FinScope Consumer Survey DRC 2014 LAUNCH PRESENTATION 26 March - - PowerPoint PPT Presentation

Making financial markets work for the poor

FinScope Consumer Survey DRC 2014

LAUNCH PRESENTATION

26 March 2015 Kinshasa, DRC

• 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 ultimate lead to effective public

and private sector interventions that will increase and deepen financial inclusion

Objectives of FinScope DRC 2014

2

Research process

3

Design Implementation Results Agreements

(RH)

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

Fieldwork

n=5,000

Data management

(data entry, cleaning, weighting)

Data analysis Launch and dissemination

1 2 3

SC SC SC

Background

Context of financial inclusion in DRC

• The FinScope Survey is part of the broader Making Access Possible

(MAP) process undertaken together with UNCDF in the Democratic Republic of Congo (DRC).

• The FinScope survey in DRC will address the information needs that

would enable the country to develop evidence-based policies and regulations which will help extend the reach of financial services in the DRC.

• FinScope DRC 2014 has been conducted in conjunction with the Ministry
• f Finance, the Central Bank and the Institute of National Statistics (INS)

in DRC. The process has been approved by the Government via the Ministry of Finance and has their full support.

4

Sampling and Methodology

Respondent profile Coverage and methodology Sample and fieldwork validation

• Universe: Adult

population in selected survey areas of DRC

• DRC residents 15 years

and older

• Fieldwork conducted from

May to July 2014

• Questionnaire translated

into French

• 5 000 interviews conducted

by Target Research and Consulting

• Sample designed by

AfricaScope

• Quality control by Frontline
• Representative sample

at Capital, peri-urban and rural levels

• Covered areas of

Central Bank activity

• Sample drawn

proportional to population size

• Survey data weighted

to adult population of survey areas

Contents

• 1. Understanding people’s lives

2.

Payments: Banking, MFIs, SACCOs, remittances and mobile money

3.

Savings and investments: Do people manage to save?

4.

Borrowing and credit

5.

Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

7.

Financial capability

8.

Conclusions and recommendations

Introduction and context

• Although enjoying GDP growth of 8,5% in 2013 (IMF), DRC is classified as a low income

country

• Key poverty indicators highlight that DRC is a country in severe poverty:
• Gross National Income (GNI) per capital of $444 (2013) (HDI)
• 7 out of 10 households are classified as poor and 46% of the population in severe poverty (UNDP)
• Agriculture employs over 71% of the total population, but 73% of the population is constantly affected by food

insecurity (BCC, 2012)

• Childhood mortality (under 5 years) of 158 per 1,ooo (MICS 2010)
• Ranked 186 out of 187 countries on the overall Human Development Index (2013)
• Only 18,000 individuals registered individual tax payers in the top tax bracket and only 69,000

registered in the middle income tax bracket

• Low levels of financial inclusion
• Total banking service use estimated to be 5.7% (BCC 2012)
• 23 MFIs and 126 SACCOs operate in DRC (BCC 2012)
• In June 2014, BCC recorded total bank loans of US$2bn, of which $584m (+/- 30%) is given to private
• households. Given the banking rate, this would mean that banking loans have to be concentrated

amongst the proportionately fewer banked wealthiest private households that actually have bank loans.

• Cash-based society - 76% of household decision-makers are remunerated in cash and only 1.3% make

utility payments at a bank (GSMA 2013)

• DRC has a strong network of local and international remittance companies

7

Understanding people’s lives:

Demographics

Gender Age Education

8 18 27 18 18 10

15-17 18-24 25-34 35-44 45-59 60+

10 31 48 11

No formal education Primary school or less High school education University or higher 8

51 49

Male Female

Base: 15 years or older

9

Understanding people's lives:

Satisfaction with life

23 44 47 85 73 49 50 10 4 7 3 5

HH money improved in past year Up to government to provide for family Happy with education Life will be better in 2 years

Agree Disagree Not applicable

Note: Not applicable responses not shown

8 12 14 38 42 35 31 28 20 22 18 26 1 5

Skipped a meal Went without medicine Unable to send children to school

Often Sometimes Rarely Never Don't know

In the past 12 months:

Base: 15 years or older

Possession of documentation

• Other than elector’s card, a low possession of documentation. Is this a barrier to

financial access?

