The Unbanked and Savings in South Africa: New Perspectives, New Priorities

1
The Unbanked and Savings in South AfricaNew
Perspectives, New Priorities
Dr David Porteous
2
Portrait Of The Unbanked
Mrs X, near Tzaneen 2002
3
The Banking Value Proposition
4
Micro-finance vs Micro-lending
Transactions
100
80
60
Micro-finance is about diverse institutions
providing massive, permanent access to a broad
range of financial services for a broad range of
clients CGAP 2002
40
20
Savings
Insurance
0
Credit
5
The Landscape Of Access of SA Adults
Transactions
e.g cheque a/c, basic bank a/c, Postbank
100
80
60
40
20
Savings
Insurance
0
Credit
6
The Landscape Of Access of SA Adults
Transactions
100
80
60
40
20
Savings
Insurance
0
e.g. retirement fund, stokvel, endowment, mutual
fund
Credit
7
The Landscape Of Access of SA Adults
Transactions
100
80
60
40
20
Savings
Insurance
0
e.g credit card, retail credit, mortgage
Credit
8
The Landscape Of Access of SA Adults
Transactions
e.g life insurance, funeral insurance, burial
society, medial insurance
100
80
60
40
20
Savings
Insurance
0
Credit
9
Why Money Matters especially for the Poor

• People need
• Safe place to store liquid wealth
• Liquidity to face contingencies
• Insurance against shocks
• Otherwise pushed into destitution
• Investment need in livelihood/ productive
  activities

10
Money Matters

• SAMPLE
• 42 low income Bangladeshi households, visited
  twice monthly for a year
• Poor are active managers of financial resources
• Each household used 4 or more instruments some
  12
• Turnover in FI 2/3 of total income

Source Rutherford, S Money Matters 2002
11
Usage Of Lump Sums

• No longer term accumulation of financial assets

Source Rutherford, S Money Matters 2002
12
Saving Up
Usefully large lump sum
Savings
Value
Time
Source Rutherford, S The Poor and Their Money
13
Saving Down
Next cycle may begin
Usefully large lump sum
Savings
Value
Time
Source Rutherford, S The Poor and Their Money
14
1. Transaction Accounts of SA Adults
Transactions
100
80

• 11m in SA have
• bank accs
• USA 90
• Brazil 35
• Kenya 5

60
40
40
20
Savings
Insurance
0
Credit
15
Banked/Unbanked - By LSM 2001 Weights
16
Age Breakdown
6,21M 4,13M 2,8M 1,831M 1,29M
1,4M
17
Work Status Unbanked
18
Type of Dwelling - Unbanked
19
2. Savings of SA Adults
Transactions
100
80

• 80 of f/e
• have retirement
• savings
• Informal
• mechanisms
• stokvels 3.5m

60
40
20
Savings
Insurance
0
44
Credit
20
Stokvel Membership

SOURCE FUTUREFACT 2002
21
Monthly Contributions to Stokvels
2
As a of total monthly income
3
4
2
4
R508
5
4
9
4
8
R315
R197
R161
R142
R98
R78
R75
R63
R48
1
2
3
4
5
6
7
8
9
10
Source Marketscape 2002
22
Banking by Stokvel Members
Source Marketscape 2002
23
3. Credit - consumer of SA Adults
Transactions
100
80

• Credit bureaux
• 16m credit active
• individuals
• Convergence in types
• M/loan
• Credit card
• Retail

60
40
20
Savings
Insurance
0
60
Credit
24
Credit MarketPeople with loans where money
came from
SOURCE FUTUREFACT 2002
25
4. Insurance of SA Adults
Transactions
100
80
60
40
20
Savings
Insurance
38
0
Credit
26
Life Insurance and Funeral

SOURCE FUTUREFACT 2002
27
The Landscape of Access of SA Adults
Transactions
Why not 66 ?
100
80
60
40
40
20
20
Savings
Insurance
0
0
2010
Credit
2001
28
Our Research Agenda

• Markets need credible, regular, segmentable data
• Demand side profile
• LSMs to Financial Sophistication Measures
• Pilot by November 2002
• Geo-location of distribution infrastructures

29
Conclusion

• Access to financial services matters greatly for
  the poor
• But access is not an absolute good
• Dont underestimate informal instruments and
  mechanisms
• Dont over-glorify informal instruments and
  mechanisms