FinScope Consumer Survey Malawi 2014 LAUNCH (August 2014) October - - PowerPoint PPT Presentation

Making financial markets work for the poor

FinScope Consumer Survey Malawi 2014

LAUNCH (August 2014)

October 2014 (revised due to changes in the weights)

• 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 assess trends/changes over time (from 2008)
• To stimulate evidence-based dialogue that will ultimate lead to effective public

and private sector interventions that will increase and deepen financial inclusion

Objectives of FinScope Malawi 2014

2

Research process

3

Design Implementation Results Agreements

(SC, LPC, RH)

Questionnaire design Sampling, maps and field preparations Training of enumerators Pilot and questionnaire revision

Fieldwork

n=3005

Data management

(data entry, cleaning weighting)

Data analysis Launch and dissemination

1 2 3

SC SC SC

Methodology - overview

Respondent profile Sample and methodology Quality control and data validation

• Universe: Adult

population in Malawi

• Residents of

Malawi who are 16 years and

• lder
• Sample drawn by MCG, using

sampling framework from NSO, Representative on national, urban/rural, and regional level

• Comprehensive LISTING in 503

EAs – listing 115 913 households

• 3005 Face-to-face pen and

paper interviews ± 75 min.

• Fieldwork conducted by

Millennium (November 2013 – March 2014)

• Quality control / field

checks conducted by the Research House, Steering committee members, FinMark Trust, LPC

• Data validation against

census data and FS Malawi 2008

• Weighting of the data

conducted by Dr. Ariane Neethling

4

Contents

• 1. Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

5

Understanding peoples’ lives:

Demographics

Total adult (16+) population 8 million

• 81% reside in rural areas
• 40% are under 30 years of age
• 76% have primary education or

less

Urban/rural Gender Age Education

4 23 17 14 11 14 9 8

16 - 17 yrs 18 - 24 yrs 25 - 30 yrs 31 - 35 yrs 36 - 40 yrs 41 - 50 yrs 51 - 60 yrs 61 plus yrs

15 30 31 11 10 2 1

No formal education Primary standard 1-5 Primary standard 6-8 Secondary 1-2 Secondary 3-4 Vocational training institute University or other higher education 6

43 57

Male Female

15 4 81

Urban Peri-urban Rural

2014 2008

Number of individuals with access to piped water (inside dwelling or yard/plot)

8.7 % (=528 000)

Number of individuals with electricity (for cooking or lighting)

8.8% (=532 000)

Understanding peoples’ lives:

Access to Infrastructure

Number of individuals with access to piped water (inside dwelling or yard/plot)

9.9 % (=792 000)

Number of individuals with electricity (for cooking or lighting)

9.5% (=762 000)

7

8

Understanding peoples’ lives:

Ownership of assets

Increased ownership in:

• Cell phone 51%
• Bed 38%
• TV sets 15%
• Lounge suite 20%

2 3 3 2 3 5 5 12 15 33 50 65 32 31 2 2 3 3 3 4 6 15 20 38 49 53 51 72

Plough Donkey or ox drawn cart Electric device to heat water Motorcycle Car, truck or other vehicle Electric or gascoooker or hotplate Refrigerator or deep freezer TV set Lounge suite or sofa Bed Bicycle Radio Cell phone Torch 2014 2008

Understanding peoples’ lives:

Income / livelihoods

• 90% of households are involved in farming – 66% of them farm for consumption mainly.

Tobacco, maize and groundnuts bring most income for the 34% households that sell their produce

• Farming remains one of the most important source of income (46%)
• Only 8% receive a regular salary
• 45% personally earn less than MK 10 000 per month (US$23.4)
• 28% (about 1 million) house holds own any kind of livestock – of which 67% would sell their

livestock to meet their expenses

Sources of income Personal monthly income (US$1 = MK420) 10 45 9 8 2 1 25

No income MK 1 - 10 000 MK 10 001 - 20 000 MK 20 001 - 50 000 MK 50 001 - 250 000 MK 250 001 and more Don't know/refused

9

8 8 23 26 45 46

Other Wages or salary Own business Money from others Ganyu (Piecework) Farming

Understanding peoples’ lives:

