Exploring market opportunities for savings in Mozambique

1 Exploring market opportunities for savings in Mozambique 3 March 2016 INTERIM RESULTS Eighty20 Consulting

2 Agenda Mozambique a FinScope overview Savings usage Savings access

3 Agenda Mozambique a FinScope overview Savings usage Savings access

4 Awareness of financial terms such as Savings account and Interest rate is generally very low across the market AWARENESS / KNOWLEDGE OF FINANCIAL TERMS (Adults 16+) Savings account Interest rate 100% 100% 80% 60% 60% 3 27% 7 57% 62% 80% 60% 57% 34% 2 6 54% 6 40% 20% 0% 18% 20% 2 40% 16% 20% 24% 17% 1 Total Urban Rural Male Female 40% 20% 0% 16% 17% 18% 42% 14% 25% 30% 17% 2 Total Urban Rural Male Female Heard of this and know what this means Never heard of this Heard of this but does not know what it means No response

5 4.39 million adults aged 16 and above (30% of adults) currently make use of at least one formal or informal savings mechanism SAVINGS AND INVESTMENT (Adults 16+) Cash at home or in a secret place not for your living expenses Deposit made regularly, as agreed with a group or collector ** Livestock Savings account with formal bank Fully owned business investment * Cash left with someone else for safekeeping House(s) held as an investment *** Savings Plan Term Deposit Business investment in partnership * Savings with credit and savings cooperative Savings with any other formal financial institution Savings with your employer Corporate bonds Treasury Bills or Government Bonds Shares in a business Shares in the Stock Market 2.0% 1.2% 1.0% 0.6% 0.5% 0. 0.2% 0. 0.0% 0.0% 0.0% 3. 4.4% 5. 7.0% 6.8% 12.7% * e.g. barraca, chapa, shop, farming equipment; ** e.g. community-based savings and credit group, xitique group, xitique geral; *** besides the one that you live in Note: of adults say they used to (but no longer) keep cash at home or in a secret place, 7% used to keep cash with someone else for safekeeping, used to make a regular deposit with a group or collector

6 36% of urban adults and 28% of rural adults are currently saving or investing SAVINGS AND INVESTMENT (Adults 16+) URBAN RURAL Savings account with formal bank Deposit made regularly, as agreed with a group or collector ** Cash at home or in a secret place not for your living expenses Fully owned business investment * Livestock Cash left with someone else for safekeeping Term Deposit Savings Plan House(s) held as an investment (besides the one that you live in) Business investment in partnership * Savings with any other formal financial institution Savings with credit and savings cooperative Savings with your employer Corporate bonds Treasury Bills or Government Bonds Shares in a business Shares in the Stock Market 4. 4.0% 3.5% 2.4% 2. 2. 0.8% 0.6% 0.6% 0. 0.2% 0. 0. 0. 11.5% 11.0% 12.4% 1. 4.8% 4. 3. 0. 0.7% 1. 0.5% 0.2% 0.5% 0. 0. 0.0% 0.0% 0.0% 8.2% 13.5% * e.g. barraca, chapa, shop, farming equipment; ** e.g. community-based savings and credit group, xitique group, xitique geral

For those individuals who are currently saving, 4 cite proximity as an important factor for selecting a savings mechanism; 37% safe the savings mechanism must be safe and trustworthy 7 WHAT MATTERS WHEN YOU SELECT A WAY TO SAVE OR INVEST? (Adults 16+, Currently saving) Must be nearby 4 Must be safe and trustworthy 37% Must be private It is convenient to withdraw from when you need it Must keep money safe from the temptation to spend it Must not cost much to use Must be simple to use 24% 22% 2 18% 17% Must have a good service 1 Must be able to relate and understand Must keep money safe from others Does not know Must offer the best interest rate 8% 6% 5% 5%

