FINSCOPE CONSUMER SURVEY MADAGASCAR LAUNCH PRESENTATION - 2016 11 NOVEMBER 2016
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FinScope Consumer Survey
Madagascar
2016
Launch Presentation
11 November 2016
Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
2
Partnering for a common purpose
Making Access Possible (MAP) is a diagnostic and programmatic framework to support
expanding access to financial services. The MAP methodology and process has been
developed jointly by:
At country level, the core MAP partners, collaborate with other stakeholders such as
policymakers, regulators and donors to ensure an inclusive, holistic process. In
addition to the above MAP members, to formalise the MAP Madagascar process,
there is a technical committee comprising the following additional members:
3
Acknowledgements • General Secretary – Ministry of Economy and Planning • Locale authorities (chiefs) • INSTAT staff • Malagasy
FinScope Footprint
Objectives of FinScope Madagascar 2016
• 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
• To create a benchmark/baseline for financial inclusion in Madagascar (2016) to
which provide an assessment of changes and factors in the future (including
possible impacts of future interventions to enhance access)
6Research process
1 Design 2 Implementation 3 Results
Agreements Training of Data management
(data entry, cleaning and
(SC, INSTAT) enumerators weighting)
SC
Questionnaire Pilot and
design questionnaire Data analysis
revision
SC
SC
Sampling, maps Fieldwork Launch and
and field
n=5,040 dissemination
preparations
7Methodology - overview
Respondent Sample and Quality control and
profile methodology data validation
• Sample drawn by INSTAT; • Quality control / field
• Universe: Adult
representative on national, checks conducted by
population in
urban/rural, and regional level the INSTAT, UNCDF,
Madagascar
CNFI and FinMark Trust
• Residents of • Comprehensive LISTING in 504
• Data validation against
Madagascar who EAs – listing 111 469 eligible
census data, General
are 18 years and households
Population and
older
• 5 040Face-to-face pen and Housing Census in 1993
paper interviews ± 75 min. and projections and
the National Survey for
• Fieldwork conducted by INSTAT monitoring the MDG
(September 2015 – April 2016) goals 2013
• Weighting of the data
conducted by INSTAT
8Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
9Understanding people’s lives:
Demographics
• 73% reside in rural areas
Total adult (18+)
population • 41% are 30 years of age or younger
• 57% have primary education or less
±11 million
• 17% have no formal education
Urban/rural Gender Age Education
61 years and older
Vocational /
8
Tertiary / Higher 5
education
27 51 - 60 years 12
48 Secondary
38
73 52 41 - 50 years 17 education
31 - 40 years
Primary
22
education and 40
less
26 - 30 years 13
Urban Male
No formal
17
Rural 18 - 25 years 28 education
Female
10Understanding people’s lives:
Income / livelihoods
• Farming is very important to the Malagasy with 71% of households being involved in farming with rice
(43%) and legume crops (10%)
• 31% of farmer households are in possession of a document for the land they farm on (title deed or petits
papiers)
• 18% of farmer households are consumption, 9% are fully commercial and 73% both consume and sell their
produce
• Drought and natural disasters and product spoilage and lack of tools are the main problems for farmers
Source of farming inputs Farming problems experienced
Use other sources of income 57
Sell some livestock 31 Climatic risks (drought,… 48
Sell some crops 21
I manage with what I have already 15 Lack of tools 32
Sell products we have 12 Disease 31
Use savings 10
Sell something we collect from nature 9 Not enough land 29
Borrow from friends and/or family 5
Selling prices 24
Borrow from a money lender 3
Loan from a bank 1 Lack of seeds 20
Borrow from a community/savings… 1
Other 4 Lack of fertilizers 15
11Understanding people’s lives:
Agriculture
• 7% of farmer households received formal training/technical assistance mainly in agricultural, fishing
and livestock techniques with most having had it free of charge