Expenditure and payments

10

6 4 8 8 11 16 15 17 26 45 90

Other Education Clothes Loan repayments Medication Business expenses Savings/insurance instalments Household expenses e.g. rent, bills Travelling expense Communication Food and grocery

Monthly expenditure

In 2008 we asked the largest expenses in a normal month, which is not entirely comparable to 2014:

• 1. Food and grocery

93%

• 2. Expenses, e.g. rent, bills

14%

• 3. Medical expenses

12%

• 4. Savings

7%

• 5. Business

4%

• 6. Communication (airtime)

2%

Base: 18 years or older

• More changes in the population profile:
• Decrease in the rural population from 84% to 81%
• Increase in female population from 52% to 57%
• Small improvements in education: percentage of people with

formal education increased from 80% to 85%

• Small improvements in access to infrastructure:
• Access to piped water increased from 8.7% to 9.9%
• Access to electricity (for cooking or lighting) increased

from 8.8% to 9.5%

• Average time taken to reach a bank branch reduced from

83 minutes to 77 minutes

• Farming remains the most important source of income

Summary

11

Contents

1.

Understanding people’s lives: Have people’s lives changed?

• 2. Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

57 58 64 68 67 71 78 80 87 88

Personal budget Savings account ATM or Money Card or cash card Current account or cheque account Life insurance Interest rate Collateral Grace period Credit card Debit card

Unrecognised financial terms Desired financial education

46 48 51 51 52 53 54 54 59 67 68 72

How to transfer airtime from

• ne's cell phone to another

How to se the internet for banking How to draw up and manage a personal budget How to use your cell phone for banking How to use an ATM to transfer or withdraw money How to use mobile money How to insure your valuable things against losses How to insure your life to benefit your family when… How interest rates work How credit works How to save your money How to keep your money safe 13

Financial capability

• Accessing information

2 5 3 3 4 2 6 9 9 26 38

Does not know Other Someone you trust in the community (e.g. Teacher) Financial adviser Any formal financial institution One of your children Other family members A friend Parent and/or grandparent Your spouse or partner Would not ask anyone for help

Financial capability

• Accessing information

52% of those who get financial advice on money management

• btain advice

from family/friend

31 38 8 23

Respondent make decision alone Respondent and partner make decision Respondent and other family members make decision Respondent do not make decision

Where do people usually get financial advice Responsibility for financial decision making

14

15

47 37 17 Plan/budget on how to spend your money Keep to the plan you make for using the money Keep records of your spending

65% do not keep to plan because of low income

Financial capability – Managing money

20 40 36 4 Always Often Sometimes Never

Frequency at which people run out of money

3 4 10 12 71

Other Unplanned nice to have expenses, e.g. new cloths Unexpected events, e.g. funeral Fluctuating/unreli able income Insufficient/low income

Reasons why people run out

• f money (96%)

Planning and tracking

Someone is financial incapable if he/she can not plan and manage money, but Malawi would be an exception due to low, inconsistence income. Malawians use their savings as the coping strategy when they run out of money.

16

13 2 2 2 3 5 5 8 11 13 21 28

Other Death or illness of livestock Loss of land or access to land Increase in household size Death of family member Natural disaster Loss of employment Death of income earner Rise in prices Drought Theft Illness within the household 2 2 8 12 37 39 None of the above

Engagement Birth of a child Wedding Funeral Illness or medical emergency for self or family member

Main risks to livelihoods Most costly events

Medical expenses are also a main reason for savings (13%) and borrowing (12%)

Financial capability – Planning ahead

20% (1.6 million) individuals are from households that experienced 1 or more deaths in the past year prior to the survey

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

• 3. Financial inclusion overview: Access Strands, total product

uptake, Landscape of Access – what has changed since 2008? 4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

17

Defining financial inclusion

Total adult population 16 years and older in Malawi 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. Chipereganyu or Katapila. Banked = have/use financial products/ services provided by a bank, regulated by the Reserve Bank of Malawi. Served by other formal financial institutions = have/use financial products/services provided by

• ther regulated (non-bank) financial institutions, e.g.

a loan by a micro-finance institution or insurance products.