Factors for selecting a savings mechanism do not differ significantly between urban and rural areas, with the exception of convenience of withdrawal (27% versus 1) and good service (20% versus ). A slightly larger proportion of rural savers than urban savers cited avoiding temptation and ease of use as important factors 8 WHAT MATTERS WHEN YOU SELECT A WAY TO SAVE OR INVEST? (Adults 16+, Currently saving) URBAN RURAL Must be nearby 42% 4 Must be safe and trustworthy 36% 38% It is convenient to withdraw from when you need it 27% 1 Must be private 24% 24% Must have a good service 20% Must keep money safe from the temptation to spend it Must not cost much to use Must be simple to use 14% 1 18% 18% 1 2 Must offer the best interest rate 7% Must be able to relate and understand Must keep money safe from others Does not know 4% 7% 6% 7% 6%

9 For those individuals who are currently saving, 42% say they do so to increase their income and 35% say it is for living expenses in times of need WHAT ARE YOU CURRENTLY SAVING OR INVESTING FOR? (Adults 16+, Currently saving) To increase my income Living expenses for the time when you have no money For a medical emergency For an emergency that is not medical Providing something for your family after you die Buying or building a house for you to live in Education or school fees Starting or expanding your business Buying livestock Buying appliances, furniture or goods for household Buying a bicycle, motorcycle, car, truck or other transport Retirement or old age Farming or fishing expenses (e.g. seeds, fertilizers, nets, boats) Buying farming equipment or implements Funeral expenses Holidays or travel A wedding or dowry / lobola Acquiring land Buying a house or land to rent out Security or cash collateral so that you can borrow money 8% 8% 7% 6% 6% 4% 4% 4% 2% 2% 12% 12% 1 24% 35% 42% Note: Responses with less than are not shown on the chart (Paying off a debt; Placing money or goods in someone else s business; Invest in shares, Treasury Bills or Government Bonds), is not shown (2%)

For those individuals who are currently saving, a significantly larger proportion of those living in urban areas cite increasing income as a reason for saving/investing than those living in rural areas 10 WHAT ARE YOU CURRENTLY SAVING OR INVESTING FOR? (Adults 16+, Currently saving) URBAN RURAL To increase my income Living expenses for the time when you have no money For an emergency that is not medical For a medical emergency Buying or building a house for you to live in Providing something for your family after you die Education or school fees Starting or expanding your business Buying appliances, furniture or goods for household Funeral expenses Retirement or old age Farming or fishing expenses (e.g. seeds, fertilizers, nets, boats) Buying a bicycle, motorcycle, car, truck or other transport Buying livestock Holidays or travel Acquiring land Security or cash collateral so that you can borrow money Buying farming equipment or implements Buying a house or land to rent out A wedding or dowry / lobola 2 20% 1 10% 8% 5% 4% 4% 2% 2% 2% 3 50% 17% 12% 14% 8% 8% 6% 5% 5% 8% 5% 27% 37% 37% Note: Responses with less than for Total are not shown on the chart (Paying off a debt; Placing money or goods in someone else s business; Invest in shares, Treasury Bills or Government Bonds), is not shown (2%)

11 For those individuals who are not currently saving or investing, a large proportion cite lack of available funds as a reason why not WHY DO YOU NOT SAVE OR INVEST? (Adults 16+, Not currently saving) No money left over after living expenses 47% Never thought about saving All my money is put into the household pot Not have any income - so nothing to save 18% 18% 22% Do not know 12% You prefer to spend money when you have it Not interested / do not see purpose It is not safe to keep money in a bank or other financial institution I am worried about who would get my money after I die I am worried that family members would come for my savings 7% 5% 0%

12 Reasons for not currently saving are not significantly different between urban and rural areas WHY DO YOU NOT SAVE OR INVEST? (Adults 16+, Not currently saving) URBAN RURAL No money left over after living expenses 47% 47% Never thought about saving Not have any income - so nothing to save All my money is put into the household pot 1 16% 2 18% 22% 1 You prefer to spend money when you have it Do not know 1 Not interested / do not see purpose It is not safe to keep money in a bank or other financial institution I am worried about who would get my money after I die I am worried that family members would come for my savings 7% 7% 4% 0% 7% 5% 0%

