FinScope Consumer Survey DRC PDF Free Download

FinScope Consumer Survey DRC 2014 LAUNCH PRESENTATION 26 March 2015 Kinshasa, DRC Making financial markets work for the poor

Objectives of FinScope DRC 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 stimulate evidence-based dialogue that will ultimate lead to effective public and private sector interventions that will increase and deepen financial inclusion 2

Research process Design Implementation Results 1 2 3 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=5,000 Launch and dissemination 3

Background Context of financial inclusion in DRC The FinScope Survey is part of the broader Making Access Possible (MAP) process undertaken together with UNCDF in the Democratic Republic of Congo (DRC). The FinScope survey in DRC will address the information needs that would enable the country to develop evidence-based policies and regulations which will help extend the reach of financial services in the DRC. FinScope DRC 2014 has been conducted in conjunction with the Ministry of Finance, the Central Bank and the Institute of National Statistics (INS) in DRC. The process has been approved by the Government via the Ministry of Finance and has their full support. 4

Sampling and Methodology Respondent profile Coverage and methodology Sample and fieldwork validation Universe: Adult population in selected survey areas of DRC DRC residents 15 years and older Fieldwork conducted from May to July 2014 Questionnaire translated into French 5 000 interviews conducted by Target Research and Consulting Sample designed by AfricaScope Quality control by Frontline Representative sample at Capital, peri-urban and rural levels Covered areas of Central Bank activity Sample drawn proportional to population size Survey data weighted to adult population of survey areas

Contents 1. Understanding people s lives 2. Payments: Banking, MFIs, SACCOs, remittances and mobile money 3. Savings and investments: Do people manage to save? 4. Borrowing and credit 5. Insurance and risk management 6. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access 7. Financial capability 8. Conclusions and recommendations

Introduction and context Although enjoying GDP growth of 8,5% in 2013 (IMF), DRC is classified as a low income country Key poverty indicators highlight that DRC is a country in severe poverty: Gross National Income (GNI) per capital of $444 (2013) (HDI) 7 out of 10 households are classified as poor and 46% of the population in severe poverty (UNDP) Agriculture employs over 71% of the total population, but 73% of the population is constantly affected by food insecurity (BCC, 2012) Childhood mortality (under 5 years) of 158 per 1,ooo (MICS 2010) Ranked 186 out of 187 countries on the overall Human Development Index (2013) Only 18,000 individuals registered individual tax payers in the top tax bracket and only 69,000 registered in the middle income tax bracket Low levels of financial inclusion Total banking service use estimated to be 5.7% (BCC 2012) 23 MFIs and 126 SACCOs operate in DRC (BCC 2012) In June 2014, BCC recorded total bank loans of US$2bn, of which $584m (+/- 30%) is given to private households. Given the banking rate, this would mean that banking loans have to be concentrated amongst the proportionately fewer banked wealthiest private households that actually have bank loans. Cash-based society - 76% of household decision-makers are remunerated in cash and only 1.3% make utility payments at a bank (GSMA 2013) DRC has a strong network of local and international remittance companies 7

Understanding people s lives: Demographics Gender Age Education 15-17 8 No formal education 10 49 51 18-24 25-34 18 27 Primary school or less 31 Male Female 35-44 45-59 18 18 High school education 48 60+ 10 University or higher 11 8 Base: 15 years or older

Understanding people's lives: Satisfaction with life In the past 12 months: Life will be better in 2 years 85 105 Unable to send children to school 14 35 20 26 5 Happy with education 47 50 3 Went without medicine 12 42 28 18 Up to government to provide for family 44 49 7 HH money improved in past year 23 73 4 Skipped a meal 8 38 31 22 1 Base: 15 years or older Agree Disagree Not applicable Note: Not applicable responses not shown Often Sometimes Rarely Never Don't know 9

Possession of documentation Other than elector s card, a low possession of documentation. Is this a barrier to financial access? Possession of documentation in own name [%] Elector's card 77 Proof of residence 8 Proof of income 6 Passport 4 ID equivalent 3 Driver's license 3 Pupil card 2 Base: 15 years or older None of these 16 10

