Three-quarters of poor unbanked

VALUE ADDED SERVICES

|
Image: By World Bank
Three-quarters of poor unbanked

Three quarters of the world’s poor do not have a bank account, not only because of poverty, but also because of the cost, travel distance, and amount of paper work involved in opening one, says the World Bank.

Those without access to formal banking often have to rely on money lenders who often charge high fees. The “unbanked” are also less likely to start their own business or insure themselves against unexpected events.

Financial inclusion, or being “banked” can be transformative, as it allows poor people to build a more secure future. The ability to save and borrow allows them to build their assets, start a business, invest in education, establish a credit rating, and eventually own a home.

"Providing financial services to the 2.5 billion people who are ‘unbanked’ could boost economic growth and opportunity for the world's poor,” said World Bank Group President Robert B. Zoellick. “Harnessing the power of financial services can really help people to pay for schooling, save for a home, or start a small business that can provide jobs for others. This new report on the world's 'unbanked' makes the case: the more poor people are banking today, the more they are banking on their future."

Women are particularly disadvantaged when it comes to access to financial services. Only 37% of women in developing countries have an account, whereas 46% of men do. That gap is even bigger among those in poverty: Women living below USD2 a day are 28% less likely than men to have a bank account.

Worldwide, 22% of adults report having saved at a formal financial institution in the past 12 months, according to the World Bank’s Global Financial Inclusion Database, or Global Findex. Findex provides the most comprehensive picture yet of how people around the world save, borrow, make payments and manage risks.

Even among those who do have a formal bank account, only 43% of adults use their account to save. Yet 61% of account holders worldwide use their account to receive payments from an employer, the government or family members living elsewhere.

The data was collected by Gallup, Inc. using the Gallup World Poll Survey. The Bank’s Development Research Group is building the database with a 10-year grant from the Bill & Melinda Gates Foundation.

Few adults in developing countries use formal financial products to manage risk. More than 11% of adults in developing countries have an outstanding loan for emergencies or health-care needs, but more than 80% of these adults use only informal sources of credit. Of adults in developing countries working in farming, forestry or fishing, only 6% of them have crop, rainfall or livestock insurance.

Money transfers through mobile phones is a form of increasingly popular nontraditional banking that often doesn’t require users to travel or set up an account at a brick-and-mortar bank. Such mobile banking, which allows account holders to pay bills, make deposits or conduct other transactions via text messaging, has expanded to16% of the market in Sub-Saharan Africa, where traditional banking has been hampered by transportation and other infrastructure problems. Kenya, where 68% of adults report using a mobile phone for money transactions, has seen particularly impressive growth in this market.

“Nearly two-thirds of the unbanked cite poverty as the obstacle to financial access, but about a third also blame the cost of opening and maintaining an account or the banks being too far away, which means long bus rides for many,” said Asli Demirguc-Kunt, the Bank’s director of development policy and chief economist of the Finance and Private Sector Network.

The Bank’s financial inclusion portfolio totals over USD3 billion, with projects in over 60 countries. It supports country action plans for financial inclusion as well as increasing access to financial products and services such as credit, savings, payments, and insurance through low cost delivery mechanisms (ATM kiosks, mobile phones).

 



Share the News

Get Daily Newsletter

Search News

comments powered by Disqus

MORE VALUE ADDED SERVICES NEWS

Safaricom launches M-PESA bill manager service

Safaricom has launched a new service known as ‘Bill Manager’ that will enable customers to manage and pay bills via M-PESA all in a single transaction.   Read More

BankOne empowers 250 Microfinance Banks

One of Africa’s leading Information Technology platforms for micro finance banks, BankOne, has announced the signing up of its 250th client. Read More

Orange Money in France to allow money transfers to three African countries

Orange Money is available in Metropolitan France to enable Orange mobile subscribers in France to transfer money via their mobile to other Orange Money customers in Côte d'Ivoire, Mali and Senegal. Read More

Dar es Salaam gets Uber

Dar es Salaam has become the 475th city to join in Uber’s growing global network. Read More

Carrefour signs up for Lipa Na M-PESA

Carrefour, the world’s second largest hypermarket chain, has today become the first retailer in Kenya to fully integrate Safaricom’s payments service – Lipa Na M-PESA – paving the way for the retailer to fully adopt M-PESA as a payments channel in Kenya.  Read More

Tigo Insurance pays 10,000th claimant

Tigo Ghana says it paid over GHS 6.2 million to policyholders since the inception of Tigo Insurance in 2010. This was revealed during the presentation of a payment to its 10,000th claimant. Read More

Uber signs MoU with Ghana’s Transport Ministry

Uber, a technology company that connects riders and drivers at the touch of a button, has signed a memorandum of understanding with Ghana’s Ministry of Transport. Read More

Safaricom set to rival Uber with LitteCabs

In a move aimed at giving Uber a run for its money, Safaricom is in the preliminary stages of introducing its own tax app - LittleCabs. Read More

Uber launches in Accra

Uber has officially launched its taxi app in Ghana’s capital city Accra. Read More

M-PESA customers to access money through Equity Bank ATMs countrywide

Equity Bank has partnered with Safaricom to launch a new mobile money transfer service that will see M-PESA customers access money from the bank's automated teller machines throughout the country. Read More

PRESS OFFICES

Sage EnterpriseSAP AfricaTrust PayVMWareSamsung ElectronicsMitsumi DistributionPhoenix DistributionMTN BusinessSchneider ElectricMultichoiceMicrosoft 4AfrikaNetworks UnlimitedArbor NetworksEricssonTigo Ghana

FEATURED STORY

Government should encourage youths in ICT earlyGovernment should encourage youths in ICT early

Youths should be given more encouragement to develop their ICT skills, an 11-year-old app developer told Kokumo Goodie.

IN DEPTH

IBM Opens First Cloud Data Centre in South AfricaIBM Opens First Cloud Data Centre in South Africa

IBM is opening a new IBM Cloud Data Centre in Johannesburg, South Africa. The new cloud center is the result of a close collaboration with Gijima and Vodacom and is designed to support cloud adoption and customer demand across the continent.