1. Indicators of Access to Finance Through Household Level Surveys Concepts and Measures for Six Countries Presented by: Anjali Kumar, World Bank Based on the collaboration of a Joint Working Group of the World Bank/DFID/Finmark Trust Prepared by: Anne-Marie Chidzero, FinMark Trust, Karen Ellis, DFID, & Anjali Kumar, World Bank with contributions from Mukta Joshi and Adam Parsons World Bank/Brookings Institution Global Conference World Bank Headquarters, Washington, DC May 30-31, 2006

2. Individual and Household Consumers: present focus  ‘Specialized’ surveys of financial access:  Brazil, India, Colombia, Mexico, and new surveys in Nepal, Pakistan, Jordan and proposed for West Africa (World Bank)  South Africa, Botswana, Lesotho, Swaziland, Namibia, Zambia, Uganda, and proposed for Ghana, Tanzania (Finscope)  Compatibility Desirable with Broad Based Income and Expenditure Surveys:  LSMS, US, UK, many other developed countries

3. What should be Measured? Dimensions of Access  Institutional Dimension - Across providers; e.g.:  Formal /Informal  Public / Private  Domestic / Foreign  Functional Dimension – Across services:  Transactions: check cashing to cross border remittances  Savings: from safekeeping to investment  Loans and credits: Infrequent to readily available  (Insurance / risk transformation)  Product Dimension / Across devices / interfaces:  Types of bank accounts, types of loans, credit cards, etc

4. Institutional Core Indicators % Adult Population with access to:  A1: Banks and Bank like providers:  Broad-spectrum intermediaries (including some credit unions, niche banks) Criteria: deposit taking, access to national payments network, supervision and oversight, standard terms Criteria: deposit taking, access to national payments network, supervision and oversight, standard terms  A2: Other formal financial institutions:  More specialized, e.g. insurance, money transfer agents, finance/ credit companies Also regulated, vary by country and by service, tradeoff of comparability / comprehensiveness  A3: Informal financial service providers:  No financial regulation, but organized ROSCAs, tontines, moneylenders, pawn shops, ususus, stokvels etc. ROSCAs, tontines, moneylenders, pawn shops, ususus, stokvels etc.

5. The Access Strand: Formal to Informal Institutions Financially Excluded Informally Served (only) Financially Served BankFormal otherInformalExcluded Bank 0%20%40%60%80%100% Country X Formally Included Formal other (only)

6. Functional Core Indicators % Adult Population who:  A4 = Payments:  Receive money regularly through formal financial instruments Income, remittances Income, remittances  A5 = Savings:  Keep money in formal financial instruments which allow them to safeguard and accumulate money Transactions accounts, savings accounts, time deposits / CDs, bonds, stocks, funds, voluntary pension plans, etc. Transactions accounts, savings accounts, time deposits / CDs, bonds, stocks, funds, voluntary pension plans, etc.  A6 = Loans and Credits:  Have obtained / have outstanding a loan or credit facility from a formal financial institution now or over the past 12 months.

7. Sub Indicators: Poverty and Financial Access:  S1 = % Adults who are Formally Served in the Bottom Quintile Household Financial Access:  S2 = Individuals vs Households: % Adults formally served either directly or indirectly through another household member

8. A1: The Banked Country% Brazil (  P = 2000) 43.0 Colombia (  P = 1217) § 39.2 Mexico (  P = 1198) 23.0 Botswana43.2 Namibia51.1 South Africa 47.0 Percentage of total adult population with a bank account § Each Individual is randomly selected from every household

9. A2: Headline Indicator – The Formally Included Percentage of total adult population which uses the services of any formal financial institution Country% Brazil (  P = 2000) ± 79.3 Colombia (  P = 1217) 48.1 Mexico (  P = 1198) 52.0 Botswana49.0 Namibia53.9 South Africa 55.0 ± Formal access high due to large number of people of accessing lottery shops

10. A3: The Financially Served Percentage of total adult population which uses any formal and/or informal financial institution Country% Brazil (  P = 2000) 83.8 Colombia (  P = 1217) 50.6 Mexico (  P = 1198) 78.6 Botswana54.0 Namibia55.8 South Africa South Africa 63.0