• Land size, lack of water and low productivity are the main barriers to commercialisation
• Markets are more popular amongst those farmers selling their produce while those selling to more
formal buyers are few
Barriers to commercialising Market for those selling crops/produce
Do not have enough land 84 At market place 66
Do not have enough water 71
Direct to the consumer 33
There is no surplus to sell 70
Middlemen / agent 29
Do not have the money for the… 62
Do not have enough access to… 60 Retailer 10
There is no transport to the… 59
Trading company 3
The market is too far away 58
Auction floor 2
Transport is too expensive 57
Processor e.g. Milling
Farming is too involving 54 1
company
12Understanding people’s lives:
Income / livelihoods
• Almost half of the adults claim farming / farming activities as a main income source
• The informal economy provides the main income source for 36% of adults and 10% are
dependents relying on remittances and assistance
• Formal sector i.e. public and private sector as well as formal self employment provides main
income for 10% of adults
• 66% of adults personally earn 100,000Ar (≈$31) or less per month while 95% live under
400,000Ar (≈$123) per month (including 1% that claim to have no income)
Principal Income Source Personal monthly income1
Farming / farming activities 47 1 000 001 Ar to 2 000 000 Ar 1
Self-employed - unregistered business 14
Get money from household member 10 500 001 Ar to 1 000 000 Ar 2
Salary/wages from an individual 4
Salary/wage from a farm 4 400 001 Ar to 500 000 Ar 2
Piece work 4
Salary/wages from private company 4 200 001 Ar to 400 000 Ar 11
Self-employed - registered business 3
100 001 Ar to 200 000 Ar 18
Salary/wages from Government 3
Get money from parents 2 100 000 Ar and below 65
Pension or annuities 2
Remittances (money/in-kind) 1 No income 1
Part-time work 1
13
1USD = 3,250ArDaily realities - contextualising the drive for
greater financial inclusion
Gone without medical treatment or
40
medicine
Skipped a meal because you didn’t have
31
food
Not been able to send children to school 19
Use firewood as a main source of energy for
64
cooking
Use spring water as the main source of
33
drinking water
• The poverty indicators above show that medical costs are a challenge with two in five adults going
without treatment
• About two out of three adults reside in households that use firewood as the main source of energy
for cooking
• When adults occupy their time in getting basic amenities, they seldom concern themselves with
getting financial services
14Understanding people’s lives:
Ownership of assets (household level)
Bed/Mattress 87 96
84
Radio 68 77
65
Lamp/floor lamp 55
5458
Mobile Phone 32
• Generally, low ownership of 21 63
household assets with huge Television 26 65
12
gaps between rural and urban Wardrobe/Closet 21 46
12
counterparts 19
Bicycle 1821
• Low ownership of assets
Video recorder / CD DVD Player 13 32
amongst rural households 7
particularly electrical Jewelry 13 21
10
appliances such as TVs, Plow (engine or animal… 2 8
10
refrigerators, etc. 7 13
Sewing machine 5 Total
Refrigerator / Freezer Chest 5 13
2 Urban
Motorcycle / Motorbike 5
3 8 Rural
Hifi or sound system 5 14
2
Generator / Solar panel 4
34
Fan 4 10
2
Desktop or Laptop 4 12
1
Satellite Dish / Decoder 3
1 6
15Understanding people’s lives:
Access to Infrastructure (household level)
Number of households with access to tap water Number of household with electricity connection
(as main source of drinking water) Total: 31%
Total: 31% Urban 72% : Rural 16%
Urban 68% : Rural 17%
Number of households with access toilet facilities 76
JIRAMA 94
Total: 68% 2
46
Independent Provider 0
60 Urban 91% : Rural 59% 4
Solar Panel 3
16
31 37
4 1
2 2 1 Generator 0
2 Total
Latrines No Toilets / In Private toilets Private flush Private flush Public toilets Neighbouring houses 23 Urban
without slab / the Nature without flush - toilets - toilets - 2
4 Rural
Open hole Turkish model Turkish model English model Other 0
9
16Understanding people’s lives:
Infrastructure accessibility
Adults using Mean time taken to reach destination (mins)
or aware of
destination Total Urban Rural
1 Grocery store 99% 15’ 7’ 18’
Nearest