Household dwelling ownership and type of construction materials used Dwelling ownership [%] 10 8 15 12 5 22 39 23 83 68 53 62 5 6 8 9 14 24 Main type of wall construction materials used[%] 2 31 10 1 13 6 17 21 12 47 11 16 11 10 4 33 48 48 Total Capital Peri-urban Rural 15 Owner Tenant Free Total Capital Peri-urban Rural Base: 15 years or older Dwelling ownership higher in Rural [83%] than Urban regions [53%] Brick adobe Baked brick Plant / mats Tarpauling / cardboard sheets Cement block Wood Beaten earth 11

Understanding people's lives: Access to infrastucture and media channel use in the past month Total Radio 39 Top 3 main lighting sources: Flashlight 41% Electricity 21% Oil lamp 19% TV 27 Top 3 main water sources: Not equipped 19% Equipped 17% Service valve 15% Newspapers Internet 6 7 % of individuals with access to latrine / flush toilet 31 % Magazines 4 12 Base: 15 years or older

Understanding people's lives: Household ownership of assets Base: 15 years or older Bed/Mattress 81 Radio 57 Mobile Phone 51 Lamp/floor lamp 42 Television 34 Video recorder / CD-DVD Player Bicycle Wardrobe/Closet Fan Stove/Portable stove Refrigerator / Freezer Chest 21 20 17 15 13 12 Generator / Solar pannel Motorcycle / Motorbike Sewing machine Desktop or Laptop Satellite Dish / Decoder Wheelbarrow Hi-fi or sound system Photo Camera / Video Camera 8 8 6 6 6 6 5 5 13

Understanding people's lives: Income / livelihoods Income generating activities [%] Personal monthly income [%] (US$1 = CDF925) Farming / fishing Own business Money from parent / other family Money from husband, wife / partner Money from friend Selling things on the street Likelemba / informal savings group Rent Providing interest on loans Job with government Job with company Job with individual person Piece job Do not get money 21 24 12 15 8 4 15 7 6 2 1 1 6 4 4 3 8 5 6 2 4 32 33 41 No income Less than CDF8.999 CDF9.000-CDF26.999 CDF27.000 - CDF89.999 CDF90.000-CDF179.999 CDF180.000 + Don't know/refused 4 13 16 15 11 20 21 Base: 15 years or older Income generating activity Main source of income 14

Understanding people's lives: Income segments Main Income generating activities [%] Formal employment 7 Business owner 21 Estimated median reported income (CDF) CDF90.000 CDF85.000 Informal employment 7 CDF70.000 Sell to neighbours / on street 9 CDF48.000 Depend on others 21 CDF48.000 Farming No money 4 32 CDF25.000 Median monthly income estimate based on those that claim to know their income and a proportion within the appropriate income band Base: 15 years or older 15

Food needs and farming problems When it comes to household involvement in farming, 55% of household are involved in farming: 26% only farm, 29% farm and do other work and 45% are not involved in farming at all. Farming problems experienced [%] Lack of tools What to grow 18 Drought Product spoiling 14 13 Selling prices 10 Not enough land 7 Not getting loans 4 24 Land conflicts 2 None 4 Farming coverage of food needs [%] Some 79% None 2% All 19% People in DRC are primarily farming to eat 16 Base: 15 years or older in households involved in farming

Involvement in farming Of the 74% of households that farm, 18% farm mostly for their own consumption, 76% both to sell and consume and 6% mostly to sell Mostly sell 6 Consumption only Some None 18% Sell 51% 1% 82% Consume and sell 76 Farming coverage of food needs [%] All 48% Farming coverage of food needs [%] Some 85% None 2% All 13% Crops farmed [%] Crops farmed [%] Tubers and root crops Beans, pulses, peanuts Cereals (maize etc.) Vegetables Fruits Sugar cane Oil palm Beverage crop (tea etc.) Poultry Goat / sheep Pigs Fishing Meat cattle 12 9 6 11 2 6 25 41 32 69 61 53 85 Tubers and root crops Beans, pulses, peanuts Cereals (maize etc.) Vegetables Fruits Sugar cane Oil palm Beverage crop (tea etc.) Poultry Goat / sheep Pigs Fishing Meat cattle 8 10 4 21 20 25 22 38 46 51 79 77 93 17 Base: 15 years or older in households involved in farming

