(...) Data for the DRC shows some impressive growth rates in the number of accounts. Whereas in 2007 and 2008 account ownership was below 1% of the population, this number had already substantially increased – almost quadrupled - in 2011 when on average 3.7% of the Congolese had a bank account. The numbers for 2014 look exciting (see Chart 1), although they have to be interpreted (and compared) carefully. Whereas in 2011 only accounts at financial institutions were counted, the 2014 Findex data also counts mobile money accounts.
The data shows impressive growth in number of accounts for all groups of the population surveyed. An average of 17.5% of the Congolese population owned an account in 2014 and used it in the past 12 months. Numbers suggest that some people even have both, an account at a financial institution and a mobile money account. Most impressive growth with an increase of almost 10 times show the poorest 40% of the population (based on income levels). Whereas only 1.2% of this population group had an account in 2011, 12.2% are financially included in 2014—more than half of those (7.5%) through a mobile phone.
This trend is much less pronounced for all of (developing) Sub-Saharan Africa, where 34.2% of the population surveyed have any account and 28.9% an account at a financial institution. Almost as impressive as the growth rate (almost 700%) for the poorest segment is the increase for young adults aged 15 to 24. Interestingly enough growth is lowest with the wealthier (or less poor) people (upper 60% of the population).
Mobile money accounts have revolutionized access to finance in all of Africa (and the whole developing and emerging world). Whereas this boosts financial inclusion as we see in the case of DRC, it can also come at high cost (see earlier blog post Combining inclusion and protection?). In terms of inclusion mobile money accounts seem to keep what they promise for the case of DRC.
Comparing 2011 data on mobile money transactions (defined as “mobile phone used to pay bills, receive or send money”) with 2014 data on the ownership of a mobile account shows an impressive growth trend in mobile money accounts in DRC (see Chart 2) with 9.2% of the population owning such an account—quite close to the 11.5% on the regional Sub-Saharan level. Again trends are most marked with poor and less educated people (percentage growth rates of course have to be interpreted carefully since growth rates are often impressive when the base value is very low!). Nevertheless, the point is that is seems easier and more convenient for poorer and less educated people to access a mobile money account than an account at a financial institution, including an account at an MFI.
Looking at savings, trends are also quite pronounced (see Chart 3). Whereas in 2011 only between 20% and 30% of the population reported saving or setting aside any money in the past 12 months, this percentage increased to above 65% of the population (except for young adults) and thus is even higher than the regional average (59.6%). What might be the reason for this change in behaviour? Have financial literacy trainings had such tremendous impact?
However, looking at the numbers more closely, only a very small part of the population saves at financial institutions. Usage of savings accounts at financial institutions is increasing, however hardly reaches for any of the surveyed groups more than 5% (except for the wealthier two thirds of the population at 6.6% up from 1.9% in 2011). Findex numbers also show that saving using the good old savings clubs or with a third person is up from 8.3% to 15.4% in 2014. Does this confirm what numbers on mobile money accounts show: whereas opening a mobile money account or saving in a club is what the poor population tends towards, the richer or less poor lot is more inclined to manage their financial lives using (formal) financial institutions?
Analyzing data on borrowing, the picture is not so different from savings (see Chart 4). More than 1 in 2 people borrowed money at all in the past 12 months from any of the following sources: a formal financial institution, a store by using instalment credit, family or friends, employer, or a private lender. This number is up from around 30% in 2011 and in line with the regional average. However only a fraction of those borrowing use a financial institution.