10 77 8 6 4 3 3 2 16 Elector's card Proof of residence Proof of income Passport ID equivalent Driver's license Pupil card None of these

Possession of documentation in own name [%]

Base: 15 years or older

Household dwelling ownership and type of construction materials used

68 53 62 83 22 39 23 5 10 8 15 12 Total Capital Peri-urban Rural

Dwelling ownership [%]

Owner Tenant Free

Dwelling ownership higher in Rural [83%] than Urban regions [53%]

11

Base: 15 years or older

33 15 48 48 24 47 12 4 14 17 21 10 9 6 13 11 8 1 3 16 6 1 1 11 5 10 2 Total Capital Peri-urban Rural

Main type of wall construction materials used[%]

Brick adobe Cement block Baked brick Wood Plant / mats Beaten earth Tarpauling / cardboard sheets

39 27 7 6 4 Radio TV Newspapers Internet Magazines

Total

12

Understanding people's lives:

Access to infrastucture and media channel use in the past month

Base: 15 years or older

Top 3 main lighting sources: Flashlight 41% Electricity 21% Oil lamp 19% % of individuals with access to latrine / flush toilet 31 % Top 3 main water sources: Not equipped 19% Equipped 17% Service valve 15%

81 57 51 42 34 21 20 17 15 13 12 8 8 6 6 6 6 5 5 Bed/Mattress Radio Mobile Phone Lamp/floor lamp Television Video recorder / CD-DVD Player Bicycle Wardrobe/Closet Fan Stove/Portable stove Refrigerator / Freezer Chest Generator / Solar pannel Motorcycle / Motorbike Sewing machine Desktop or Laptop Satellite Dish / Decoder Wheelbarrow Hi-fi or sound system Photo Camera / Video Camera

13

Understanding people's lives:

Household ownership of assets

Base: 15 years or older

41 33 24 15 4 15 6 2 1 6 4 8 6 32 21 12 8 7 1 4 3 5 2 4 Farming / fishing Own business Money from parent / other family Money from husband, wife / partner Money from friend Selling things on the street Likelemba / informal savings group Rent Providing interest on loans Job with government Job with company Job with individual person Piece job Do not get money

Income generating activities [%]

Income generating activity Main source of income 4 13 16 20 15 11 21 No income Less than CDF8.999 CDF9.000-CDF26.999 CDF27.000 - CDF89.999 CDF90.000-CDF179.999 CDF180.000 + Don't know/refused

Understanding people's lives:

Income / livelihoods

Personal monthly income [%] (US$1 = CDF925)

14

Base: 15 years or older

Understanding people's lives:

Income segments

15

7 21 7 9 21 32 4 Formal employment Business owner Informal employment Sell to neighbours / on street Depend on others Farming No money

Main Income generating activities [%]

Base: 15 years or older

Estimated median reported income (CDF) CDF90.000 CDF85.000 CDF70.000 CDF48.000 CDF48.000 CDF25.000

Median monthly income estimate based

• n those that claim to know their

income and a proportion within the appropriate income band

Food needs and farming problems

16

All 19% Some 79% None 2%

Farming coverage of food needs [%]

24 18 14 13 10 7 4 2 4 Lack of tools What to grow Drought Product spoiling Selling prices Not enough land Not getting loans Land conflicts None

Farming problems experienced [%]

Base: 15 years or older in households involved in farming

People in DRC are primarily farming to eat When it comes to household involvement in farming, 55% of household are involved in farming: 26% only farm, 29% farm and do other work and 45% are not involved in farming at all.