Involvement in farming Of the 74% of households that farm, 18% farm mostly for their own consumption, 76% both to sell and consume and 6% mostly to sell Farm inputs finance sources [%] Consumption only 18% Sell 82% Farm inputs finance sources [%] Sell crops and use money 17 Sell crops and use money 51 Other income sources 35 Other income sources 22 Sell livestock 2 Sell livestock 8 Collect from nature and sell 4 Collect from nature and sell 5 Do piece work 3 Do piece work 3 Sell animal byproducts 3 Sell animal byproducts 3 Use savings 2 Use savings 2 Borrow friends / family 1 Borrow friends / family 2 Don't - make do 34 Don't - make do 47 Do not use inputs 28 Do not use inputs 17 18 Base: 15 years or older in households involved in farming

Access to facilities Households do not use or know the duration to many points of commercial facilities, particularly those that are part of formal franchises rather than localised places Don t know / don t use [%] 66 59 74 66 61 11 12 6 12 23 Time taken amongst those who use or know 85 82 80 77 74 72 64 64 61 61 73 64 53 58 48 Within 30 min 57 40 Within 1 hour 37 30 28 General convenience store Base: 15 years or older Pharmacy Local clinic Informal market Internet café Public Transport FROM MOST TO LEAST ACCESSIBLE Petrol station ATM Bank Supermarket 19

Community membership and assistance Group membership [%] Where would people go for financial advice or assistance [%] Church or other religious group 77 Parents or other family Friends 51 76 Likelemba / informal savings group 16 Church / religious / solidarity group 37 Neighbourhood associations 10 Other persons Children 18 14 There is very low membership of informal financial groups. Base: 15 years or older Tribal / ethnic associations Solidarity groups None of these 8 8 17 Community based organisation Likelemba / informal savings group MFI or SACCO Banque lambert / moneylender No-one 6 7 2 1 5 Congolese would mostly seek financial advice or assistance from family or neighbours. Note the ¾ agree they can rely on neighbours for help and 3 in 5 agree they rely on church for help 20

People s lives Summary DRC has infrastructure and livelihood vulnerability challenges. This is borne out through Only 1 in 4 have electricity and 1 in 3 have a flush or latrine toilet in their household. Only 30% of adults in surveyed areas are within half an hour of a bank 2 in 5 adults in surveyed areas have not attained high school education The potential lack of formal institutions or lack of trust in such places is displayed through the very low percentages of people who would seek out such places for financial advice. Rather family, neighbours and religious groups are key safety nets used for financial and other support 21

People s lives Summary (continued) Fewer than 1 in 4 adults in surveyed areas agree that the household money situation has improved in the past year 53% adults in surveyed areas claim to earn less than US$100 a month and a further 1 in 5 did not know or refused to give their income There is low formalisation of employment 1 in 3 claim farming (predominantly subsistence) to be their main income source, a further 1 in 5 mainly depend on others and a further 1 in 5 claim business (usually informal) income as main income source 55% of households are involved in farming and 82% of these households sell (some of) their produce but this is on a marginal level as only about a half claim to actively finance farm inputs such as seeds, implements and fertiliser. Furthermore the biggest problems experienced are: Lack of tools (24%) What to grow (18%) The main produce farmed are basic foodstuffs like tubers and root crops, beans and pulses and cereals 22

Contents 1. Understanding people s lives 2. Financial accounts: Banking, MFIs, SACCOs, remittances and mobile money 3. Savings and investments: Do people manage to save? 4. Borrowing and credit 5. Insurance and risk management 6. Financial inclusion overview: Access Strands, total product uptake, Landscape of Access 7. Financial capability 8. Conclusions and recommendations 23

Defining financial inclusion Total adult surveyed population 15 years and older in DRC 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. Likelemba, Banque lambert. Banked = have/use financial products/ services provided by a bank, regulated by the Regulatory Authorities of DRC. 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. 24

Banking behaviour of the adult surveyed population 12% of surveyed adults are currently banked About 2% of the currently unbanked surveyed population were previously banked, while the rest have never been banked Banking behaviour of the adult surveyed population [%] % Unbanked 88% Never banked Previously banked 2 86 Banked 12% 25