18

Financial inclusion:

“Slightly more people have been brought into banking (and/or formally served) in 2014”

2008 2014

55 25 15 19 26

Excluded Informal Other formal (non- bank) Banked Formally served

19

51 25 18 27 34

Excluded Informal Other formal (non- bank) Banked Formally served

• Banking is up by 8 percentage points and continues to be driven by the uptake of

transactional products

• Uptake of other formal non-bank products is up by 3 percentage points and

continues to be driven by remittance

• Informal financial products/mechanisms remain stable being driven by Village

Savings and Loan Groups

• Financial exclusion has been reduced by 4 percentage points

Base: 18 years or older

Banked 11.8 Other formal (non-bank) 5.0 Informal 14.8 Excluded 51 4.5 3.4 2.2 7.2

21

Overlaps:

“Consumers generally use a combination of financial products and services to meet their financial needs

• Only 12% of adults rely exclusively
• n banking services
• 3% use a combination of formal and

informal mechanisms to manage their financial needs, thus indicating that their needs are not fully met by the formal sector alone

• 15% (1.1 million) of the adult

population ONLY rely on informal mechanisms such as Village Savings and Loans groups to save or borrow money

Base: 18 years or older

Financial inclusion:

Access Strand

22

19 27 7 7 19 15 55 51 2008 2014

Banked Other formal (non-bank) Informal only Excluded

Financial inclusion has increased from 45% (2008) to 49% (2014)

Base: 18 years or older

Financial inclusion:

Access Strands 2014 by location and gender

By location By gender

23

23 31 7 7 16 13 54 49 Female Male Banked Other formal (non-bank) Informal only Excluded 21 42 54 7 10 9 16 6 6 56 42 31 Rural Peri-urban Urban Banked Other formal (non-bank) Informal only Excluded

Financial inclusion:

Access Strands 2014 by location and gender

24

By income source

16 24 29 34 67 7 7 7 8 9 17 17 12 18 7 60 52 52 40 17 Ganyu (Piecework) Farming Money from others Own business Receive wages or salary Banked Other formal (non-bank) Informal only Excluded

Financial inclusion:

Access Strand across the region

12 14 14 24 27 38 41 44 62 75 1 43 9 14 7 23 18 6 8 4 9 16 14 22 15 20 8 13 3 5 78 27 63 40 51 19 33 37 27 16

Mozambique 2009 Tanzania 2013 Zambia 2009 Zimbabwe 2011 Malawi 2014 Lesotho 2011 Botswana 2009 Swaziland 2011 Namibia 2011 South Africa 2013

Banked Other formal (non-bank) Informal only Excluded

26

• Fully served: Those who have at least more than two landscape

products/services portfolio (Transaction products or savings account

• r credit or insurance)
• Partially served: Have only one or two landscape products/services

portfolio

Financial inclusion:

Depth Strand - 88% of the included population are thinly served

27

6 11 29 3 51

More than 2 landscape accounts 2 landscape accounts 1 lanscape account Indirectly banked only Excuded

Fully served (6%) Partially served (43%) Excluded (51%)

Financial inclusion:

Landscape of Access

(of those with any financial product)

28

2008 2014

35 38 57 4 36 Transactional Credit Savings Insurance Remittance 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 secrete place) 34 27 53 6 23 Transactional Credit Savings Insurance Remittance

Base: 18 years or older

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

• 4. Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

29

Banking:

How many adults are banked?

2008 2014

• No. of banked adults in

Malawi 1 153 809 (19%) 2 137 579 (27%)

• No. of previously

banked adults in Malawi 165 086

(3%)

469 003

(6%)

• No. of never banked

adults in Malawi 4 734 251

(78%)

5 418 470

(67%)

• No. of unbanked adults

in Malawi 4 899 337

(81%)

5 887 473 (73%) Total adult population 6 053 146 8 025 052 Indirect banking: 24% (520 thousand)

• f banked adults

make use of bank accounts that are not in their name, and of those, 21% (108 thousand) pay a fee to use someone else's bank account

30

Banking:

Where is the growth?

