Findings from the FinScope Consumer Survey Dates, authors and - - PowerPoint PPT Presentation

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Findings from the FinScope Consumer Survey Nepal 2014

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Dates, authors and references to be placed here Making Access Possible (MAP) is a diagnostic and programmatic framework to support expanding access to financial services. The MAP methodology and process has been developed jointly by: At country level, the core MAP partners, collaborate with other donors to ensure an inclusive, holistic process. In addition to the above MAP members, to formalise the MAP Nepal process, there is a technical committee comprising the following additional members:

Partnering for a common purpose

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FinMark Trust and FinScope

• FinMark Trust is an independent trust with the

purpose of “Making financial markets work for the poor” across Africa and now in Asia in order to increase access to financial services for the unserved and underserved that ultimately lead to the development of inclusive financial systems that can benefit all people

• FinScope is a representative study of the usage of

and access to financial services. The FinScope survey is used to better understand money matters, with an emphasis on the market needs and attitudes to both informal and formal financial

• fferings and usage. The FinScope survey further

sheds light on consumer behaviour by exploring individuals’ interactions with the financial sector as a whole Where:

22 countries - 17 African countries, Pakistan, Thailand, Myanmar, Laos and Nepal and currently

• ngoing in India.

Objective:

To measure and profile levels of access to and use

• f financial services by all adults, across income

ranges and other demographics, in order to inform stakeholders and develop policy.

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• 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 ultimately lead

to effective public and private sector interventions that will increase and deepen financial inclusion

Objectives of FinScope Nepal 2014

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Dates, authors and references to be placed here Context of financial inclusion in Nepal…

• Nepal is classified as a Least Developed Country (LDC) and

has both low levels of per capita income and a sizable population classified as poor

• Farming is a key component of livelihoods management for

many households in Nepal as well as a key income generating activity

• Nepal has just experienced a catastrophic earthquake, with

devastating effects on infrastructure and its people. These effects will be felt for many years, mainly by the poor

• Nepal Rastra Bank (NRB) embarked on a strategic five-year

action plan (2012-2016) to undertake a major program to reform the financial sector, highlighting financial inclusion as a strategic priority.

Introduction, background, and context

Methodology of the FinScope Study

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Sampling and Methodology

• Universe: Adult population

in Nepal

• Nepal residents 18 years and
• lder
• Fieldwork conducted from

Dec 2014 – Jan 2015

• Questionnaire translated and

conducted in Nepalese language

• 4,014 interviews conducted by

IDA

• Sample representative at

national, regional, and urban/rural

• Sample drawn using

probability proportional to population size

• Survey data weighted to

Census 2011 adult population

• Sample methodology and

data weighting by IDA with

• versight from FMT. CBS

provided the sampling frame

Respondent profile Coverage and Methodology Sample and fieldwork validation

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Household population size, area profile

Census 18+ adult population Unweighted sampled population % Weighted sampled population % Development region Eastern 1,230,743 1176 29.3 1,230,729 22.7 Central 1,962,238 1230 30.6 1,962,226 36.2 Western 1,065,599 630 15.7 1,065,628 19.6 Mid-Western 695,014 540 13.5 695,019 12.8 Far Western 469,703 438 10.9 469,695 8.7 Ecological region Mountain 363,698 498 12.4 363,706 6.7 Hill 2,532,041 1668 41.6 2,532,023 46.7 Tarai 2,527,558 1848 46 2,527,568 46.6 Rural/urban Rural 4,377,722 3204 79.8 4,377,722 80.7 Urban 1,045,575 810 20.2 1,045,575 19.3 Total 5,423,297 4,014 5,423,297

5.4 million households, average household size: 4.9

Sample was weighted based on probabilities of selected EAs within each stratum being chosen. These weights were then adjusted to be in line at an overall level with key Census variables

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• 1. Understanding people’s lives
• 2. Financial context:
• 3. Conclusions

Contents

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Understanding people’s lives:

Demographics

47 53 Male Female 23 35 23 19 18-24 25 - 39 40-54 55+ 25 13 1 15 12 18 11 5 Illiterate Literate but formally… Pre-primary Primary Lower secondary Secondary school Upper secondary Tertiary / higher

Gender (%) Age (%) Education (%)

58% of the adult population is aged between 18 and 39. 25% of adults claim to be illiterate. 18% claim to have achieved secondary school as their highest level of education against 5% that claim tertiary / higher education

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Understanding people’s lives:

Access to infrastructure and media channel use in the past month

58 41 23 14 14 Radio TV Newspapers Internet Magazines

Media Channel (Multiple response) %

% of individuals with inside water supply 67 % % of individuals with electricity for 5+ hrs / day 75% % of individuals with access to toilet 77 %

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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• Grocery stores and private money lenders are most conveniently placed for

those who use them.