Financial transactions: What drives the 3% with any kind of financial account and what transactions have they done in the past 3 months? Drivers [%] Transactions conducted in past 3 months [%] To save 75 Got cash from ATM 46 To keep money safe Get salary or wages 33 50 Do banking in bank branch 42 Note that non-cash transactions are very low and banking in a bank branch is more frequent i.e. monthly activity Get credit or loan 22 Non-cash transactions 28 Primarily EFTs or debit orders Make payments or get money 13 Pay bills through bank account 12 Base: Have Financial Account 15 years or older 26

Banks: Drivers and barriers 12% of surveyed adults are banked 88% of surveyed adults are not banked Drivers [%] Barriers [%] Money safe from theft 73 Unaware of any bank 48 Trust banks with money Employers deposit salary 55 60 Not enough money for bank account Don't have regular income Don't have money to save Don't have job 30 23 18 12 52% of unbanked surveyed adults in DRC are aware of banks but don t use them Helps to access loans Safe / easy way to receive money Safe/easy way to send money Interest on savings 36 36 33 32 Earn too little Don't understand how works Don't know how to open account Bank too far Prefer cash Don't know 12 10 10 8 5 5 In addition to awareness, limited income is a key barrier for the unbanked Interestingly this group would trust banks with their money 27

MFIs: Drivers and barriers 4% of surveyed adults claim use of MFI 96% of surveyed adults do not use MFIs Helps get access to loans Money safe from theft Drivers [%] Barriers [%] Interest on savings Salaries deposited Safe way to receive money Don't know None 9 9 12 13 22 21 52 Unaware of any MFI Don t know - accounts, convenience, fees Not enough money to open account NOT trust with money No money to save Don't have regular income Don't know how to open account Don't need MFI too far MFI unreliable 4 4 3 3 3 3 10 8 17 76 24% of MFI nonuser surveyed adults in DRC are aware of MFIs but don t use them Although income and trust issues feature, awareness of MFI and its workings are by far the biggest barrier to MFI use, even amongst those who have heard of and use MFIs 28

SACCOs: Drivers and barriers 5% of surveyed adults claim use of SACCO 95% of surveyed adults do not use SACCOs Drivers [%] Barriers [%] Easy to understand 50 Unaware of any SACCOs 87 Money safe from theft Trust with money Employers deposit salary Interest on savings Get access to loans Safe / easy way to receive money Safe/easy way to send money 7 14 22 28 27 41 50 42% of users claim the hours to be inconvenient Don't know - fees, convenience, accounts Not enough money Irregular income Trust with money Easy to understand 8 4 3 3 3 13% of SACCO nonuser surveyed adults in DRC are aware of MFIs but don t use them Although income issues feature, awareness of SACCOs and its workings are by far the biggest barrier Do not know 37 No money to save 3 29

Remittances / money transfer Remittances / money transfer overview [%] Formal 25 Informal 2 Friends / family 9 No remittance usage 66 Remittances / money transfer Strand [%] 2014 25 1 8 66 Base: 15 years or older Formal Informal only Friends / family / other No remittance usage 30

Origin and destination of remittances Destination / origin of money sent [%] People sent to or received money from [%] In DRC 57 53 Other family members Child 22 63 Parent 17 Outside DRC 9 23 Friend Spouse 8 16 Received Sent Borrowed 3 Base: 15 years or older remittance senders/receivers 31

Payment channels used to send and receive money 1 out of 3 surveyed adults who use remittances claim to send or receive money at least once a month Financial courier / other remittance channel 72 Friends / family 28 Bank transfer 4 Cellphone 3 Motorcycle / taxi 2 Base: 15 years or older remittance senders/receivers 32

Usage and ownership of communication devices Nearly 47% of surveyed adults own a mobile phone (against 51% of households), and only 1 out of 5 use paying call points Low use and ownership of other devices as well compared with household ownership of 57% for radios, 42% for lamps and 34% for televisions Mobile Phone Computer / Laptop / Tablet Internet connection E-mail Paying call points Use 57% 8% 8% 7% 22% Own 47% 4% - - - 33

