FINSCOPE II 2009 FINDINGS · • Majority of Ugandans live in the rural areas(75%) • 63% have...
Transcript of FINSCOPE II 2009 FINDINGS · • Majority of Ugandans live in the rural areas(75%) • 63% have...
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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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