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Steadman now Synovate

Demand, Access & Use

of Financial Services

FINSCOPE II 2009 FINDINGS

• Prepared by: Synovate

• Date: 5th October 2010

1 © Synovate 2009 Steadman now Synovate

Contents

• Introduction

• Methodology

• Demographics

• Income

• Financial literacy

• Financial Landscape

• Savings

• Investment

• Credit

• Insurance

• Money transfer

• Access to finance by the Youth

Introduction

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Background

• FinScope studies provide data on access, demand and

usage of financial services and products

• The first FinScope study was carried out in 2006

• Since 2006, the financial sector has experienced changes

and growth, notably;

- Increase in number of commercial banks

- Mergers and buy offs

- Innovations in financial products and services, increase

in number of branches

- Upgrading of MDIs to commercial banks

- Increased implementation of VSLA and SACCOs

- More elaborate efforts by government in rolling out

Prosperity for All

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Background

• FinScope II (2009) is a follow up to FinScope

I conducted in 2006

• It provides details on the current status on

access, demand and usage of financial

services

• Hence, providing information on changes and

impact created as a result of the interventions

in the financial sector

Methodology

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Methodology

• Approach: Face-to-face interviews with selected

respondents aged 16 years and above at household

level

• Coverage: 56 districts

• Sample selection

- Selection of EAs: Probability proportionate to size

- Selection of Respondents; Kish Grid

• Achieved sample: 3001 (1649 female, 1352 male)

Distribution of the 16+

Central 940

Eastern 713

Northern 620

Western 728

Understanding

Ugandans

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Economic

profile &

livelihood

• Majority of Ugandans live in the rural areas(75%)

• 63% have attained only primary education or

none at all

• 32% do not earn any cash income & only 8% are

formally employed.

• For those with an income financial earning is from

mainly agricultural activity (over 50%).

• Agricultural earning highest in the rural areas.

30% of Urban people earn through running

personal businesses.

• 40 % earn irregularly

• Income from other activities constitutes 52%

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Access to

facilities

• Health centre are the closest facilities to the

public – 39% mentioning Less than a km & 42%

1-5km

• Formal financial institutions are relatively far from

the majority of the public – 42% said they are 5 to

10km or more

• 63%(less than a km) can easily access informal

financial services

Financial

Landscape

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Formally

included

Informally

served

Financially

excluded

Individuals using “Formal” financial

products supplied by institutions

governed by a legal precedent of any

type. Thus, a formal organization that

must be bound by legally recognized

rules. Adults who currently use at

least one or more of these products

are included in this segment. This is

not exclusive usage, as these

individuals may also be using

“informal” products.

Individuals using

traditional financial

products supplied by

commercial banks, credit

institutions & MDIs.

Formal

other Banked

Divided into two sub-segments for more accurate cross country

comparisons:

Finscope financial strand segmentation methodology

Individuals using financial

products supplied by non BoU

regulated financial institutions

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Formally included

Informally served

Financially excluded

Individuals using “informal”

products – i.e. products

without recognized legal

governance e.g. using

services of an informal group,

money lender, employer etc

Individuals who use no

financial products - neither

“formal” nor “informal” – to

manage their financial lives

Defining Financial Inclusion

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Financially excluded

Defining Access strand –

product usage

• Banked: Individuals with a product from a bank (these individuals

could also have other products but their defining characteristic is

the fact they do have access to a bank product);

• Formal Others: individuals who do not have a product from a

bank but who do have products from another types of formal

financial institutions (these individuals could also have informal

savings products but their defining characteristic is the fact they

do have access to a formal financial product although this is not

from a commercial bank)

• Informal: individuals who do not have any formal financial

products and only rely on informal products such as savings clubs;

ASCA’s and burial societies etc

• Financially excluded: individuals who did not have access to any

financial product at the time of the FinScope survey.