• Of the 74% of households that farm, 18% farm mostly for their own consumption, 76% both

to sell and consume and 6% mostly to sell

Consumption

• nly

18% Sell 82%

All 48% Some 51% None 1% Farming coverage of food needs [%]

Involvement in farming

17

85 69 61 53 25 12 9 6 41 32 11 2 6 Tubers and root crops Beans, pulses, peanuts Cereals (maize etc.) Vegetables Fruits Sugar cane Oil palm Beverage crop (tea etc.) Poultry Goat / sheep Pigs Fishing Meat cattle

Base: 15 years or older in households involved in farming

Crops farmed [%] Crops farmed [%]

All 13% Some 85% None 2% Farming coverage of food needs [%]

76 6 Consume and sell Mostly sell

93 79 77 51 38 21 20 8 46 25 22 10 4 Tubers and root crops Beans, pulses, peanuts Cereals (maize etc.) Vegetables Fruits Sugar cane Oil palm Beverage crop (tea etc.) Poultry Goat / sheep Pigs Fishing Meat cattle

• Of the 74% of households that farm, 18% farm mostly for their own consumption, 76% both

to sell and consume and 6% mostly to sell

Consumption

• nly

18% Sell 82%

51 22 8 5 3 3 2 2 47 17 Sell crops and use money Other income sources Sell livestock Collect from nature and sell Do piece work Sell animal byproducts Use savings Borrow friends / family Don't - make do Do not use inputs 17 35 2 4 3 3 2 1 34 28 Sell crops and use money Other income sources Sell livestock Collect from nature and sell Do piece work Sell animal byproducts Use savings Borrow friends / family Don't - make do Do not use inputs

Farm inputs finance sources [%]

Involvement in farming

18

Base: 15 years or older in households involved in farming

Farm inputs finance sources [%]

Access to facilities

• Households do not use or know the duration to many points of commercial

facilities, particularly those that are part of formal franchises rather than localised places

19

73 64 53 58 48 57 40 37 30 28 85 82 80 77 74 72 64 64 61 61

General convenience store Pharmacy Local clinic Informal market Internet café Public Transport Petrol station ATM Bank Supermarket

Within 30 min Within 1 hour

FROM MOST TO LEAST ACCESSIBLE

Base: 15 years or older

Time taken amongst those who use or know Don’t know / don’t use [%]

11 12 6 12 66 23 59 74 66 61

17 8 8 10 16 77

None of these Solidarity groups Tribal / ethnic associations Neighbourhood associations Likelemba / informal savings group Church or other religious group

5 1 2 7 6 14 18 37 51 76

No-one Banque lambert / moneylender MFI or SACCO Likelemba / informal savings group Community based

• rganisation

Children Other persons Church / religious / solidarity group Friends Parents or other family

Community membership and assistance

Group membership [%] Where would people go for financial advice or assistance [%]

20

Base: 15 years or older

There is very low membership of informal financial groups. Congolese would mostly seek financial advice or assistance from family

• r neighbours. Note the

¾ agree they can rely on neighbours for help and 3 in 5 agree they rely on church for help

• DRC has infrastructure and livelihood vulnerability challenges. This is

borne out through

• Only 1 in 4 have electricity and 1 in 3 have a flush or latrine toilet in

their household.

• Only 30% of adults in surveyed areas are within half an hour of a

bank

• 2 in 5 adults in surveyed areas have not attained high school

education

• The potential lack of formal institutions or lack of trust in such places is

displayed through the very low percentages of people who would seek

• ut such places for financial advice.
• Rather family, neighbours and religious groups are key safety nets used

for financial and other support

People’s lives Summary

21

• Fewer than 1 in 4 adults in surveyed areas agree that the household

money situation has improved in the past year

• 53% adults in surveyed areas claim to earn less than US$100 a month

and a further 1 in 5 did not know or refused to give their income

• There is low formalisation of employment – 1 in 3 claim farming

(predominantly subsistence) to be their main income source, a further 1 in 5 mainly depend on others and a further 1 in 5 claim business (usually informal) income as main income source

• 55% of households are involved in farming and 82% of these households

sell (some of) their produce but this is on a marginal level as only about a half claim to actively finance farm inputs such as seeds, implements and

• fertiliser. Furthermore the biggest problems experienced are:
• Lack of tools (24%)
• What to grow (18%)
• The main produce farmed are basic foodstuffs like tubers and root crops,

beans and pulses and cereals

People’s lives Summary (continued)

22

Contents

1.