13 Around 593,000 adults (4.) currently have a Savings Account at a bank, 147,000 (1.0%) have a Term Deposit, and 135,000 (0.) have a Savings Plan BANKING PRODUCTS AND SERVICES CURRENTLY USED (Adults 16+) Current Account Debit Card Salary Account Savings Account Credit Card Term deposit Loan Account Savings Plan Loan Checkbook Consumer Credit (associated with salary account) Overdraft Facilities Bank Cheque Direct Debit/order Business Loan Housing loan Immovable Leasing Standing Order (payment of services) e-banking Car or equipment leasing 1.0% 1.0% 0. 0. 0. 0.4% 0. 0. 0.2% 0.2% 0. 0. 0. 0.0% 0.0% 0.0% 2.2% 4. 6. 5.4% 10.5% * 5. of adults say they are currently saving with a savings account with a formal bank and 1.2% of adults say they are currently saving with a savings plan

14 For those currently making use of any banking products and services, 3 cite saving or accumulating money as a reason for banking REASONS HAVE A BANK ACCOUNT OR USE THESE SERVICES (Adults 16+, Have a bank account) To keep the money safe 64% My employer required me to do it 3 In order to save or accumulate money 3 To send and receive money 25% To pay my bills and expenses 15% To access credit facilities or services 12% To have a credit card To have a debit card 8% 2%

15 Around one in ten adults cite earning interest on savings as an advantage of using a bank account ADVANTAGES OF USING A BANK ACCOUNT (Adults 16+) HAVE A BANK ACCOUNT DON T HAVE A BANK ACCOUNT Money is safe from theft 72% 50% Easy way of receiving money from others 54% 18% Salaries can be deposited by employers 46% 12% Safe way of receiving money from others Easy way of sending money to others Safe way of sending money to others Helps you to get access to loans 3 26% 20% 1 1 8% 1 You earn interest on savings 10% 2% None - no advantages 10% Don't know 2

16 Anticipated use of precautionary savings is relatively limited, with credit and liquidation of assets far more common in the event of an expenditure shock COPING MECHANISMS (What adults would do if they were faced with the following circumstances*) POOR HARVEST THEFT, FIRE OR DESTRUCTION OF HOUSEHOLD/PROPERTY Sell something 36% Sell something 35% Borrow money 2 Borrow money 22% Don't know 18% 17% 16% Don't know 16% Use savings 10% Use savings 14% Cut down on household expenses Cut down on household expenses 10% Claim insurance 0% Claim insurance FLOOD DESTROYING HOUSE/PROPERTY THEFT, FIRE OR DESTRUCTION OF CAR/VEHICLE Sell something 38% Sell something 28% 22% Don't know 22% Borrow money 18% Borrow money 20% Don't know 16% Use savings 18% Use savings 10% 1 Cut down on household expenses 6% Cut down on household expenses 10% Claim insurance Claim insurance 5% * Adults that reported the event as a risk

17 Anticipated use of precautionary savings is relatively limited, with credit and liquidation of assets far more common in the event of an expenditure shock COPING MECHANISMS (What adults would do if they were faced with the following circumstances*) DEATH OF MAIN WAGE-EARNER ILLNESS OF ACCIDENT OF MAIN WAGE-EARNER Don't know 2 Sell something 28% Sell something 2 Borrow money 2 Borrow money 22% Don't know 20% 1 1 Cut down on household expenses Cut down on household expenses 1 Use savings 8% Use savings 1 Claim insurance Claim insurance LOSS OF JOB OF MAIN WAGE-EARNER PAY OR CONTRIBUTE TO A FUNERAL Don't know 28% Sell something 27% Sell something 25% Don't know 24% Borrow money 17% Borrow money 1 16% Use savings 18% Use savings 10% 1 Cut down on household expenses Cut down on household expenses 7% Claim insurance 0% Claim insurance * Adults that reported the event as a risk