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Financially excluded

21%

20%

61%

28%

0% 20% 40% 60% 80%

Banked

Formal Others

Informal

Formal

Financial products usage

Overlap in the use of financial services

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Financial Access – mutually Exclusive

Base: All Ugandans 16years +

21% 7% 42% 30%

Banked Other Formal Informal Un-served

70% financially included

28% formally included

Financial inclusion is highly influenced by the informal sector

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Financial Access – mutually Exclusive

18%

22%

10%

7%

29%

43%

43%

28%

2006

2009

All Weighted population 18 years and above

Banked Other Formal Informal Un-served

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Financial Access (continued)

38%

15%

9%

7%

25%

47%

28%

31%

Urban

Rural

Access by Location

Banked Other Formal Informal Un-served

The informal sector

serving more rural than

urban

Only 15% of the people in

the rural areas are

formally banked

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Main source of income

Agriculture is

the main

source of

livelihood

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Formal access by employment

20%

11%

3%

19%

73%

33%

6%

7%

3%

10%

6%

8%

25%

57%

48%

39%

9%

32%

49%

25%

45%

32%

12%

27%

A household member (e.g. spouse, parent, child etc) pays my

Sell produce from own farm (food crops- beans, maize,cassav

Working on other people’s farms

Working for an individual in a private business

Employed in the formal sector like in an office – public or

Running own business

Banked Other formal Informal Un-served

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Formal access by Institution

18%

16%

3% 3% 2%

1%

22%

17%

3% 3% 3% 2%

BOU regulatedInstitutions

Commercial Bank SACCO MDI MFI Credit Institution

2006 2009

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Barriers to using formal financial institutions

59%

44%

29%

23%

11%

10%

10%

9%

6%

6%

5%

3%

3%

2%

Don’t have money to save

Don’t have a regular income

I earn too little to open and maintain an account

I can’t afford to have an account

I can’t read or write

I don’t know how to open an account

I don’t need an account

The financial institution is too far from where I live or stay

Don’t want to pay service fees

I prefer to use other options rather than a bank

I couldn’t speak their language

I don’t qualify to open an account

Spouse/partner does not allow to open an account

It takes long to get money from the institution

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Banked Formal other

Informal

3% 2%

42%

4%

9%

5% 5%

Excluded 30%

Overlap in the user of financial institutions

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Banked Formal other

Informal

5% 5%

25%

11%

15%

7% 5%

Excluded 27%

Banked Formal other

Informal

2% 2%

47%

2%

7% 4%

5%

Excluded 31%

Urban Rural

Financial Access strand

Savings &

Investment

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Currently save 67%

Ever saved but stopped

9%

Never saved 24%

Incidence of saving - 2009

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Saving & investment strand

17% 4% 31% 19% 29%

Banked Other Formal Informal Secret place/Friends Don't save

Base: 16year and above

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Saving & investment strand

16%

18%

8%

4%

18%

32%

31%

18%

27%

28%

2006

2009

Base: Weighted population 18 years and above

Banked Other Formal Informal Secret place/Friends Don't save

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What is happening in the savings space?

Read: In 2009, 70% of the 16+ Ugandan population claimed to be saving

Savings mechanisms/products

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71%

18% 16%

4%

26%

62%

7%

27%

6%

43%

Secret place Friends/relatives Banked Formal others Informally

2006 2009

Place of saving

Base: 18years and above

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Banked Formal other

Informal

3% 1%

31%

4%

6%

4% 3%

Excluded 48%

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Banked Formal other

Informal

8% 1%

15%

9%

9%

5% 3%

Excluded 50%

Banked Formal other

Informal

2% 1%

36%

2%

4% 4%

3%

Excluded 48%

Urban Rural

Savings strand

Credit

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Currently Borrowing

45%

Ever Borrowed

20%

Never borrowed

35%

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Credit strand 2009 (mutually exclusive)

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Borrowing strand (mutually exclusive)

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Agriculture & Credit

11%

8%

15%

4%

13%

Total Female Male Urban Rural

Incidence of borrowing for Agriculture

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27% 20%

30%

0%

29%

23% 28%

20%

43%

21%

7%

0%

12%

0%

8%

6%

12%

2%

7%

5% 5%

5% 5%

11%

4%

33% 35% 32%

39% 33%

Total Female Male Urban Rural

Base: Weighted population 16 years and above who borrowed for agricultural purposes