Understanding people’s lives

• 2. Financial accounts: Banking, MFIs , SACCOs, remittances and

mobile money 3.

Savings and investments: Do people manage to save?

4.

Borrowing and credit

5.

Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

7.

Financial capability

8.

Conclusions and recommendations

23

Defining financial inclusion

Total adult surveyed population 15 years and older in DRC 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. Likelemba, Banque lambert. Banked = have/use financial products/ services provided by a bank, regulated by the Regulatory Authorities of DRC. 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.

24

Banking behaviour of the adult surveyed population

• 12% of surveyed adults are currently banked
• About 2% of the currently unbanked surveyed population were previously

banked, while the rest have never been banked

Banked 12% Unbanked 88%

Banking behaviour of the adult surveyed population [%]

2 86 Previously banked Never banked

%

25

Financial transactions:

What drives the 3% with any kind of financial account and what transactions have they done in the past 3 months?

26

12 28 42 46

Pay bills through bank account Non-cash transactions Do banking in bank branch Got cash from ATM

Base: Have Financial Account 15 years or older

Note that non-cash transactions are very low and banking in a bank branch is more frequent i.e. monthly activity Primarily EFTs or debit orders 75 50 33 22 13 To save To keep money safe Get salary or wages Get credit or loan Make payments or get money

Drivers [%] Transactions conducted in past 3 months [%]

Banks:

Drivers and barriers 12% of surveyed adults are banked 88% of surveyed adults are not banked

27

48 30 23 18 12 12 10 10 8 5 5 Unaware of any bank Not enough money for bank account Don't have regular income Don't have money to save Don't have job Earn too little Don't understand how works Don't know how to open account Bank too far Prefer cash Don't know 73 60 55 36 36 33 32 Money safe from theft Trust banks with money Employers deposit salary Helps to access loans Safe / easy way to receive money Safe/easy way to send money Interest on savings

Drivers [%] Barriers [%]

52% of unbanked surveyed adults in DRC are aware of banks but don’t use them In addition to awareness, limited income is a key barrier for the unbanked Interestingly this group would trust banks with their money

MFIs:

Drivers and barriers 4% of surveyed adults claim use of MFI 96% of surveyed adults do not use MFIs

28

76 17 10 8 4 4 3 3 3 3 Unaware of any MFI Don’t know - accounts, convenience, fees Not enough money to open account NOT trust with money No money to save Don't have regular income Don't know how to open account Don't need MFI too far MFI unreliable 22 21 12 9 9 52 13 Helps get access to loans Money safe from theft Interest on savings Salaries deposited Safe way to receive money Don't know None

Drivers [%] Barriers [%]

24% of MFI non- user surveyed adults in DRC are aware of MFIs but don’t use them Although income and trust issues feature, awareness

• f MFI and its

workings are by far the biggest barrier to MFI use, even amongst those who have heard of and use MFIs

SACCOs:

Drivers and barriers 5% of surveyed adults claim use of SACCO 95% of surveyed adults do not use SACCOs

29

87 8 4 3 3 3 3 Unaware of any SACCOs Don't know - fees, convenience, accounts Not enough money Irregular income Trust with money Easy to understand No money to save 50 50 41 28 27 22 14 7 37 Easy to understand Money safe from theft Trust with money Employers deposit salary Interest on savings Get access to loans Safe / easy way to receive money Safe/easy way to send money Do not know

Drivers [%] Barriers [%]

13% of SACCO non- user surveyed adults in DRC are aware of MFIs but don’t use them Although income issues feature, awareness of SACCOs and its workings are by far the biggest barrier 42% of users claim the hours to be inconvenient

30

Base: 15 years or older

Remittances / money transfer overview [%]

Remittances / money transfer Strand [%]