1 of adults belong to one or more informal community groups where people get together to save or borrow money amongst each other. The most common type of group is Xitiques 18 INFORMAL FINANCE: MEMBER OF A COMMUNITY GROUP (Adults 16+) Xitique 12.2% General xitique 1.6% Community based savings group and credit group (37 respondents) 1. Informal family group sharing a family account (27 respondents) 0.5% Funeral association (17 respondents) 0.2%

Membership of informal community groups is more prevalent in urban areas; 20% of adults living in urban areas belong to one or more groups while for adults living in rural areas this proportion is 10% 19 INFORMAL FINANCE: MEMBER OF A COMMUNITY GROUP (Adults 16+) URBAN RURAL Xitique 18. Xitique 8. General xitique 2.4% General xitique 1. Informal family group sharing a family account 1. Informal family group sharing a family account 0.2% Community based savings group and credit group 0.8% Community based savings group and credit group 1. Funeral association 0.5% Funeral association 0.

20 Membership is slightly higher for women than for men; 14% of women belong to one or more groups while this is the case for 12% of men INFORMAL FINANCE: MEMBER OF A COMMUNITY GROUP (Adults 16+) MALE FEMALE Xitique 10.6% Xitique 13.7% General xitique 1. General xitique 1.4% Community based savings group and credit group 1. Community based savings group and credit group 0. Informal family group sharing a family account 0.6% Informal family group sharing a family account 0.4% Funeral association 0.2% Funeral association 0.

21 There are some cases where individuals belong to more than one informal community group of the same type MEMBER OF INFORMAL GROUP: NUMBER OF GROUPS PER TYPE (Adults 16+, Member of the respective group) Percentage of adults belonging to group Xitique 85% 15% 12.2% General xitique 8 1 1.6% Community based savings group and credit group 94% 6% 1. Informal family group sharing a family account 98% 2% 0.5% Funeral association 95% 5% 0.2% 0% 20% 40% 60% 80% 100% One More than one

22 The predominant reason cited for belonging to more than one informal group of the same type is to get more money REASONS BELONG TO MORE THAN ONE INFORMAL GROUP OF THE SAME TYPE (Adults 16+, Belong to more than one informal group of the same type) To get more money 7 Meets my needs, because the money comes at different times 3 Reduces the risk because I do not lose all my money in a single go 15%

23 For those individuals that are members of Xitiques, 22% mentioned savings as their previous pay-out usage MEMBER OF XITIQUE: WHAT DID YOU DO WITH THE LAST AMOUNT RECEIVED? (Adults 16+, Member of a Xitique group) Bought household goods 3 Saved it 22% 22% Bought food 17% Bought stock for business 12% Paid school fees Paid debts Paid an unforeseen event (illness, death) 4% 4% 4% Bought medicine Paid an expected event (marriage) 2% 0.

Most individuals who are members of a Xitique, Xitique General or ASCA group say this is to have a lump sum to use; many individuals also cite wanting to save as a reason for belonging to the group 24 MEMBER OF XITIQUE / XITIQUE GENERAL / ASCA: REASONS BELONG TO THIS GROUP OR THESE GROUPS (Adults 16+, Member of a Xitique or Xitique General or ASCA group) To have a lump sum to use when it is your turn To keep money safe To save To socialize / meet your friends To help when there is an unexpected expense To help when there is another emergency To invest in bigger things by pulling money / resources together To exchange ideas and information To increase income by lending You can get money easily when you need it It is expected for people of your clan / village / community Forces you to participate and support your group members To borrow money The group buys your household or farm goods when it's your turn Because you could not get money or help elsewhere Because you inherited the position from parent 15% 1 1 1 8% 8% 6% 4% 2% 2% 0.8% 2 30% 4

25 Agenda Mozambique a FinScope overview Savings usage Savings access

26 Bank term deposit In progress

27 Informal savings group In progress