31

5 3 12 1 1 12 3 23 55 1 1 2 1 3 4 3 14 19 40

Business loan Agricultural loan Cheque book Personal or consumer loan Debit Card (Electron/ MasterCard / Visa) Savings account - Fixed Term Deposit / Call Account Malswitch Card / Cash Card Pay using Makwacha Card Receive income into bank account Savings account with ATM Card

2014 2008 Looking at the total numbers, uptake of the following products increased:

• Saving account with ATM:

640 thousand – 845 thousand

• Receive income into bank

account: 273 thousand – 414 thousand

• The Makwacha card PIN

protected online debit card allowed 303 thousand cardholders to buy goods at the merchants stores

• 36 thousand individuals had

Malswitch Card in 2008 compared to 216 thousand in 2014

Base: 18 years or older

Banking:

Drivers and barriers 27% of adults are banked 73% of adults are not banked

32

9 2 4 7 9 10 10 13 15 16 Other To access a loan for a business To transfer money to others To deposit money from a business/farming To keep money from the temptation to spend it To save for something you want to buy or do To save for something in case

• f emergency

To receive money from others who deposit into the account To receive salary or deposit money from an employer To keep money safe from theft 9

2 2 3 4 4 6 24 65 Other Doesn't know Bank accounts are not for people like me Banks are too far away Cannot maintain the minimum balance Does not know how to apply Does not understand how banks work Iinsufficient balance after expenses Insufficient or no money coming it to justify it

TOTAL 2008 TOTAL 2014 36:13 32:41 45:14 45:96 85:50 62:31

• 70:64

83 :28 76: 71 27:06

• Infrastructure accessibility

“Average time to reach a bank branch has been reduced since 2008”

33

Shortest

1 2 3 4 5 6 7

Median time it takes to get to destination

(figures are given in minutes and seconds) Nearest market Private money lender Office of any financial institution Post office Bank branch Nearest place to buy airtime

Longest

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

• 5. Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

34

Savings and investments:

Less people manage to save, but people opting to save money through VSL and

• ther informal saving groups rather than saving at home and putting money

into livestock/farming and business

2008 2014

35

12 5 17 23 57 Bank products Other formal (non-bank) Informal Save at home Not saving

Savings Strand

14 12 3 3 17 13 40 15 26 57 2008 2014 Bank products Other formal Informal Save at home only Not saving

Base: 18 years or older

14 5 20 48 26 Bank products Other formal (non-bank) Informal Save at home Not saving

• Saving through banks is down by 2 percentage points
• Overall uptake of informal financial products/mechanisms (savings group) is up: FinScope 2014

indicates that there are 1.3 million individuals who use Village Savings and Loans/membership

• rganisation/informal savings only
• Putting money into livestock, farming, business to get profit has declined in 2014 compared to

2008 – DO WE KNOW WHY?

36

Savings and investments:

Where is the growth/decline in the informal space?

Saving mechanisms 2008 2014 Savings with employer 10 598 46 578 Savings with a membership organisation 13 170 61 791 Membership of savings and credit group e.g. ROSCA 12 990 30 746 Membership of an informal savings only 38 727 155 438 Village savings and loan n/a 1 162 943 Investing mechanisms 2008 2014 Investment into property 304 192 315 959 Land including farming 522 145 569 999 Cattle and other livestock 1 455 768 776 834 Farming/fishing equipment 1 728 723 354 720 Investment in business 1 297 089 511 557 Buying agricultural crops from farmers 346 055 181 212

Savings and investments:

“Saving purpose is rather short-term driven”

43% of adults save 57% of adults do not save

37

3 1 1 4 6 14 71 Other Don't know Saving is for rich people Prefer to spend money when you have it All money is put into household pot Do not have any income No money left over after living expenses

7 2 2 2 2 3 5 5 10 13 14 16 18 41

Other Funeral expenses Buying land Provide for my family when I die Education Buying household appliances Holiday Buying or building a dwelling Starting or expanding a business Medical expenses/emergency Emergency other than medical Just to keep it safe Farming expenses Living expenses

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

• 6. Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

38

Borrowing and credit:

“Borrowing from formal credit providers has slightly declined – is credit supply or demand (credit appetite) an issue?”