• Fewer Nepalese adults use ATMS or Post Offices

Access to facilities

90 79 67 48 40 32 30 96 91 82 70 67 57 53 Grocery store Private money lender Point of access to public transport Market Post Office ATM Bank Within 30 min Within 1 hour

Time taken to access facilities use / aware of (%)

FROM MOST TO LEAST ACCESSIBLE

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Understanding people’s lives:

Income / livelihoods

31 16 11 12 10 4 2 5 3 3 1 Own farming Household member Piece work Own business Remittances Private company salary Farm wages Government salary Salary/wage from… Pension / Investments Government grant Do not get money Main source of income (Single response) 49 22 19 19 19 6 6 6 4 6 2 2 Own farming Household member Piece work Own business Remittances Private company salary Farm wages Government salary Salary/wage from… Pension / Investments Government grant Do not get money Income generating activity (Multiple response)

Income generating activities (%) Main source of income (%)

Although 49% of Nepalese adults claim to get money from their own farming, 31% claim

• wn farming to be their main source of income

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Understanding people’s lives:

Personal monthly income

2 40 10 24 No money Less than NPR6,000 NPR6,000-9,999 NPR10,000+ 2 27 71 No income Regular monthly income Irregular income

Personal monthly income (%) Regularity of income (%)

(US$1 = NPR99.21) Note: 24% did not provide a response to this question

• Only 27% claim to earn a regular income and 2% claim to earn no money
• 49% claim to earn money from selling their own produce and another 6% claim to earn

farm wages

• 22% claim to get money from another household member and 19% through remittances
• 42% reported earning less than approximately US$2 per day and 24% claim to earn

NPR10,000 or more a month

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Household income

3 10 12 16 14 10 10 11 11 3 1-2999 3000-5999 6000-9999 10000-14999 15000-19999 20000-24999 25000-34999 35000+ Don't know Refused 23 40 19 10 3 3 1 2 3 4 5 6 or more

• Most households claim to have between 1 and 3 income contributors
• Only 13% of households claim to live on less than US$2 per day
• Mean PMI is NPR 9,000 vs. mean HH monthly income of NPR 20,500

Household monthly income (%) Number of people who contribute (US$1 = NPR99.21) to household income (%)

Base: 18 years or older, weighted to Census 2011 households

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Food needs and farming problems

62 36 27 27 12 12 12 6 4 3 7 Lack of irrigation Lack of fertilisers / seed Product spoiling Drought Lack of agricultural technician Lack of land Lack of tools Selling prices Transport goods to market Not getting loans None

Farming problems experienced (Multiple response) [%] Farming households

• 77% of households are

involved in farming:

• 22% only farm
• 55% farm and do other

work

• 23% are not involved in

farming at all

• Farming in Nepal is done both to cover household food needs and earn income
• Agriculture is the biggest claimed income earning activity amongst households in Nepal
• The biggest problems experienced with farming are lack of irrigation (62%), lack of

fertilisers / seed (36%), product spoiling (27%) and drought (27%)

Base: Weighted households involved in farming

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• Low formalisation of employment, multiple sources of income – 19%

have their own business, 6% receive a government salary, 6% receive a salary from a private company

• 31% claim farming to be their main income source and 15% mainly

depend on others

• Low individual income that is variable – 42% personally earn on

average less than US$2 per day and 24% earn NPR10,000 or more a

• month. 71% claim that their income level varies from month to month.
• Multiple contributors to household income
• Farming is a key driver of income – 77% of households are involved in

farming and only 42% of these households sell (some of) their produce. The biggest problems experienced are:

─ Lack of irrigation (62%); lack of fertiliser (36%), product spoiling

(27%); drought (27%)