2 Mobile money agent 18% 31’ 18’ 45’
P
R 3 Public transport /
67% 37’ 11’ 49’
O
Bus stop
X 4 Bank branch
I 10% 45’ 30’ 70’
M 5
I MFI 9% 46’ 24’ 58’
T
Y 6
Furthest
ATM 5% 46’ 28’ 74’
7 Informal market 95% 51’ 23’ 61’
7 17Understanding people’s lives:
Communication and technology access/usage
Media access in past month Usage of communication device
69 44
Radio 70 Mobile phone 80
68 31
26 11
Television 68 Taxi phone 28
10
5
9
Newspapers 23 Computer or laptop or 5
4 14
tablet 1
4
Magazines 8 4
3 Total Internet 11
1 Total
Urban
3 Urban
Internet Rural 2
7 Rural
1 Email 6
1
7
Other 2 1
0 Land line 4
1
18Summary
Population profile:
About three out of four adults reside in the rural areas
Low educational levels amongst adults
Low income levels and low formal employment
Access to infrastructure:
Access to piped running water is lower in rural areas
One in three households have an electricity connection
Accessibility to common formal financial service destinations such as
banks or ATMs and MFIs is a challenge and much lower in rural areas
taking most adults more than 30 minutes to reach
Farming is the most important source of income with over half the adult
population dependent on income from farming activities
Most adults are dependent on the informal economy to generate their
livelihoods leaving very little usage of formal products
19Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
20Defining financial inclusion
Total adult population 18 years and older in Madagascar
Financially included = have/use financial Financially
products and/or services – formal and/or excluded = do not
informal have/use any
financial products
and/or services ––
Formally served Informally served formal and/or
= have/use formal financial products = have/use financial informal
and/or services provided by a products and/or services
financial institution (bank and/or non- which are not regulated
bank)
Banked
Served by other formal financial institutions
= have/use financial products/
= have/use financial products/services provided by
services provided by a bank
regulated non-bank financial institutions
regulated by the BCM
21Financial inclusion:
Overview
Formally served 29
Banked 12
Other formal (non-bank) 26
Informal 41
Excluded 41
22Overlaps:
“Consumers generally use a combination of financial products and
services to meet their financial needs”
• 2% of adults rely exclusively on
banking services yet 10% rely
exclusively on other formal
mechanisms
Banked Other formal
5.6 • 11% use a combination of banked,
1.6 10.2
and/or other formal and/or informal
4.0
0.8 6.2 mechanisms to manage their
financial needs, thus indicating that
their needs are not fully met by the
Informal formal sector alone
29.8
• One third of the adult population
Excluded 41.8%
ONLY rely on informal mechanisms
such as saving in livestock,
solidarity systems to cover funeral
risk
23
Note: Due to rounding off numbers of ‘Banked’ and ‘Other formal’ the ‘Excluded’ population is 41%Financial inclusion:
Financial Access Strand
Total 12 17 30 41
Urban 26 28 15 31
Rural 7 12 35 46
Female 12 19 28 41
Male 12 14 32 42
Banked Other formal (non-bank) Informal only Excluded
24Financial Consumer Access Strand
(ranked by excluded)
Seychelles 2016 94 12 3
Mauritius 2014 85 3 2 10
South Africa 2016 77 8 3 11
Rwanda 2016 26 42 21 11
Zimbabwe 2014 30 39 8 23
Botswana 2014 50 18 8 24
Swaziland 2014 54 10 9 27
Tanzania 2013 14 43 16 27
Togo 2016 18 27 15 40
Zambia 2015 25 13 21 41
Madagascar 2016 12 17 30 41
Malawi 2014 27 7 15 51
DRC 2014 12 24 12 52
Mozambique 2014 20 4 16 60
Banked Other formal (non-bank) Informal only Excluded
25Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
26Banking and MFI penetration:
How many adults are banked and using MFIs?
MFI
Banked MFI FinScope (FinScope
current +
past)
Number adults currently using 12% 5% 14%
product in Madagascar (1 350 000) (600 000) (1 570 000)
Number of adults not using 88% 95% 86%
product in Madagascar (9 900 000) (10 400 000) (9 430 000)
Total adult population 11 million 11 million 11 million
The numbers reported are of those that currently have/use a product
27Banking:
What products / services are driving the banked?