25 1 8 66 2014 Formal Informal only Friends / family / other No remittance usage 25 2 9 66 Formal Informal Friends / family No remittance usage

Remittances / money transfer

Origin and destination of remittances

31

3 8 16 17 22 63

Borrowed Spouse Friend Parent Child Other family members People sent to or received money from [%]

Base: 15 years or older remittance senders/receivers

57 23 53 9

In DRC Outside DRC

Received Sent

Destination / origin of money sent [%]

Payment channels used to send and receive money

• 1 out of 3 surveyed adults who use remittances claim to send or receive money

at least once a month

32

2 3 4 28 72

Motorcycle / taxi Cellphone Bank transfer Friends / family Financial courier / other remittance channel

Base: 15 years or older remittance senders/receivers

• Nearly 47% of surveyed adults own a mobile phone (against 51% of

households), and only 1 out of 5 use paying call points

• Low use and ownership of other devices as well – compared with household
• wnership of 57% for radios, 42% for lamps and 34% for televisions

Mobile Phone Computer / Laptop / Tablet Internet connection E-mail Paying call points

Use 57% 8% 8% 7% 22% Own 47% 4%

• Usage and ownership of communication devices

33

2 2 3 3 5 5 6 12 15 1 3 69 Don't know Don't have a cellphone

Don't trust telecom companies Don't trust it It is complicated Don't have money to send/receive Not thought about it Not educated on how to use it Don't have enough information Not registered & use mobile money Registered & use Mobile Money No cellphone access / mobile money awareness

Mobile money

About 57% individuals claim to use a cell phone

35% of surveyed adults in DRC know about mobile money, but only 4% (10% of those

who own a mobile phone) have registered on a network with even fewer (60% of those registered as well as some others), claiming to conduct mobile money activities.

34

Base: 15 years or older

• Only 12% of adults in surveyed areas claim to use a bank
• Claimed financial account ownership at either banks, MFIs or

SACCOs is even lower – only 3% claim to have any such account

• The chief drivers of such accounts as well as using banks, MFIs and

SACCOs generally are saving and keeping money safe

• Non-cash transactions amongst the those with accounts is very

low

• The biggest barrier to using banks, MFIs or SACCOs is awareness.

Income is also an important barrier mentioned and probably a key reason for low rollout of these institutions

• Besides income / employment limitations, there appears to be low

trust in financial institutions, particularly MFIs. This is reflected by the large proportion of users of MFIs and SACCOs who do not know what the advantages of using these institutions is

Summary

35

• Formal remittances are one of the most important drivers of

financial inclusion in DRC and 1 in 4 adults in surveyed areas claim to use

• This is in turn underpinned by use of places like Western Union and

Moneygram

• Although mobile use and ownership amongst those surveyed in

DRC (at 57% and 47% respectively) is high compared to all other communication devices, it is low when compared to other countries in SADC

• However these use and ownership figures still present
• pportunities
• Presently use of mobile money is very low and the biggest barriers

to adoption are awareness and knowledge.

Summary

36

Contents

1.

Understanding people’s lives

2.

Payments: Banking, MFIs, SACCOs, remittances and mobile money

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

4.

Borrowing and credit

5.

Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

7.

Financial capability

8.

Conclusions and recommendations

37

7 4 20 44 45 Banking products Other formal products Informal Save at home, in kind, friends/family Not saving

Savings and investments

Savings usage overview [%]

38

Savings Strand [%]

7 3 17 28 45 2014 Banking Other formal Informal only Save at home / friends etc. only Not saving

Base: 15 years or older

Savings and investments:

Even among the 55% who save, only 38% claim to save monthly or more

• ften

55% of surveyed adults save 45% of surveyed adults do not save

39

2 9 16 54 57 Too much expenditure Too many family responsibilities All money spent on household No income No money left over after living expenses

81 41 41 29 26 17 15 12 11 10 9 9 8 To have money when need Non-medical emergency Medical expenses Living expenses Education / school fees Improving home Starting / expanding business Funeral expenses Retirement / old age Providing for family after die Buying / building dwelling to live Farming expenses Buying land

Drivers [%] Barriers [%]

• Saving is driven by informal means as well as saving at home and

with family and friends

• A lack of disposable income is the biggest limitation on saving
• The biggest recipients of savings are planned and unplanned

emergency savings

• Limited income is the biggest barrier cited to saving

Summary

40

Contents

1.

