Three-quarters of poor unbanked
VALUE ADDED SERVICESBy BiztechAfrica - 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
MTN partners Salt & Einstein MTS, NHIS on insuranceMTN Nigeria says it has partnered Salt & Einstein MTS and the National Health Insurance Scheme (NIHS) to help push health insurance to many people in the country leveraging on its wider reach. Read More
Free Twitter on EconetEconet Wireless is now offering free access to Twitter to all subscribers on Econet Broadband. Read More
Gemalto, GSMA drive African mHealth initiativeGemalto has announced its partnership with (global System for Mobile Communication Association (GSMA1) to drive the pan-African mHealth Initiative (PAMI). Read More
Has Africa slowed in global mobile payments innovation?wiGroup says Africa has lost ground to the US and China in the mobile payments innovation race. Read More
New mobile payment system goes live in SAMobile payment system Zapper has launched its innovative and secure payment app for smartphones in South Africa. Read More
Mobile banking numbers to pass online banking by 2019New findings from Juniper Research finds that over 1.75 billion mobile phone users will have used their devices for banking purposes by the end of 2019, compared to 800 million this year. Read More
Remita’s e-transactions hit N500bnNigerian electronic payment platform Remita says it is driving cashless initiatives, and currently processes electronic transactions valued at N500billion monthly. Read More
Nigeria’s cashless campaign goes nationwideIn spite of obvious hiccups, the cashless initiative of the Central Bank of Nigeria (CBN) goes live in the 36 states of the federation and Abuja, the Federal Capital Territory (FCT) today. Read More
More than 2.5m Rwandans now using mobile paymentsThe number of mobile payments subscribers in Rwanda has reached more than 2.5 million, according to figures in the recently-published Rwandan ICT Sector Profile. Read More
FEATURED STORYWidening ICT skills gap: Cause for concern
Nigeria's FDI gains could be eroded by the widening gap in indigenous skilled ICT manpower, writes Kokumo Goodie.
BEST READ NEWS
IN DEPTHKenya rolls out e-extension to improve agriculture
In a bid to curb the overwhelmed number of agricultural extension officers in Kenya, the ministry of agriculture is embracing technology with their introduction of E-Extension services, which are aimed at reaching out to over 7 million farmers annually.
COMPANY NEWSNew Sage ERP X3 version puts business information at your fingertips
Sage ERP Africa has announced the availability of Sage ERP X3 version 7, the latest version of its global business management solution for midsized companies.How the cloud can power entrepreneurship and urbanisation in Africa
Cloud computing is not only fundamentally changing the way business operates, it is also driving a new wave of job creation opportunities, says SAP Africa.