Banking products/usage (of those Approximate
%
currently banked) number
Current/Cheque account 29 400 000
Savings book 23 300 000
Debit card / ATM 23 300 000
Savings account 15 200 000
Salary deposit 8 100 000
Cellphone banking 8 100 000
Home loan 3 40 000
28Banking:
Drivers and barriers
12% of adults are banked 88% of adults are not banked
Cash withdrawal from a bank Do not have enough money for
29 saving
49
account
Do not have regular source of
Deposit cash into a bank account 25 income
39
Cash a cheque 17 Do not need it 37
Used cash point/ATM 16 The places are too far away 36
Do not understand how banks
Get a bank statement 12 work
35
Mobile banking transaction 8 Do not know how to apply 34
Received money from someone in a Do not understand benefits from
7 having a bank account
31
bank account
Draw a bank cheque 4 Do not have job 29
Financial accounts are not for
Deposit a cheque into bank account 3 people like me
27
Cannot maintain the minimum
Paid people/bills 2 balance
26
Money transfers between your own Fear embarrassment or refusals
2 26
bank accounts
Money transfer to another person’s It is too expensive to have a
2 bank account
25
bank account
29Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
30Savings and investments:
Overview – Informal is mainly driven by livestock
Formal savings 13
Banked 7
Other formal (non-bank) 7
Informal 33
At home / secret place 26
Savings Strand
Total 7 6 31 15 41
Banked Other formal (non-bank) Informal At home / secret place only Not saving
31Savings and investments:
Overview – Rural savings are largely informal (livestock)
Urban 18 10 15 13 44
Rural 3 4 36 16 41
Female 8 6 28 15 43
Male 6 6 33 15 40
Banked Other formal (non-bank) Informal At home / secret place only Not saving
32Savings and investments:
Adults save mainly for medical related expenses and living costs
41% of adults save 59% of adults do not save
Non-medical emergency 34 No money after living expenses 56
Living expenses 33
Do not have an income – no… 40
Developmental savings (total) 32
Medical expenses 30 Never thought about it 15
Buying livestock 15 Do not know about investments… 8
Education or school fees 10 Prefer to invest in other things 7
Buying land 9
I do not have a bank account 7
Funeral expenses when needed 8
Improving or renovating dwelling 8 Do not have payslip / cannot… 6
Providing something for my family… 7 Prefer to spend money on other… 4
Buying or building a dwelling to live in 7
My children will look after me 4
Buying farming equipment 7
Buying farming expenses 6
I save in other ways 4
Buying household appliances 4 It is too expensive to open an… 4
Buying a dwelling or land to let out 4 Do not want it 2
Starting or expanding my business 4
Do not need it 2
A wedding 3
Traditional ceremonies 3
I won’t be able to access my… 2
Other 10 Other 4
33Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
34Borrowing and credit:
Overview
Formal credit 5
Banked 2
Other formal (non-bank) 3
Informal 6
Family / friends 22
Credit Strand
Total 2 3 6 20 69
Banked Other formal (non-bank) Informal Family / friends only Not borrowing
35Borrowing and credit:
Overview
Urban 4 4 5 17 70
Rural 1 2 6 22 69
Female 1 3 6 21 69
Male 2 3 6 19 70
Banked Other formal (non-bank) Informal Family / friends only Not borrowing
36Borrowing and credit:
Borrowing mechanisms
Borrowing mechanism (of those Approx. Total
Urban Rural
currently borrowing) number %
Borrow from friends/family 2 500 000 73% 62% 77%
Borrow from MFI 320 000 10% 13% 8%
Borrow from bank (all credit products from
180 000 5% 13% 3%
bank)
Borrowing from employer / colleague 150 000 4% 4% 4%
Got goods in advance from agricultural
78 000 2% - 3%
buyer
Borrow from money lender 45 000 1% 1% 2%
Borrow from savings group 40 000 1% - 1%
37Borrowing and credit:
Adults mostly borrow for cover day-to-day expenses
31% have borrowing/credit products 69% do not borrow
Living expenses 40 I do not want to have debt 29
Medical expenses 19 Never thought about it 28
Non-medical emergency 16 Do not know about loans 13
Pay for utilities 7 Do not need it 13
Starting or expanding my business 7 Do not know how to get a loan 11
Funeral expenses 5 I earn too little 10
Buying farming expenses 5 Can not afford it 10
Buying livestock 4 The interest is too high 9
Buying farming equipment 4 Unemployed 9
To take care of sick relative(s) 3 Do not have a regular income 9
Traditional ceremonies 2 Fear of debt 7
Buying household appliances 2 Insufficient salary 5
Buying/building a dwelling to live in 2
Do not have financial statement 4
Improving/renovating a dwelling 2
I do not have pay slip 4
Buying land 2
I do not have a statistic card 3
Bad experience in the past 3
Paying off debt 1
Other 11
Other 7
38Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