Understanding people’s lives

2.

Payments: Banking, MFIs, SACCOs, remittances and mobile money

3.

Savings and investments: Do people manage to save?

• 4. Borrowing and credit

5.

Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

7.

Financial capability

8.

Conclusions and recommendations

41

Borrowing and credit

42

Base: 15 years or older

0,2 0,3 3 6 92 Banking products Other formal products Informal Borrow from friends/family Not borrowing

Borrowing usage overview [%]

Credit Strand [%]

1 3 4 92 2014 Banking Other formal Informal only Borrowing from friends etc. only Not borrowing

Borrowing and credit:

“Developmental reasons come up for borrowing”

8% have borrowing/credit products 92% do not borrow

43

3 3 4 5 8 8 9 10 10 31 Don't know Too scared to approach such a place Interest is too high Earn too little Don't have job Can't afford No regular income Never thought about it Don't need it Don't want to have debt 6 8 14 16 17 19 26 31 Bills Clothes Give to another family member Child's education Start / invest in own business Food House Medical spending

Drivers [%] Barriers [%]

• Borrowing use is very low with only 8% claiming to borrow,

primarily from family and friends

• Debt is the biggest fear followed by income limitations
• Medical spending, food and developmental reasons feature

amongst drivers of borrowing

Summary

44

Contents

1.

Understanding people’s lives

2.

Payments: Banking, MFIs, SACCOs, remittances and mobile money

3.

Savings and investments: Do people manage to save?

4.

Borrowing and credit

• 5. Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

7.

Financial capability

8.

Conclusions and recommendations

45

Insurance and risk management

Only 40% of surveyed adults have ever heard of insurance

46

1% of surveyed adults have insurance

Uptake of insurance products is driven by:

• Accident / travel

60%

• Property damage

48%

• Comprehensive motor

24%

99% of surveyed adults do not have any kind

• f financial product covering risk

Main barrier to the uptake of insurance:

• Value of assets too low
• Affordability (job / income)
• Don’t understand how works
• Don’t believe in it

Base: 15 years or older

Insurance Strand [%]

1 99 2014 Formal Informal only No insurance coverage At 1% of adults in surveyed areas claiming any use, insurance in DRC is incredibly low. The main barriers to insurance uptake are value of assets, familiarity, understanding and affordability

45 24 17 2 1 2 9 Savings Sell something Family / friends Borrow elsewhere Rely on community Other Don't know

47

Main way to pay major expenses [%]

Risk management:

44% expect a major expense in the coming year Response to major events

38 31 14 9 8 Illness / death main income earner Illness / death other HH member Theft Drought Increase in HH size

Costly events experienced in past year [%]

Base: 15 years or older

35 19 18 7 6 4 Health Education Water, electricity, cooking fuel Clothing / footwear Furtniture / household items/… None of the above

Expenditure to cut back on, other than food [%]

There is a need in DRC for risk cover for death and illness, as the current coping mechanisms create vulnerabilities; and health spending is most likely to be cut when financial stresses take place

Contents

1.

Understanding people’s lives

2.

Payments: Banking, MFIs, SACCOs, remittances and mobile money

3.

Savings and investments: Do people manage to save?

4.

Borrowing and credit

5.

Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

7.

Financial capability

8.