11. A4: Payments Country% Brazil (  P = 2000) 25.1 Colombia (  P = 1217) 24.1 Mexico (  P = 1198) 20.8 Botswana - Transactions 43.1 Namibia - Transactions Namibia - Transactions 41.1 South Africa - Transactions 31.0 Percentage of adults receiving money regularly through formal financial institutions

12. A5: Savings Country% Brazil (  P = 2000) 39.7 Colombia (  P = 1217) 36.4 Mexico (  P = 1198) 44.1 Botswana - Savings 51.3 Namibia - Savings 51.3 South Africa - Savings South Africa - Savings 29.0 The percentage of adults who keep money in formal financial instruments which allow them to safeguard and accumulate money

13. A6: Loans and Credit Country% Brazil (  P = 2000) 22.5 Colombia (  P = 1217) 6.4 Mexico (  P = 1198) 7.4 Botswana - Credit/loans 20.6 Namibia - Credit/loans 22.7 South Africa - Credit/loans 19.0 Percentage of persons who have obtained/have outstanding a loan or credit facility from a formal financial institution

14. S1: The Poverty Dimension – The Formally Served in the Bottom Quintile Country% Brazil (  P = 2000)  Quintile based on Income  Quintile based on Bedroom per person 49.243.4 Colombia (  P = 1217) - Mexico (  P = 1198)  Quintile based on Income  Quintile based on Rent 16.8 25.1 25.1 Botswana Namibia South Africa Percentage of total adult population in the bottom income quintile which uses the services of any formal financial institutions

15. S2: Individuals vs. Households – Direct and Indirect Access Country% Brazil (  P = 2000) 80.7 Colombia (  P = 1217) 67.2 Mexico (  P = 1198) 67.3 Botswana Namibia South Africa Percentage of total adult population formally served either directly or indirectly through another household member

16. Comparison of the Core Access to Finance Indicators across Countries ∫ ∫Data in percentages ∫ Data in percentages ± includes AFORES Quintile calculation based on * income, ‡ on bedrooms per person, § on income, ﾈ on rent Country Banked (A1) Formally Served (A2) Financially served (A3) Payments (A4) Savings (A5) Loans and Credit (A6) Formally served in bottom quintile (S1) Direct and indirect access (S2) Brazil43.079.383.825.139.722.5 49.2* 43.4 ‡ 80.7 Colombia39.248.150.624.136.46.4-67.2 Mexico23.052.078.620.844.17.416.825.167.3 Botswana43.249.054.043.151.320.6 Namibia51.153.955.841.151.322.7 South Africa 47.055.063.031.029.019.0

17. Financial Access Strand: Botswana 2004 A3- Financially Served – 54% Financially Excluded Bank Formal Other A2 - Formally Included – 49% A1- Banked Informal Only

18. Financial Access Strand: Brazil 2002 Bank A3- Financially Served – 83.8% Financially Excluded Formal Other A2 - Formally Included – 79.3% A1- Banked Informal Only

19. Financial Access Strand: Colombia 2002 Bank A3- Financially Served – 50.6% Financially Excluded Informal Only Formal Other A2 - Formally Included – 48.1% A1- Banked

20. Financial Access Strand: Mexico 2002 Financially Excluded A3- Financially Served – 78.6% Informal Only Formal Other A2 - Formally Included – 52.0% A1- Banked Bank

21. Financial Access Strand: Namibia 2004 A3- Financially Served - 55.8% Financially Excluded Bank Informal Only Formal Other A2 - Formally Included – 53.9% A1- Banked

22. Financial Access Strand: South Africa 2005 A3- Financially Served - 63% Financially Excluded Informal Only Formal Other A2 - Formally Included – 55% A1- Banked Bank

23. The Formally Served – S1: Total population vs Bottom quintile

24. The Formally Served – S2: Direct and Indirect Access

25. The International Community Information, Involvement, Support  From the next small steps..  Incorporation of access indicators in multiple forms of investigations, with different donor / national partners  Undertaking a set of follow up surveys across a range of countries  The Vision: Mapping Access in the developing world  To the final major goals  Incorporating Access indicators into stronger policies for financial inclusion  Achieving growth and poverty reduction through financial deepening