surveys have been completed in 21 countries. This allows for cross-country comparison and sharing of findings which are key in assisting on-going growth and strengthening the development of financial markets. Surveys are currently underway in 6 countries 2 in SADC, in Asia and 1 in East Africa. FinScope Botswana 2014 contains a wealth of data based on a nationally representative sample of the adult population of Botswana. Contact For further information about FinScope Botswana 2014, please contact: Mr Jabulani Khumalo jabulanik@finmark.org.za Tel: +27 11 1 9197 Fax +27 6 1 79 Dr Kingstone Mutsonziwa kingstonem@finmark.org.za www.finmark.org.za www.finscope.co.za FinMark Trust, an independent trust based in Johannesburg, South Africa, was established in 2002, and is funded primarily by UKaid from the Department for International Development (DFID) through its Southern Africa office. FinMark Trust s purpose is Making financial markets work for the poor, by promoting financial inclusion and regional financial integration. This is done by promoting and supporting financial inclusion, regional financial integration, as well as institutional and organisational development, in order to increase access to financial services for the un-served and under-served. In order to achieve this, FinMark Trust commissions research to identify the systemic constraints that prevent financial markets from reaching out to these consumers and by advocating for change on the basis of research findings. Thus, FinMark Trust developed the FinScope tool, including both the FinScope MSME Survey and the FinScope Consumer Survey. Published: July 201