Conclusions and recommendations

48

Financial inclusion overview

• High proportion of excluded adults in DRC, with 52% excluded individuals
• Only 12% are banked but including MFI and SACCO users gives the BCC

banking rate of 17%

• Altogether 36% are formally served

36 12 32 26 52 Formally served Banked Other formal [non bank] Informal Excluded

Financial Inclusion overview [%]

49

Base: 15 years or older

Note: MFIs and SACCOs excluded from “banked” classification

• Banking is mainly driven by

savings and transactional products

• Other formal products by

remittances, and

• Informal products by savings

Drivers of banking products, other formal products and informal products

65 59 2 Transactions Savings Credit

Drivers of Banking Products [%]

79 26 13 13 3 1 Remittances Transactions Mobile money Savings Insurance Credit

Drivers of “Other formal products” products [%]

93 16 Savings Credit

Drivers of “Informal Products” [%]

50

Financial inclusion overlaps

• Very few adults (3%) use a combination of all financial services types and the

majority of those included only have either Formal other (18%) or Informal (12%) inclusion –i.e. are likely to be saving or remitting but not both Financial Inclusion overlaps

Banked 3% Formal

• ther

18% Informal 12% 5% 3% 1% 6%

Excluded 52%

51

Base: 15 years or older

Financial inclusion:

Access Strand total and by gender

52

12 24 12 52 2014

Banked Other formal (non-bank) Informal only Excluded

48% are financial included and 36% are formally included

Base: 15 years or older

By gender [%]

13 11 26 21 13 12 48 56 Male Female

Banked Other formal (non-bank) Informal only Excluded

Financial inclusion:

Access Strands 2014 by income categories

53

By income categories [%]

39 16 14 7 11 4 5 29 28 24 30 29 17 6 9 14 21 12 7 14 7 23 42 41 51 53 65 82 Formal employment Business owner Sell to neighbours / street Informal employment Depend on others Farming No money

Banked Other formal (non-bank) Informal only Excluded

12 12 14 14 27 30 38 41 54 62 75 85 1 24 43 9 7 39 23 18 10 8 5 3 9 12 16 14 15 8 20 8 9 3 6 2 78 52 27 63 51 23 19 33 27 27 14 10

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

Banked Other formal (non-bank) Informal only Excluded

Financial inclusion:

Access Strand across the region [%]

54

• Transactional banking outperforms the other product categories, while mobile

money and remittances lag significantly behind. Informal savings are notable.

55 24 8 2 53 9 20 24 1 2 53 9 Savings Transactional Credit Insurance Remittances Mobile money

Landscape of access among financially included individuals [%]

55

Financial inclusion:

Landscape of Access

(of those with any financial product)

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)

Base: 15 years or older financially included

Legend Total usage Formal usage

• 48% of the survey population are included, 36% formally included

and 12% banked

• DRC has amongst the lowest inclusion levels in the SADC region
• Financial inclusion is driven by formal remittances and informal

savings

• The challenge for inclusion is particularly stark amongst those who

main rely on farming

Summary

56

Contents

1.

Understanding people’s lives

2.

Payments: Banking, MFIs, SACCOs, remittances and mobile money

3.

Savings and investments: Do people manage to save?

4.

Borrowing and credit

5.

Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

• 7. Financial capability

8.

Conclusions and recommendations

58

Main way to pay major expenses [%]

Expenses:

44% expect a major expense in the coming year

38 31 14 9 8 Illness / death main income earner Illness / death other HH member Theft Drought Increase in HH size

Costly events experienced in past year [%]

Base: 15 years or older

35 19 18 7 6 4 Health Education Water, electricity, cooking fuel Clothing / footwear Furtniture / household items/… None of the above

Expenditure to cut back on, other than food [%]

45 24 17 2 1 2 9 Savings Sell something Family / friends Borrow elsewhere Rely on community Other Don't know

5 1 2 7 6 14 18 37 51 76

No-one Banque lambert / moneylender MFI or SACCO Likelemba / informal savings group Community based

• rganisation

Children Other persons Church / religious / solidarity group Friends Parents or other family

Financial capability

• Assistance and decision-making

30 33 8 29

Manage HH money alone Manage HH money with others Others in HH manage money Someone else in HH manages for everyone

Where would people go for financial advice

• r assistance [%]

Responsibility for financial decision Making [%]

59

Base: 15 years or older

54 25 13 8

Full control Together with others No control Don't know / no money of own

Control over how own money spent [%]

60

47 31 26 Have a plan for spending money Pay bills / loans / accounts on time every month Keep records of your spending

Financial capability

– Managing money

Planning and tracking [%]

Someone is financial incapable if he/she can not plan and manage

• money. Congolese use their

savings as the coping strategy when they run out of money.