Friends and family Commercial bank MDI SACCOS MFIs Others

Where agricultural borrowing is accessed

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35%

13%

11%

11%

10%

5%

Buy seed

Buy pesticide/herbicide

Hire of labor

Buy agricultural land

Buy fertilizers

Buy livestock

Use of Agriculture credit

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Banked Formal other

Informal

3% 1%

32%

2% 1%

Excluded 61%

Borrowing Strand

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Banked Formal other

Informal

3% 1%

28%

0%

1%

2% 1%

Excluded 64%

Banked Formal other

Informal

2% 0.5%

33%

0%

0.5% 1.5%

0.5%

Excluded 61%

Urban Rural

Borrowing Strand

Insurance

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Formal Insurance

3%

Informal insurance

3%

No insurance

94%

2006 Formal

Insurance -3%

Informal insurance -

22%

No insurance -

75%

2009

Incidence of insurance Base: 18+years

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(n=3001)

Insurance strand (include burial society & welfare fund)

Taking at least one form of insurance (23.4%)

Insurance Strand Uganda 2009

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1%

1%

2%

2%

4%

6%

18%

87%

Trading goods

Regulated provider like UgaMed …

Loan protection

Term life

Motor Third Party Liability

NSSF

Member of welfare group

Member of burial group

Base: All those with insurance 16 years and above

Informal sector

plays an

important role in

insurance just

like in other

financial services

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Formal insurance by product

49%

30%

13%

12%

6%

5%

4%

3%

2%

Insures with NSSF

Motor Third Party Liability

Term life

Loan protection

Regulated provider like UgaMed/NIC/Jubilee

Trading goods

Unregulated provider like AAR, Bupa

House- Building or contents

Other occupational pension scheme

Most people buy formal

insurance as a mandate

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Benefits of insurance

54%

14%

13%

8%

6%

3%

1%

Guard against unlikely events or uncertainties

Prevent financial losses

Don't know

Look after my family

Prestige/Status symbol in society

To have a peace of mind

None

Benefits of insurance

Ugandans appreciate the importance of insurance despite low

usage

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Reason for not using insurance

Cant afford it

Don’t know about insurance and how it works

Never thought about insurance

Don’t know how to go about insurance

Don’t want it

Don’t know where to buy insurance

Don’t believe in insurance

2006

56%

45%

14%

19%

9%

6%

4%

2009

55%

36%

25%

15%

11%

8%

6%

Cost & Knowledge of how to buy insurance are major

impediments to use of formal insurance

Lanscape of access

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Landscape of Access - Uganda 2009

33.4

70.8

45.2

23.4 0

20

40

60

80

100

Transactions product

Savings products

Credit products

Insurance products

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Comparing Landscape of Access –

Informal/formal

Money transfer &

Remittances

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Incidence of Money Transfer

35% 34% 37% 48%

31%

1% 1% 1%

0%

1%

64% 65% 62% 51%

68%

Total Female Male Urban Rural

Base: All weighted population 16 years and above

Currently use Ever used but stopped Never

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Incidence of Money Transfer 2006

Within Uganda

Channels

Total Female Male Urban Rural

3,439,852

%

1,874,044

%

1,565,808

%

1,085,740

%

2,354,112

%

Informal services e.g. taxis 78 77 79 65 84

Commercial bank 25 21 29 35 20

Mobile money 13 12 14 21 9

Post office 3 2 5 4 3

Money transfer services (e.g western union, money

gram) 2 3 1 5 1

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Incidence of Money Transfer 2006

Outside Uganda

Total Female Male Urban Rural

Weighted Base 628,544

%

326,681

%

301,863

%

281,963

%

346,582

%

Informal 41 42 39 20 57

Money transfer outside Uganda 34 37 32 36 33

Commercial bank 17 15 20 24 12

Post office outside Uganda 5 4 6 5 5

Non-banking Institutions 3 5 2 3 4

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Frequency of receiving money

37%

18%17%

10%8%

6%

When need arises

At least once a month

At least once every three

months

At least once a year

At least once every six months

Can’t remember

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Sources of Money

Total Urban Rural

Weighted Base 641,048 279,367 361,681

Uganda 88 79 93

Europe 28 35 23

North America (USA or Canada) 25 12 34

East Africa (i.e. Tanzania, Kenya including Rwanda & Burundi) 14 11 17

Southern Sudan 12 19 7

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Thank You For Your

Attention.

Our Curiosity Is All Yours.

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