Mobile money About 57% individuals claim to use a cell phone 35% of surveyed adults in DRC know about mobile money, but only 4% (10% of those who own a mobile phone) have registered on a network with even fewer (60% of those registered as well as some others), claiming to conduct mobile money activities. No cellphone access / mobile money awareness 69 Registered & use Mobile Money Not registered & use mobile money 1 3 Don't have enough information Not educated on how to use it 12 15 Not thought about it Don't have money to send/receive It is complicated Don't trust it Don't trust telecom companies Don't have a cellphone 6 5 5 3 3 2 Base: 15 years or older Don't know 2 34

Summary Only 12% of adults in surveyed areas claim to use a bank Claimed financial account ownership at either banks, MFIs or SACCOs is even lower only 3% claim to have any such account The chief drivers of such accounts as well as using banks, MFIs and SACCOs generally are saving and keeping money safe Non-cash transactions amongst the those with accounts is very low The biggest barrier to using banks, MFIs or SACCOs is awareness. Income is also an important barrier mentioned and probably a key reason for low rollout of these institutions Besides income / employment limitations, there appears to be low trust in financial institutions, particularly MFIs. This is reflected by the large proportion of users of MFIs and SACCOs who do not know what the advantages of using these institutions is 35

Summary Formal remittances are one of the most important drivers of financial inclusion in DRC and 1 in 4 adults in surveyed areas claim to use This is in turn underpinned by use of places like Western Union and Moneygram Although mobile use and ownership amongst those surveyed in DRC (at 57% and 47% respectively) is high compared to all other communication devices, it is low when compared to other countries in SADC However these use and ownership figures still present opportunities Presently use of mobile money is very low and the biggest barriers to adoption are awareness and knowledge. 36

Savings and investments Savings usage overview [%] Banking products Other formal products 4 7 Savings Strand [%] Informal Save at home, in kind, friends/family Not saving 20 44 45 2014 7 3 17 28 45 Base: 15 years or older Banking Other formal Informal only Save at home / friends etc. only Not saving 38

Savings and investments: Even among the 55% who save, only 38% claim to save monthly or more often 55% of surveyed adults save 45% of surveyed adults do not save Drivers [%] Barriers [%] To have money when need Non-medical emergency 41 81 No money left over after living expenses 57 Medical expenses 41 Living expenses 29 No income 54 Education / school fees 26 Improving home Starting / expanding business 17 15 All money spent on household 16 Funeral expenses 12 Retirement / old age Providing for family after die 11 10 Too many family responsibilities 9 Buying / building dwelling to live 9 Farming expenses Buying land 9 8 Too much expenditure 2 39

Summary Saving is driven by informal means as well as saving at home and with family and friends A lack of disposable income is the biggest limitation on saving The biggest recipients of savings are planned and unplanned emergency savings Limited income is the biggest barrier cited to saving 40

Borrowing and credit Borrowing usage overview [%] Banking products Other formal products Informal Borrow from friends/family 0,2 0,3 3 6 Not borrowing 92 Credit Strand [%] 2014 1 3 4 92 Base: 15 years or older Banking Other formal Informal only Borrowing from friends etc. only Not borrowing 42

Borrowing and credit: Developmental reasons come up for borrowing 8% have borrowing/credit products 92% do not borrow Drivers [%] Barriers [%] Medical spending 31 Don't want to have debt 31 House 26 Don't need it 10 Never thought about it 10 Food 19 No regular income 9 Start / invest in own business 17 Can't afford 8 Child's education 16 Don't have job 8 Give to another family member 14 Earn too little Interest is too high 5 4 Clothes 8 Too scared to approach such a place 3 Bills 6 Don't know 3 43

Summary Borrowing use is very low with only 8% claiming to borrow, primarily from family and friends Debt is the biggest fear followed by income limitations Medical spending, food and developmental reasons feature amongst drivers of borrowing 44

Insurance and risk management Only 40% of surveyed adults have ever heard of insurance Insurance Strand [%] 2014 1 99 Formal Informal only No insurance coverage 1% of surveyed adults have insurance Uptake of insurance products is driven by: Accident / travel 60% Property damage 48% Comprehensive motor 24% 99% of surveyed adults do not have any kind of financial product covering risk Main barrier to the uptake of insurance: Value of assets too low Affordability (job / income) Don t understand how works Don t believe in it At 1% of adults in surveyed areas claiming any use, insurance in DRC is incredibly low. The main barriers to insurance uptake are value of assets, familiarity, understanding and affordability Base: 15 years or older 46