People’s lives: Summary

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• 1. Understanding people’s lives
• 2. Financial context
• 3. Conclusions

Contents

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Analytical framework

Total adult population = Minimum age defined by the age at which individuals can enter into a legal financial transaction in their own capacity Financially included = Adults who have/use financial products and/or services – formal and/or informal Financially excluded = Adults who do not have/use any financial products and/or services – if borrowing, they rely only on friend/family; and if saving, they save at home Formally served = Adults who have/use financial products and/or services provided by a financial institution (bank and/or non- bank) Informally served = Adults who have/use financial products and/or services which are not regulated/registered, e.g. saving clubs/groups, private money lenders

Banked = Adults who have/use financial products and/or services provided by a A, B, C or D classed-banks regulated by the central bank Served by other formal financial institutions = Adults who have/use financial products and/or services provided by registered non-bank formal financial institutions, including cooperatives, insurance companies, retail credit providers, remittance service providers

Formal Inclusion

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Financial inclusion:

Access Strand

40 21 21 18 2014 Banked Other formal (non-bank) Informal only Excluded

82% of Nepalese adults are financial included, 61% are formally included and 40% are currently banked

Banked 40% Unbanked 60%

Banking behaviour of the adult surveyed population (%)

Notes: Banked population includes all the adults that are involved in transaction, savings,

• r credit associated with class A, B, C, D class banks in Nepal.

4 56 Previously banked Never banked

Unbanked % split

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Financial inclusion:

Access Strand by region (%)

40 38 42 48 29 39 21 25 20 18 19 18 21 20 17 21 28 33 18 17 21 13 24 10 Total Eastern Central Western Mid-Western Far-Western

Banked Other formal (non-bank) Informal only Excluded

Western region has the highest formal financial inclusion and Mid-Western has the lowest

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Financial inclusion overview

61 40 44 57 18 Formally served Banked Other formal [non bank] Informal Excluded

Financial Inclusion overview [%]

Banked 9% Formal

• ther

7% Informal 21% 9% 14% 8% 14% Excluded 18%

14% of Nepalese adults use a combination of all financial services types versus 22% who are both banked and use informal financial services

Financial inclusion overlap

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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• The average income of those that have a

bank account is 1.7 times more than of those without a bank account

• 38% of those with a bank account have a

regular monthly income whilst only 20%

• f those without claim a regular monthly

income

• 63% of adults with a bank account are

aged 25-54 years

• Only 19% are under the age of 25 years

Income by bank account ownership

12 000 7 000 Currently have a bank account Currently do not have a bank account

Average income for those who have a bank account

National average income = NPR 9,000 Base: 18 years or older, weighted to adult 18+ Census 2011 population

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• 42% cannot maintain the minimum balance required to keep a bank account

Banks:

Drivers and barriers

75 45 25 12 Save Keep money safe Get credit or loan Receive salary or wages 42 33 16 9 8 7 Cannot maintain minimum balance Do not need Too far away / transport difficult Do not understand how work Financial accounts not for you Don't know 40% of surveyed adults are banked 60% of surveyed adults are unbanked

Drivers (multiple response) [%] Barriers (multiple response) [%]

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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22% of the total adults use savings and cooperatives 40% of the total adults are banked, including 11% that also use cooperatives 11% of Nepalese adults are unbanked and use cooperatives Banked only Banked and cooperative Cooperative only

• Male
• Tarai
• Younger
• Remittances main

income

• 25-39
• Higher education
• Hills
• Money from business or salary

from government

• NPR25,000+
• Female
• 40-54
• Rural – Mountain, Central
• Lower education
• Farming, piece work or

household member main income

Overlap between Banked and use Cooperatives

Banked 29% 11% Cooperatives 11%

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Savings and credit in cooperatives and savings groups

22 19 9 Cooperatives Savings in cooperatives Credit from cooperatives 29 18 8 Savings groups Saving in savings groups Credit from savings groups

22% of Nepalese adults claim to belong to a cooperative – of all Nepalese adults 19% claim saving and 9% claim borrowing with cooperatives 29% of Nepalese adults claim to belong to a savings group. 8% of Nepalese adults claim to borrow from these groups

Base: 18 years or older, weighted to adult 18+ Census 2011 population

Cooperatives use [%] Savings groups use [%]