39Insurance and risk management:
Overview
Insured 8
Other formal (non-bank) 3
Informal 4
Insured indirectly 1
Insurance Strand
Total 3 4 1 92
Other formal (non-bank) Informal only Insured indirectly Not insured
40Insurance and risk management:
Drivers and barriers
8% of adults have insurance 92% of adults do not have any kind of
financial product covering risk
Of those insured uptake of insurance
Main barrier to the uptake of insurance:
products is driven by:
• Solidarity system 41%
• Do not know enough about insurance 20%
• Motor vehicle insurance 27% • Do not know how insurance works 17%
• Pension fund 16% • Cannot afford it 16%
• Medical aid / health fund 10% • Do not want it 12%
• Life assurance 7% • Unaware of insurance 12%
• Accident or travel cover 4% • Nothing to insure 9%
Of those without insurance (95%):
**LITERACY**
• 49% agreed there are other ways to protect oneself against risk
• 85% are not aware of medical or health insurance
• 84% are not aware of life assurance
• 63% are not aware of motor vehicle insurance
41Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
42Remittances:
Overview of those that claimed to remit in the past 12 months
Formal remittances 17
Banked 2
Other formal (non-bank) 17
Informal 3
Family / friends 12
Remittances Strand
Total 2 15 2 10 71
Banked Other formal (non-bank) Informal Family / friends only Do not remit
43Remittances and Mobile money
• 21% of adults received money while 16% sent money in the last
12 months
• More females receiving money (24%) than males (18%)
• 29% of adults remitted within Madagascar and only 2%
remitted outside
• 13% of adults own mobile money services while 17% use
mobile money services
Of those who use mobile money services (17%):
• 80% use it to remit
• 73% transact through mobile money (pay utility bills, buy
airtime, etc.)
• 12% use it to keep money
44Mobile Money:
Drivers and barriers
17% use Mobile Money Services 83% do not use Mobile Money Services
Do not have a cell phone 46
It is convenient 61
I do not have money to send or
24
receive
Have not thought about it 24
I trust it 40
Do not have a sim card 18
Do not have enough information
13
It is cheap 34 about it
Cannot use it 8
It is the only one There are no mobile money
14 6
accessible in the area dealers in my area
Do not have access to a mobile
5
phone network
Suitable for clearing bills 6 It is complicated 4
I am not interested in mobile
4
money
Other 11 Other 8
45Financial inclusion:
Landscape of Access
(of those with any financial product)
Transactions
30
Remittances Savings
32 74
11 18
Insurance Credit
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)
46Financial inclusion: Regional level analysis Anamalanga (42%), Analanjirofo (41%) and Vakinankaratra (37%) are the most formally included regions with Analanjirofo being the highest proportion of adults with other formal (non-bank) products The regions of Bongolava (18%), Vakinankaratra (25%) and Itasy have the lowest excluded population proportions mainly driven by informal product uptake The highest excluded population proportions are in the regions of Sava (60%), Androy (62%) and Sofia (66%) Credit uptake is higher in the regions of Itasy (52%) and Vakinankaratra (51%) with higher formal borrowing in Vakinankaratra (10%) and higher borrowing from friends/family (45%) in Itasy Savings are higher in the regions of Bongolava (84%) and Vatovavy Fitovinany (75%) driven mainly by informal savings in livestock in Bongolava
Contents
1. Overview
2. Understanding people’s lives
3. Financial inclusion overview
4. Banking and MFIs
5. Savings and investments
6. Borrowing and credit
7. Insurance and risk management
8. Remittances and mobile money
9. Financial Inclusion Priorities
48Financial Inclusion Priorities
1. Continued enabling regulatory environment and introduction of low cost ‘no-frills’
account to deepen bank reach to better meet needs
2. Mobile money as tool to increase reach of formal services – 80% of those that use
mobile money use it to remit - extend financial services to extend savings,
insurance and credit amongst other transactional usage such as payments
3. Savings is the biggest driver of financial inclusion in Madagascar largely driven by
informal mechanisms and those not using financial products to save
4. Insurance to better manage impact of risks - insurance is driven by funeral cover
largely through solidarity systems which in fact are not financial products
5. Consumer education and financial literacy are real issues in Madagascar –
interaction with products and insurance is encumbered are largely financial
illiteracy and low income levels
49Thank you pregar@finmark.org.za obertm@finmark.org.za kingstonem@finmark.org.za www.finmark.org.za
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