FINANCIAL INCLUSION in MENA:Results from the Global Findex

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GLOBAL FINDEX OVERVIEW

Global Findex

Funded by a 10 year grant from the Bill & Melinda Gates Foundation

Goal to collect comparable cross-country data on financial inclusion by surveying individuals around the world:

― Measure the use of formal and informal financial services, using consistent methodology across economies and time

― Identify the segments of the population with greatest barriers to access to finance: poor, woman, youth, and rural residents.

― Motivate and track policies to expand financial services to the poor

― Design a questionnaire to harmonize financial inclusion questions across economies

Added questions on the use of financial services - payments, savings, credit, and insurance - to the 2011 Gallup World Poll

GLOBAL FINDEX

Global Findex • Database is built from 150,000+ interviews with adults in 148 economies over the 2011 calendar year.

• Gallup has surveyed 158 economies since 2005, including Australia, Afghanistan, Ireland, Iraq, Sweden, Somaliland..…

• Represents 97% of world adult population (ages 15+)

• Survey translated into 141 languages

• At least 1,000 individuals per economy

• Module does not distinguish between Sharia-compliant and conventional financial services.

The data will be updated in 2014, plus a new module on domestic payments, including sending/receiving remittances, bill payment, and receipt of wage and government payments

GLOBAL FINDEX OVERVIEW

Key Findings:• More than 1.3 billion women worldwide remain largely outside the formal

financial system (Demirguc-Kunt and Klapper, 2013).

• 18% of adults in MENA (developing only) have an account at a formal financial institution—compared to 43% of adults in the rest of the developing world. Ranges from 4% in Yemen to ~40% in Lebanon/Morocco.

• 55% of adults in GCC countries (6) have a formal account – though only nationals and Arab expatriates included, generally excluding 20-25% of population.

• 74% of adults in Iran have a formal account – excluding from average because of methodology concerns.

GLOBAL FINDEX ACCOUNTS AND PAYMENTS

Over 2.5 billion adults do not have an account — 53% or over 1.3 billion of whom are women

41% of adults in developing economies are banked—compared to 89% of adults in high-income economies

37% of women in developing economies are banked—compared to 46% of men

23% of adults living below $2 per day have a formal account —a group in which women are 28% less likely than men to have account

GLOBAL FINDEX ACCOUNTS AND PAYMENTS

In every region, women have a lower account penetration compared to men

The largest gender gap is in SA and MENA —where women are 40% less likely than men to own account

GLOBAL FINDEX ACCOUNTS AND PAYMENTS

Youth (ages 15-24) in MENA are 35% less likely than those ages 25-64 to have an account.

Adults in the poorest income quintile in developing economies are half as likely to be banked as adults in the richest quintile

A 6-9 percentage points gender gap persists across income groups in developing economies

The poorest women in MENA are 36% less likely than the poorest men to have an account; 39% for the richest.

GLOBAL FINDEX ACCOUNTS AND PAYMENTS

77% of unbanked in MENA report “not enough money” as a barrier (most reported)

21% of unbanked in MENA report excessive cost as a barrier (2nd most reported)

12% of unbanked in MENA report religious reasons as a barrier (3rd most reported)

GLOBAL FINDEX ACCOUNTS AND PAYMENTS

26 percent of unbanked women report that another family member already has one, compared to 20 percent of men.

The gender gap narrows from 8% to 3% when we include ‘indirect’ access to a bank account through a family member.

GLOBAL FINDEX ACCOUNTS AND PAYMENTS

3% of adults in MENA report having used a mobile phone to pay bills or send or receive money in the past year

Compared to 15% of adults in Sub-Saharan Africa

However, some positive signs in Algeria (44%), Morocco (10%), and Iraq (8%)

52% of adults in SSA who use mobile technology to transfer money are otherwise unbanked

GLOBAL FINDEX SAVING

34% of women saved in the past year, compared to 38% of men

20% of adults in MENA saved in the past year (compared to 31% in rest of developing world)

23% of savers in MENA saved using a formal financial institution (as compared to 57% of savers in developing economies ) – 63% report saving “under the mattress”

Just 5% of adults in MENA saved formally in the past year, higher in Morocco (12%), Lebanon (17%)

GLOBAL FINDEX SAVING

40% of account holders in developing economies saved formally in the past year, compared to 23% of account holders in MENA

15% of account holders in MENA saved informally only in the past year

Why aren’t account holders using accounts to save? What can be done?

GLOBAL FINDEX CREDIT

7% of adults in developing economies have a credit card—compared to 50% of adults in high-income economies

8% of adults in developing economies borrowed money from a formal lender in the past year—9% of men and 7% of women—compared to 14% of adults in high-income economies

GLOBAL FINDEX ECONOMETRIC EVIDENCE

What explains the gender gaps ?

(II) Financial Inclusion and Legal Discrimination / Gender Norms

As a result of differential treatment under the law or by custom, women may have less ability then men to own, manage, control or inherit property which in turn might affect women’s demand for financial services (Demirguc-Kunt, Klapper, and Singer, 2013).

― Using data from the World Bank’s Women, Business and the Law database we show that in countries where women face legal discrimination in the ability to work, head a household, choose where to live, or inherit property or are required by law to obey their husband, women are less likely then men to own an account and to save and borrow

― Using data from the OECD’s Gender, Institutions, and Development database we show that attitudes towards women quantified in measures such as incidence of early marriage for women and the level of violence against women also help explain difference in the use of financial services

GLOBAL FINDEX Islamic Finance

The Use of and Demand for Formal Financial Services among Muslim Adults

― In a sample of more than 65,000 adults from 65 countries with Muslim populations between 1 and 99 percent of total population, self-reported Muslims are less likely to (i) have a formal account, and (ii) save at a formal financial institution, after controlling for individual characteristics/income and country fixed effects (Demirguc-Kunt, Klapper, and Randall,2013)

― However, Muslims are not found to be less likely to use formal credit

― Among Muslims globally (in 148 countries) without a formal account, 7 percent cite religion as barrier, which is the least frequently cited barrier among this group

East Asia Pacific Europe Central Asia Middle East North Africa

South Asia SubSaharan Africa0%

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Figure 1: Has an account at a formal financial institution (% adults)

Non-Muslim Muslim

GLOBAL FINDEX DATA RELEASE

Global Findex Suite of Products

• Findex Notes and Working Papers

• Financial Inclusion Data Portal

• World Bank eAtlas of Financial Inclusion

• The Little Data Book on Financial Inclusion 2012

• Global Financial Inclusion Microdata

www.worldbank.org/globalfindex