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Savings

Mechanism % Bank 27 Cooperative 19 Savings group 18 Household member / friend 7 Jewelry / gold 7 Secret place 6

27 13 16 1 43 Banking Other formal Informal only Save at home / friends etc. only Not saving

Savings Strand [57% claim to save]

26 24 4 3 2 18 Savings Family /… Pension Sell… Govern… No plans 51 26 22 17 13 12 Living expenses Medical expenses Education fees Non medical… Retirement / old… Buy house… 51 35 16 12 5 3 Living expenses Income Never thought about it No bank account Don't need Don't want

• 40% save formally (e.g. in a bank or cooperative) and 43% do not save
• Living expenses are both the main reason claimed for saving and being

unable to save

Plan for spending in old age [%] Savings Drivers (multiple response) [%] Savings Barriers (multiple response) [%]

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Borrowing and credit

Channel % Money lender 21 Bank (including MFI) 10 Cooperative 9 Savings group 8 Family / friend 8

10 8 28 54 Banking Other formal Informal only Not borrowing

Credit Strand [46% claim to borrow]

66 65 43 40

Often spend more than have Need credit to feed family Borrow money to settle debts Embarassing to borrow money

31 20 19 14 11 9 9 9 6 Living expenses Medical… Buy house… Education /… Start / grow… Non-medical… Buy / build… Special events Farm expenses 44 10 6 2 Can pay living expenses Fear of debts High interest on borrowed money Do not believe in borrowing money

• 18% claim to borrow formally (e.g. in a bank or cooperative) and 54% do not borrow
• Living expenses are both the main reason claimed for borrowing and choosing not to borrow
• Interest rates, repayment duration and trust drive choice of place to borrow from

Attitudes to borrowing (multiple response) [%] Credit Drivers (multiple response) [%] Credit Barriers (multiple response) [%]

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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11 15 16 21 26 27 29 Household member main income Own business main income Salary wages govt / prvt. Company main income Total NPR 1-5,999 personal monthly income Farming main income Piece work main income 19 20 20 31 33 35 40 Own business main source of income Salary from

• govt. main

source of income NPR10,000 or more personal monthly income Total borrowers Don't have regular income NPR 1-5,999 personal monthly income Remittances main source of income

Borrowing and credit

Using money lenders in community (amongst total population) [%] Borrowing for living expenses (amongst those that borrow) [%]

• Those who tend to rely on remittances and have irregular and lower personal incomes are

more likely to borrow for living expenses.

• Those who tend to depend on piece work or farming for their personal incomes and have lower

personal incomes are more likely to borrow from money lenders.

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Usage and ownership of communication devices and mobile money

67% of surveyed adults own a mobile phone and 5% use public pay phones

36 1 1 1 1 1 4 6 9 16 40 0,5 0,2 26 Don't know Don't have documents No cellphone access Inconvenient hours Network unreliable Don't trust it No agents in area It is complicated Not thought about it Not interested Lack of information Unregistered user Registered user Not aware mobile money

• 5% know about mobile money, but only

about 0.7% claim to use it

• 79% claim to use a mobile phone

Note: Reasons for not using mobile money is a multiple response answer question

Mobile money use and reasons for not using [%]

Base: 18 years or older, weighted to adult 18+ Census 2011 population

Use % Own % Mobile phone 79 67 Computer 10 8 Internet 14 Email 9 Public phone 5

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Remittances

8 19 7 66 Banked Formal other Informal only No remittance usage

Remittances Strand [34% claim to send or receive]

30 8

Remittance use (%)

Receive Send 1 8 8 21 Informal agent (Hundi) Friends / family Bank Money transfer agent

Payment channels used to send and receive money[%]

77 18 6 9 72 19 Outside Nepal Urban town in Nepal Rural village in Nepal Received Sent

Destination / origin of money sent [%]

Malaysia (28%), Qatar (20%), India (18%), Saudi Arabia (15%), UAE (14%)

• 27% remit formally (e.g. via a bank or money transfer agent) and 66% do not remit
• Remittances are mostly received, primarily from Malaysia, the Gulf states and India

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Financial Access Strand (%)

