Thursday, October 16, 2014

Africa: Very few have bank accounts, fewer borrow from banks

The Platinum Habib Bank, now renamed Keystone Bank, is  one of 12 commercial banks operating in The Gambia (Photo Credit: MSJoof/TNBES/August2011)
In most African countries, fewer than half of adults had a bank account and fewer than 10% borrowed from a formal financial institution in 2011, according to the 2014 Africa Survey to be released October 28th by Good Governance Africa (GGA).

Closed in 2011 for failing to meet capital requirement
The Africa Survey is a comprehensive annual collection of political, economic and social indicators for all countries on the continent.

The South Africa-based GGA said the share of adults with bank accounts is tiny, which is based on the latest figures available as of 2011.

It quoted a survey by the World Bank which shows that in 40 of 42 countries; fewer than half of adults had a bank account. Mauritius and South Africa were the only two countries where more than 50% of adults had a bank account, at 80% and 54% respectively. Niger had the lowest proportion at 1.5%.

According to GGA, more African adults borrowed from family or friends than from any other credit source in 2011. On average, 35% of the adults in each country borrowed money from a family member or friend, compared to only 5% who obtained loans from a formal financial institution.

“Many ordinary citizens could radically improve their lives with the help of small loans,” said Karen Hasse, a GGA researcher. “The share of people borrowing from family and friends indicates a high demand for credit services, and a wide-open market for financial institutions to meet this demand.”

Closed in 2012
Only two of 10 Gambian youths, aged 25 to 35 who spoke to TNBES on Thursday, said they have bank accounts, and none of them have ever borrowed from a bank or other financial institutions.

“I’m employed, but my salary is not enough to meet the cost of my family needs. So, I can’t save a butut [Gambia’s lowest currency denomination] in a bank,” said hotel worker Musa Bah, 34.

“And when I do not have a bank account and do not own properties, I simply cannot borrow from any bank. I borrow from friends,” he added. 

Economic and financial reporter, Lamin Jahateh, told TNBES despite the increase in commercial banks [12] in The Gambia, poverty would be the main cause for any low numbers in holders of bank accounts.

Close to 50 per cent of Gambia's 1.8 million population lives on less than US$1.25 a day, according to the 2010 Integrated Household Survey published by The Gambia Bureau of Statistics. A UNDP Final MDG Report 2013 states: “Poverty remains high and is far more severe in the rural than in the urban areas although urban poverty is also on the increase."

GGA is to hold a formal release of the 2014 Africa Survey on Tuesday, October 28, 2014 in South Africa.

Good Governance Africa is a research organisation that promotes better government management. Its main publications are the Africa Survey and Africa in Fact, a journal that tracks government performance and proposes solutions.

Written by Modou S. Joof

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