Comparison of supply-side study and results from FinScope 2003 for BNLS countries
By Doubell Chamberlain (Genesis Analytics, 2004)
http://www.finmarktrust.org.za/documents/2005/JANUARY/BNLS_comparative.pdf
Abstract
This paper summarizes the data collected from three different surveys conducted in Botswana, Lesotho, Namibia and Swaziland, between 2002 Ai 2003. The first one looked at the supply-side of financial services. The second one concentrated on the insurance sector in each of these countries. Finally, the third set focused on the demand-side.
Key findings are:
- Almost half of the population has access to a formal or informal savings provider, except for Lesotho, where only 33% of respondents had a bank account.
- Households with access to credit (formal or informal) are significantly lower. Again Lesotho shows the lowest figure, with only 6.7% of respondents having access to credit. However, the authors highlight that there are cultural issues that may be leading to underestimate the amount of households with credit.
- Links between the formal and informal sector are significant. Above 80% of savings clubs in Namibia and Swaziland have bank accounts
- Insurance is a popular financial instrument. Especially in Lesotho and Namibia, where 56% and 48% of respondents said they had some kind of insurance policy (i.e. life, burial society, vehicle, etc)
Summary
Some of the quantitative findings of the surveys implemented by Genesis are summarized in the following table
|
|
Botswana |
Lesotho |
Namibia |
Swaziland |
| SAVINGS |
|
|
|
|
| Household with access to formal or informal savings providers |
48.5% |
33.3% |
49.0% |
46.19% |
| Households with savings in Aoa bankAo:
|
47.0% |
17% |
28.5% |
35.3% |
| Households with savings in Aopost officeAo:
|
35.5% |
< 1% |
19.9% |
0.2% |
| Households with a retirement annuity or pension fund: |
22.3% |
4.1% |
22.5% |
17.2% |
| Households members to savings club:
|
25.7% |
28.1% |
6.1% |
25.1% |
| Savings club with bank account (denotes links between formal and informal sector) |
58.8% |
65% |
81.6% |
89% |
| Cash transactions
|
49.9% |
79.3% |
53.0% |
59.3% |
| TRANSACTION |
|
|
|
|
| Households with some form of account that allowed transaction functionality: |
43.6% |
6.7% |
26.8% |
17.7% |
CREDIT |
|
|
|
|
| Households with formal or informal credit products: |
49.7% |
12.6% |
26.8% |
27.6% |
| Households with some form of bank credit: |
31.3% |
1.1% |
18.4% |
10% |
| Store accounts:
|
29.1% |
6.0% |
15.2% |
16.1% |
INSURANCE |
|
|
|
|
| Households with an (household or vehicle) insurance policy Aishort term-: |
10.9% |
0.4% |
7.8% |
3.0% |
| Households with life insurance policy:
|
26% |
2.4% |
30.6% |
6.1% |
| Households members of burial society:
|
21.3% |
51.7% |
10.2% |
12.6% |
| Households with any kind of insurance product with life cover: |
47.6% |
56% |
36.5% |
19.2% |
Note: Data in the table shows percentages of respondents to the implemented surveys. The authors warn of problems with the sample methods that may not make the sample representative of the overall population of these countries.
Other characteristics of the economic and financial systems in the surveyed countries are:
BOTSWANA
- Whereas the financial sector is relatively strong and developed, the gov intervenes through capping interest rates and in a more direct manner through the number of gov financial institutions created to promote subsidized credit among entrepreneurs.
- The national payment system is inefficient and affects inter-bank transactions and limits the use of debit orders.
LESOTHO
- The informal financial system is dominated by burial societies and various forms of savings cooperatives.
- Most initiatives around the mobilization of credit for the rural population have failed.
- Government has established a network of Rural Savings and Credit Groups (or cooperatives) to improve the provision of financial services in rural areas, but no information is available that illustrates its success or the extent of operations.
- Microlending sector has until recently been unregulated. The Central Bank has done an important effort to harness the sector and protect customers, but regulation is still limited.
NAMIBIA
- The size of the informal financial sector in Namibia is small, although the reasons are not clear, it could be because the cooperative movement is still underdeveloped and NGO MFIs have had many failures.
- The informal sector is less developed than in the other countries. A possible explanation could be that public gatherings were prohibited in the period before independence.
SWAZILAND
- Population is largely dependent on subsistence farming on land that belongs to the king, not to the farmers.
- Asset building and household formation is hindered by the inability to build up capital through property or housing. This highlights the absence of collateral to extend credit.
- SwazilandAos law is a mixture of traditional and western law (ie. Women cannot enter contracts without the permission of husband, father, etc)
- Informal sector plays an important role Ai large cooperative sector has build substantial assets and member base, which can now build a formal cooperative bank.