Risk management: 44% expect a major expense in the coming year Response to major events Costly events experienced in past year [%] Main way to pay major expenses [%] Illness / death main income earner Illness / death other HH member 31 38 Savings Sell something Family / friends Borrow elsewhere Rely on community Other Don't know 1 2 2 9 17 24 45 Theft 14 Expenditure to cut back on, other than food [%] Health 35 Drought 9 Education Water, electricity, cooking fuel 19 18 Clothing / footwear 7 Increase in HH size 8 Furtniture / household items/ None of the above 4 6 Base: 15 years or older There is a need in DRC for risk cover for death and illness, as the current coping mechanisms create vulnerabilities; and health spending is most likely to be cut when financial stresses take place 47

Financial inclusion overview High proportion of excluded adults in DRC, with 52% excluded individuals Only 12% are banked but including MFI and SACCO users gives the BCC banking rate of 17% Altogether 36% are formally served Financial Inclusion overview [%] Formally served 36 Banked 12 Other formal [non bank] 32 Informal 26 Excluded 52 Base: 15 years or older Note: MFIs and SACCOs excluded from banked classification 49

Drivers of banking products, other formal products and informal products Drivers of Banking Products [%] Transactions Savings 59 65 Banking is mainly driven by savings and transactional products Other formal products by remittances, and Informal products by savings Credit 2 Drivers of Other formal products products [%] Drivers of Informal Products [%] Remittances Transactions 26 79 Savings 93 Mobile money 13 Credit 16 Savings 13 Insurance 3 Credit 1 50

Financial inclusion overlaps Very few adults (3%) use a combination of all financial services types and the majority of those included only have either Formal other (18%) or Informal (12%) inclusion i.e. are likely to be saving or remitting but not both Financial Inclusion overlaps Banked 3% 5% 3% 1% 6% Formal other 18% Informal 12% Excluded 52% Base: 15 years or older 51

Financial inclusion: Access Strand total and by gender 48% are financial included and 36% are formally included 2014 12 24 12 52 Banked Other formal (non-bank) Informal only Excluded By gender [%] Female 11 21 12 56 Male 13 26 13 48 Base: 15 years or older Banked Other formal (non-bank) Informal only Excluded 52

Financial inclusion: Access Strands 2014 by income categories By income categories [%] Formal employment 39 29 9 23 Business owner 16 28 14 42 Sell to neighbours / street 14 24 21 41 Informal employment 7 30 12 51 Depend on others 11 29 7 53 Farming 4 17 14 65 No money 5 6 7 82 Banked Informal only Other formal (non-bank) Excluded 53

Financial inclusion: Access Strand across the region [%] Mauritius 2014 85 3 2 10 South Africa 2014 75 5 6 14 Namibia 2011 62 8 3 27 Swaziland 2014 54 10 9 27 Botswana 2009 41 18 8 33 Lesotho 2011 38 23 20 19 Zimbabwe 2014 30 39 8 23 Malawi 2014 27 7 15 51 Zambia 2009 14 9 14 63 Tanzania 2013 14 43 16 27 DRC 2014 12 24 12 52 Mozambique 2009 12 1 9 78 Banked Other formal (non-bank) Informal only Excluded 54

Financial inclusion: Landscape of Access (of those with any financial product) Transactional banking outperforms the other product categories, while mobile money and remittances lag significantly behind. Informal savings are notable. Landscape of access among financially included individuals [%] Savings 55 20 Legend Transactional 24 24 Mobile money 9 9 Total usage Formal usage Credit 8 1 Remittances 53 53 Insurance 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) Base: 15 years or older financially included 2 2 55

Summary 48% of the survey population are included, 36% formally included and 12% banked DRC has amongst the lowest inclusion levels in the SADC region Financial inclusion is driven by formal remittances and informal savings The challenge for inclusion is particularly stark amongst those who main rely on farming 56

Expenses: 44% expect a major expense in the coming year Costly events experienced in past year [%] Main way to pay major expenses [%] Illness / death main income earner Illness / death other HH member 31 38 Savings Sell something Family / friends Borrow elsewhere Rely on community Other Don't know 1 2 2 9 17 24 45 Theft 14 Expenditure to cut back on, other than food [%] Health 35 Drought 9 Education Water, electricity, cooking fuel 19 18 Clothing / footwear 7 Increase in HH size 8 Furtniture / household items/ 6 None of the above 4 58 Base: 15 years or older

