Three-quarters of poor unbanked
VALUE ADDED SERVICES| April 23, 2012, 8:01 a.m.
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).
MORE VALUE ADDED SERVICES NEWS
Strathmore, Castalia look to implementation of mobile learningStrathmore University in Nairobi and Castalia Co of Japan has signed a Memorandum of Understanding to launch a feasibility study of “goocus pro” and “goocus 3”, mobile learning platforms developed by Castalia, starting from April of 2015. Read More
Virtual clinic to help monitor medicine intake in TanzaniaThe Vodacom Foundation has donated mobile phones to the Sickle Cell Foundation of Tanzania to support treatment adherence among patients. Read More
Airtel mobile money service now crosses into DRC, Zambia, RwandaBharti Airtel has launched a cross-border money-transfer service for Airtel Money customers between the Democratic Republic of Congo (DRC), Zambia and Rwanda. Read More
Orange, Airtel enable money transfers between Côte d’Ivoire and Burkina FasoCustomers of Orange Money in Côte d’Ivoire can use their mobile phones to send money to customers of Airtel Money in Burkina Faso, and vice versa. Read More
KCB, Safaricom launch comprehensive new mobile banking productKCB Group and Safaricom have launched a new mobile banking product with what they describe as the most comprehensive features yet in the market. Read More
M-PESA: Vodacom Tanzania, Safaricom Kenya connect on transfersOver 7 million M-Pesa customers in Tanzania and over 18 million Safaricom customers in Kenya can now send and receive money from each other. Read More
Safaricom launches M-PESA SurepaySafaricom has announced a new service that will allow organisations to track funds sent to beneficiaries via its mobile money solution M-PESA. Read More
EcoSure hits 1 million usersIn just two months, Econet’s insurance service, EcoSure, has registered over one million new customers. Read More
Airtel, Visa extend mobile payments to seven countries in AfricaVisa and Bharti Airtel have announced a partnership to bring innovative mobile payment services to seven markets in Africa. Read More
Terragon Group to unveil African-focused Mobile Advertising Technology at MWCNigeria-based Terragon Group is set to unveil its dynamic data monetisation and advertising platform, described as a first for mobile in developing markets, at MWC. Read More
FEATURED STORY2bn priced out of internet access
A new report from the Alliance for Affordable Internet shows that the price of broadband remains prohibitive for billions in developing and emerging countries, with women and rural dwellers hardest hit.
BEST READ NEWS
IN DEPTHVillagers get solar training at Barefoot College
The Botswana Human Resource Development Council (HRDC) has seconded seven semi-illiterate mostly Ngwatle villagers for a six month solar electrification training course at the famed Barefoot College in India.
COMPANY NEWSMTN Group Sustainability Report released
MTN Group’s efforts to advance social development in its markets through the integration of sustainable business practices into day-to-day activities, is yielding positive outcomes, the company’s Sustainability ...