85 75 74 62 54 40 38 33 30 29 27 23 20 17 14 12 3 5 23 8 10 21 23 10 39 38 7 19 34 13 43 24 2 6 2 3 9 21 20 17 8 8 15 30 31 31 16 12 10 14 1 27 27 18 19 40 23 25 51 28 15 39 27 52 Mauritius 2014 South Africa 2014 Thailand 2013 Namibia 2011 Swaziland 2014 Nepal 2014 Lesotho 2011 Nigeria 2012 Zimbabwe 2014 Kenya 2013 Malawi 2014 Rwanda 2012 Uganda 2013 Myanmar 2013 Tanzania 2013 DRC 2014 Banked Other formal (Non-bank) Informal only Financially excluded

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Gender - demographics

16 7 1 17 14 24 14 7 32 19 2 13 10 13 8 3 Illiterate Literate but formally… Pre-primary Primary Lower secondary Secondary school Upper secondary Tertiary / higher 33 8 13 15 7 6 6 30 22 9 11 14 4 3 Own farming Household member Piece work Own business Remittance s Private company… Governme nt salary… 6 35 26 24 13 52 24 10 8 13 Spouse Child Parent Sibling Other relative

Male Female Cell phone 83% 75% Avg. personal monthly income (NPR) 11,000 7,000 Household head 86% 14% Male Female

• Males have higher levels of education, personal monthly income, control over money
• 86% of households claim to be male headed
• Females main source of income is more likely from other people.

Level of education [%] Main source of income [%] Identity of HH member[%]

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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Gender – Financial behaviour

31 44 25 13 47 40 Manage HH money alone Manage HH money with

• thers

Someone else in HH manages for everyone

47 44 9 29 52 18

Full control Together with

• thers

No control

16 78 63 62 18 31 63 55 68 13 Not sure - Budget helps track money Agree - Good idea

• f interest

Agree - Adjust expenses to income Agree - Need loan to feed family Agree - Track monthly income and expenses

Borrowing % Saving % Male Female Male Female Money lender 47 41 Cooperative 17 21 17 21 Bank 15 10 30 20 Savings group 13 21 12 24 Family / friends 18 14 9 6 Secret place 4 7

45 36 19 21 20 23 16 20 Male Female

Banked Other formal (non-bank) Informal only Excluded Responsibility for household decisions [%] Control over spending own money [%] Financial capability statements [%]

Base: 18 years or older, weighted to adult 18+ Census 2011 population

Access strand by gender[%]

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61 59 15 15 Savings Credit Transactions Remittances

Drivers of “Informal Products” [%]

Note: Drivers of product usage are analysed in a multiple response fashion

50 49 49 22 14 Savings Transactions Remittances Credit Insurance

Drivers of “Other formal products” [%]

• Banking is mainly driven by

transactions and savings products

• Other formal products by savings,

transactions and remittances,

• Informal products by savings and credit

Drivers of banking, other formal and informal products

93 76 29 23 Transactions Savings Credit Remittances

Drivers of Banking Products [%]

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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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)

• Looked at overall, savings and transactions outperform the other product categories.

Informal credit and remittances use is high.

Financial inclusion:

Landscape of Access

68 66 57 41 13 49 60 24 33 13 Savings Transactional Credit Remittances Insurance

Legend Total usage Formal usage

Base: 18 years or older, weighted to adult 18+ Census 2011 population

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• 1. Understanding people’s lives
• 2. Financial context:
• 3. Conclusions

Contents

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• In terms of financial inclusion, 61% of Nepalese adults are formally

financially included and 40% banked. If cooperatives are classified as banked, the banked rate would increase to 51% of Nepalese adults

• Men have higher levels of banking and financial inclusion than women.

They also have higher levels of education and personal monthly income

• Financial inclusion is driven by formal transaction and savings
• 30% of Nepalese adults claim to receive remittances, primarily from

abroad

• 57% of Nepalese adults claim to save and 46% claim to borrow money.

Living expenses are given as both the drivers to and barriers limiting both borrowing and saving

• 11% of Nepalese adults have insurance. When they encounter risks such

as household illness, they tend to borrow money, use savings or do nothing

Summary

For more information on the FinScope Nepal:

Dr Kingstone Mutsonziwa kingstonem@finmark.org.za Tel: +27 11 318 9197 www.finscopeafrica.com