Financial capability - Assistance and decision-making Where would people go for financial advice or assistance [%] Responsibility for financial decision Making [%] Parents or other family Friends Church / religious / solidarity group Other persons Children Community based organisation Likelemba / informal savings group MFI or SACCO 2 6 7 14 18 37 51 76 Manage HH money alone Manage HH money with others Others in HH manage money Someone else in HH manages for everyone 8 30 29 33 Control over how own money spent [%] Full control Together with others 25 54 Base: 15 years or older Banque lambert / moneylender No-one 1 5 No control Don't know / no money of own 8 13 59

Financial capability Managing money 47 Planning and tracking [%] Someone is financial incapable if he/she can not plan and manage money. Congolese use their savings as the coping strategy when they run out of money. 31 26 Have a plan for spending money Pay bills / loans / accounts on time every month Keep records of your spending 60

Summary Financial capability in DRC appears low, with fewer than half of adults in surveyed areas claiming to have a budget and only 1 in 4 claiming to keep records of their spending Most adults go to social sources for advice but fewer than half know where to go to for advice on their financial choices and problems Adults in DRC are particularly vulnerable with 44% expecting a major expense in the next year, mostly illness and death of household members Current coping mechanisms are savings, borrowing and dependence on others; and worryingly health spending is most likely to be cut when such financial stresses take place 61

Key headline findings/conclusion 1. Financial inclusion 48% of the survey population are included, 36% formally included and 12% banked DRC has amongst the lowest inclusion levels in the SADC region Financial inclusion is driven by formal remittances and informal savings The challenge for inclusion is particularly stark amongst those who mainly rely on farming 63

Key headline findings/conclusion.. (cont. ) 2. Landscape of Access The financially included landscape of DRC is driven by remittances and savings The challenge for consumer education and behaviour change to lead to deeper, engaged use beyond these basic transactions Both the drivers and barriers to savings and credit are day-today concerns over living expenses Insurance is low, despite adverse medical and death events being far more common When such events are experienced, the current coping mechanisms are savings, borrowing and dependence on others; and health spending is most likely to be cut when financial stresses take place. Some also borrow or sell possessions 64

Key headline findings/conclusion.. (cont. ) 3. Mobile Money Although mobile use and ownership amongst those surveyed in DRC (at 57% and 47% respectively) is high compared to all other communication devices, it is low when compared to other countries in SADC However these use and ownership figures still present opportunities Presently use of mobile money is very low and the biggest barriers to adoption are awareness and knowledge 65

Key headline findings/conclusion.. (cont. ) 4. Livelihoods DRC has infrastructure and livelihood vulnerability challenges Only 7% work in formal employment, 1 in 5 depend on others and almost 1 in 3 adults claim farming (predominantly subsistence) to be their main income source With this picture, the majority of adults receive small, inconsistent and irregular incomes. 53% personally earn less than the equivalent of US$100 a month From a demand-side perspective the financial behaviour of these individuals is driven by daily needs this is often the reason why resort to informal mechanisms Low income means vulnerability to financial shocks and limits demand for financial services 66

Key headline findings/conclusion.. (cont. ) 5. Financial literacy Fewer than half of adults in surveyed areas claiming to have a budget and only 1 in 4 claiming to keep records of their spending Adults in DRC are particularly vulnerable with 44% expecting a major expense in the next year, mostly illness and death of household members Current coping mechanisms are savings, borrowing and dependence on others; and worryingly health spending is most likely to be cut when such financial stresses take place Overall low levels of financial capability 67

Financial Inclusion Priorities 1. Support subsidence farming through targeted subsidies along the value chain of key crops and inputs as well as mass media communication to aid the population 2. Insurance to better manage impact of risks 3. Remittance channels like financial couriers serve the most people and a channel opportunity to provide other financial services to better meet people s needs 4. Customer education 68

Thank you FinMark Trust For more information on FinScope Consumer Survey DRC 2014 please contact: Dr Kingstone Mutsonziwa kingstonem@finmark.org.za Tel: +27 11 315 9197 www.finmark.org.za www.finmark.org.za 69