2008 2014

39

1 3 16 17 71 Bank products Other formal (non-bank) Informal Family/friends No borrowing 5 4 7 9 80 Bank products Other formal (non-bank) Informal Family/friends Not borrowing 5 1 2 3 6 15 7 10 80 71 2008 2014 Bank products Other formal Informal Family/friends only Not borrowing

Credit Strand

586 thousand individuals currently borrow from VSL groups

Base: 18 years or older

Borrowing and credit:

“Reasons for borrowing and savings are fairly similar”

29% have borrowing/credit products 71% do not borrow

41

4 2 2 2 5 5 11 25 49 Other Do not believe in borrowing money Do not have security or collateral Tried, but have been refused Do not know where to borrow money from Had no one to borrow from Can pay living expenses with what you have Would not be able to pay back the money Fear of debts 6 2 3 3

4 7 7 12 12 16 49 Other Buying household appliances Funeral expenses Buying farming equipment For another person to use An emergency Education Medical expenses Starting or expanding business Farming expenses Living expenses

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

• 7. Insurance and risk management: Did medical insurance

remain its importance? 8.

Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

42

Insurance and risk management:

‘Insurance sector in Malawi continues to be driven by life cover, motor insurance and medical scheme’

43

136 thousand insured individuals 163 thousand insured individuals

2% of adults have insurance

Uptake of insurance products is driven by:

• Life insurance

41%

• Medical insurance scheme

39%

• Motor vehicle insurance

35%

• Funeral insurance

4%

98% of adults do not have any kind of

financial product covering risk Main barrier to the uptake of insurance:

• Lack of awareness/ knowledge

(have not heard about it, don’t know where/how to get it)

• Affordability

Note: Insurance users base sizes for both 2008 & 2014 too small for reliability analyses

Base: 18 years or older

3 2 97 98 2008 2014 Formal insurance Not insured

Risk management:

Planning for expected major events

44

47% of Malawians expect major expenses or events in the next 12 months and of

those, 33% are planning to pay for it through savings

19 1 1 1 1 9 13 20 36

Other (SPECIFY) Rely on community Borrow from other formal financial institution Borrow from a money lender in the community Borrow money from a savings group Rely on money from family and friends Sell something to cover the costs Don't know (don't have a plan) Savings

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

• 8. Remittance: Who is sending/receiving money?

9.

Mobile money

• 10. Conclusions and recommendations

45

Remittances:

• 16% remitted using formal mechanism compared to 10% in 2008
• 613 thousand receive money from outside Malawi sources
• 19% (1.5 million down from 1.6 million in 2008) of adults in Malawi either sent
• r received money to or from family members, parents, and children, usually on

a monthly basis

• 43% (657 thousand) of adults who sent or received money to or from people

living outside of Malawi. 642 400 individuals received money from people living

• utside of Malawi 12 months prior the FS Malawi 2014 survey

46

3 8 2 16 73 8 11 2 3 81 Bank Other formal (non- bank) Informal Relative/friend Do not remit 2008 2014

Remittance Strand 2014

Base: 18 years or older

investments by migrant workers? 2. What about low-cost cross-boarder remittances? 8 8 2 1 81 Bank Other formal (non-bank) Informal Relative/friend Do not remit

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

• 9. Mobile money
• 10. Conclusions and recommendations

47

Mobile money

About 72% individuals have access to a cell phone (55 own cell phone and 20 have access to cell phone)

20% (1.6 million) know about mobile money, but only 3% (263 thousand) actually use it

• either as registered user (2%) or using another person’s mobile account (1%)-

48

6 4 11 14 27 37 15 80

Other No mobile money dealers in my area Have not thought of it/No reasons Affordability Don't have sim card/cell phone Don't have enough information Use Mobile Money Not aware of mobile money

Of those who know about Mobile Money (1.6 m):

• 1. 17% use Mobile Money

(263 705)

• 2. 37% do not have

adequate information on usage

• 3. 27% don’t have access to

mobile phone

Mobile money

Transactions normally conducted

49

• Similar to that of most of other developing

countries, Mobile Money users in Malawi use it for remote payments (purchase airtime 42%) and remittances

1 1 2 7 17 18 23 30 42 School Fees Payment Utility payments (Water, Power, TV) Currently not using it Cash Transfer Cash deposits To send money Receive money Cash withdrawals Purchase of air time

Contents

1.

Understanding people’s lives: Have people’s lives changed?

2.

Financial capability

3.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access – what has changed since 2008?

4.

Banking: Has it increased?

5.

Savings and investments: Do people manage to save?

6.

Borrowing and credit: Has the usage in credit increased?