• Financial capability in DRC appears low, with fewer than half of

adults in surveyed areas claiming to have a budget and only 1 in 4 claiming to keep records of their spending

• Most adults go to social sources for advice but fewer than half

know where to go to for advice on their financial choices and problems

• Adults in DRC are particularly vulnerable with 44% expecting a

major expense in the next year, mostly illness and death of household members

• Current coping mechanisms are savings, borrowing and

dependence on others; and worryingly health spending is most likely to be cut when such financial stresses take place

Summary

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Contents

1.

Understanding people’s lives

2.

Payments: Banking, MFIs, SACCOs, remittances and mobile money

3.

Savings and investments: Do people manage to save?

4.

Borrowing and credit

5.

Insurance and risk management

6.

Financial inclusion overview: Access Strands, total product uptake, Landscape of Access

7.

Financial capability

• 8. Conclusions/Recommendation

62

• 1. Financial inclusion
• 48% of the survey population are included, 36% formally

included and 12% banked

• DRC has amongst the lowest inclusion levels in the SADC

region

• Financial inclusion is driven by formal remittances and

informal savings

• The challenge for inclusion is particularly stark amongst

those who mainly rely on farming

Key headline findings/conclusion

63

• 2. Landscape of Access
• The financially included landscape of DRC is driven by

remittances and savings

• The challenge for consumer education and behaviour change to

lead to deeper, engaged use beyond these basic transactions

• Both the drivers and barriers to savings and credit are day-to-

day concerns over living expenses

• Insurance is low, despite adverse medical and death events

being far more common

• When such events are experienced, the current coping

mechanisms are savings, borrowing and dependence on

• thers; and health spending is most likely to be cut when

financial stresses take place. Some also borrow or sell possessions

Key headline findings/conclusion.. (cont. )

64

• 3. Mobile Money
• Although mobile use and ownership amongst those surveyed in

DRC (at 57% and 47% respectively) is high compared to all other communication devices, it is low when compared to other countries in SADC

• However these use and ownership figures still present
• pportunities
• Presently use of mobile money is very low and the biggest barriers

to adoption are awareness and knowledge

Key headline findings/conclusion.. (cont. )

65

• 4. Livelihoods
• DRC has infrastructure and livelihood vulnerability challenges
• Only 7% work in formal employment, 1 in 5 depend on others and

almost 1 in 3 adults claim farming (predominantly subsistence) to be their main income source

• With this picture, the majority of adults receive small, inconsistent

and irregular incomes. 53% personally earn less than the equivalent of US$100 a month

• 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 mechanisms

• Low income means vulnerability to financial shocks and limits

demand for financial services

Key headline findings/conclusion.. (cont. )

66

• 5. Financial literacy
• Fewer than half of adults in surveyed areas claiming to

have a budget and only 1 in 4 claiming to keep records of their spending

• Adults in DRC are particularly vulnerable with 44%

expecting a major expense in the next year, mostly illness and death of household members

• Current coping mechanisms are savings, borrowing and

dependence on others; and worryingly health spending is most likely to be cut when such financial stresses take place

• Overall low levels of financial capability

Key headline findings/conclusion.. (cont. )

67

• 1. Support subsidence farming through targeted

subsidies along the value chain of key crops and inputs as well as mass media communication to aid the population

• 2. Insurance to better manage impact of risks
• 3. Remittance channels like financial couriers serve

the most people and a channel opportunity to provide other financial services to better meet people’s needs

• 4. Customer education

Financial Inclusion Priorities

68

www.finmark.org.za

Thank you

FinMark Trust

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

Dr Kingstone Mutsonziwa kingstonem@finmark.org.za Tel: +27 11 315 9197 www.finmark.org.za

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