7.

Insurance and risk management: Did medical insurance remain its importance?

8.

Remittance: Who is sending/receiving money?

9.

Mobile money

10.Conclusions/Recommendation

50

• 1. Financial inclusion
• The financially included adults increased from 45% in 2008 to

49% in 2014

• Banked population went up by 8% points – the growth has been

driven by transaction products [i.e., both from policy implementation and innovative products]

• Other formal (non-bank) increased from 15% to 18% - driven by

remittances, savings and mobile money

• Saving groups are very popular since 2008, however the growth

in overall savings has been slowed by the decline in investing through livestock, farming and business

• The excluded population has been reduced, the exclusion rate

however remain stubbornly high at 51%

Key headline findings/conclusion.. (cont. )

52

• 2. Landscape of Access
• The financial landscape (included population) of Malawi is

driven by savings, i.e. Malawians save more than they borrow, however, savings through banks declined slightly

• Borrowing from the formal financial institution (e.g. banks and

MFIs) has dropped

• The insurance sector in Malawi continues to be small
• Remittances in Malawi saw reforms – remitting through formal

products/services went up from 10% to 16%. Sending money through a relative and\or friend is reduced significantly

Key headline findings/conclusion.. (cont. )

53

• 3. Impact of informal mechanism
• About 1.3 million adults in Malawi reported that they use Village

Savings Loan Association

• With a split of 1.2 million saving through VSLA, while 586

thousand borrow from VSLA (overlaps possible)

• The majority of those who are currently borrowing, took their

loans from the VSLA, which is an attempt to overcome the difficulties of offering credit to the rural poor by building on a ROSCA model to create groups of people who can pool their savings in order to have a source of lending

Key headline findings/conclusion.. (cont. )

54

• 4. Mobile Money
• Mobile money has a strong potential to become an enabler for

financial inclusion in Malawi

• Following various programs initiated by some of the donors and

the launch of the mobile money by the cell phone communication providers, the following has been noted:

• High level of the unawareness of the mobile money services
• An average of 77 minutes to the nearest bank
• Minimum usage by those who are aware of mobile money
• Lack of enough product information by those who are aware of

mobile money but not using it

• However, the more enabling regulatory environment and high

penetration of cell phones access (72%) presents huge opportunity too empower large segments of cash based society in Malawi

Key headline findings/conclusion.. (cont. )

55

• 4. Livelihoods
• Farming remains the main source of income, followed by ganyu

(peace work)

• This could be a poverty issue as ganyu would be a coping strategy

for most of poor individuals in the crucial periods between food stores running out and the next harvest

• These livelihoods (farming & Ganyu) are often related to low levels
• f income - 45% adults in Malawi earn less MK10 000 a month
• With this picture, the majority of Malawians receives small,

inconsistent and irregular incomes

• 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 mechanism

• Malawian save and borrow for similar reasons, i.e., living expenses,

farming and medical expenses

Key headline findings/conclusion.. (cont. )

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• 5. Financial literacy
• The majority of adult Malawians do not have the knowledge of

most of the financial terms used by the financial institution

• The findings show that adult Malawian would like to know more

(desired financial education) about ‘keeping money safe; savings and credit’

• There is a ‘gap’ however, while there is lack of enough

knowledge on financial term used and huge desire for financial education – most people do not seek advice to manage their

• money. Of those who seek financial advice, majority depend on

the advice from family members and friends

• Seeking of financial advice from the financial institutions and

financial advisers is notably low

• Overall low levels of financial capability

Key headline findings/conclusion.. (cont. )

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1. Continued enabling regulatory environment 2. Mobile money NOT only to transact but also to save 3. Remittances to support vulnerable dependents 4. Insurance to better manage impact of risks 5. Deepening bank reach to better meet needs 6. Reduce credit costs and educate about good credit for developmental purposes 7. Customer education

Financial Inclusion Priorities

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www.finmark.org.za

Thank you

Millennium Consulting Group FinMark Trust

For more information on FinScope Consumer Survey Malawi 2014 please contact:

Paul Nkhoma paul.mcg@africa-online.net Mr Jabulani Khumalo jabulanik@finmark.org.za Tel: +27 11 315 9197 www.finscopeafrica.com

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