The number of South African adults with bank accounts rose by
almost 11%, to 15,9-million, between 2005 and 2006, dramatically
exceeding the country's population growth of 1%, the FinScope 2006
survey of financial use and behaviour has shown.
The proportion of banked adults rose from 46,6% to 51% out of a population of 31,1-million South Africans.
FinMark Trust's Mark Napier told a presentation in Johannesburg, on Tuesday, that Mzansi - South Africa's low-cost national bank account that extends banking to low-income earners and those living beyond the reach of banking services - had led the growth in this sector.
FinScope showed that 6% of the country's population, almost 1,2-million people, were using the Mzansi account, an increase of four percentage points since last year, which represented a year-on-year growth of almost 250%. Also, 60% of people with Mzansi accounts claimed that it was their first bank account, signifying that its primary target market used the product.
The survey unveiled that Mzansi account holders represented 12% of the entire banked market, an increase of 4% over the last year. Napier highlighted, however, that the research might be under-reading the actual Mzansi use, as the claimed use of Mzansi accounts was only 1,9-million, but that the financial sector's official figures showed that 3,3-million people were actually using Mzansi accounts.
This, he said, could be attributed to many users not knowing that they were Mzansi account holders or owing to perceptions - 41% said Msanzi was a “poor man's account”.
Napier noted that most Mzansi users were black and that strong growth was coming from urban areas, such as Gauteng, adding that rural areas were falling behind and that a lack of money and unemployment were barriers.
The survey also revealed new opportunities in the areas of life insurance and savings and showed that only 10% of South Africans said they had some form of life insurance and half of the population felt that they had not saved enough for old age.
Of the 10% of South Africans that had some form of life insurance, 39% were white, 20% coloured, 15% Indian or Asian and 5% black. Napier highlighted a lack of trust, higher charges and knowledge as barriers to South Africans taking out life insurance.
On short-term insurance, he reported that there was a very low penetration and that the barriers were: mainly people not considering their possessions worth covering, that the products offered were not always seen as suitable, accessibility and understanding how they work.
Cars were, however, the most comprehensively covered by short-term insurance, although only 7% of adults insure a vehicle. But, 54% of car owners had vehicle insurance.
Moreover, 51% of South Africans were concerned that they would not have sufficient funds for their old age. FinScope showed that over half of the country's population, 57%, was not investing or saving at all. Seven per cent, however, belonged to an informal savings club, which the survey reported demonstrated the poverty in which numerous South Africans lived.
It was not only savings and investments that were uncommon in South Africa, but also borrowing, with those who do borrow having to do so, mainly, buy food (18%), pay for funerals (10%), to pay school fees (9%) or to cover medical expenses (9%).
The reasons why people would take out a loan also varied by race and FinScope reported that white and Indian/Asian adults were far more likely to borrow money to pay off assets, often improving their long-term financial standing. In contrast, black and coloured adults were more likely to borrow money to meet everyday survival needs, the most common reason being to buy food.
“For most individuals, taking out a loan improves their short-term circumstances, but not their long-term financial well being, as they are not borrowing money to build capital but for everyday survival.
“The reason is clearly a degree of poverty - 17% of South Africans say they have no income at all, and nearly one-third of South Africans testify that they do not even have enough to eat,” FinScope reported.
Unemployment, and not having money to save, were also the main reasons given for not being banked and the survey noted that the banking sector appeared to lack relevance for a significant portion of the population.
Almost a fifth of the country's currently unbanked people would not like an account as they could not see how it would benefit them. Around 44% claimed that they could easily live their lives without a bank account.
The proportion of banked adults rose from 46,6% to 51% out of a population of 31,1-million South Africans.
FinMark Trust's Mark Napier told a presentation in Johannesburg, on Tuesday, that Mzansi - South Africa's low-cost national bank account that extends banking to low-income earners and those living beyond the reach of banking services - had led the growth in this sector.
FinScope showed that 6% of the country's population, almost 1,2-million people, were using the Mzansi account, an increase of four percentage points since last year, which represented a year-on-year growth of almost 250%. Also, 60% of people with Mzansi accounts claimed that it was their first bank account, signifying that its primary target market used the product.
The survey unveiled that Mzansi account holders represented 12% of the entire banked market, an increase of 4% over the last year. Napier highlighted, however, that the research might be under-reading the actual Mzansi use, as the claimed use of Mzansi accounts was only 1,9-million, but that the financial sector's official figures showed that 3,3-million people were actually using Mzansi accounts.
This, he said, could be attributed to many users not knowing that they were Mzansi account holders or owing to perceptions - 41% said Msanzi was a “poor man's account”.
Napier noted that most Mzansi users were black and that strong growth was coming from urban areas, such as Gauteng, adding that rural areas were falling behind and that a lack of money and unemployment were barriers.
The survey also revealed new opportunities in the areas of life insurance and savings and showed that only 10% of South Africans said they had some form of life insurance and half of the population felt that they had not saved enough for old age.
Of the 10% of South Africans that had some form of life insurance, 39% were white, 20% coloured, 15% Indian or Asian and 5% black. Napier highlighted a lack of trust, higher charges and knowledge as barriers to South Africans taking out life insurance.
On short-term insurance, he reported that there was a very low penetration and that the barriers were: mainly people not considering their possessions worth covering, that the products offered were not always seen as suitable, accessibility and understanding how they work.
Cars were, however, the most comprehensively covered by short-term insurance, although only 7% of adults insure a vehicle. But, 54% of car owners had vehicle insurance.
Moreover, 51% of South Africans were concerned that they would not have sufficient funds for their old age. FinScope showed that over half of the country's population, 57%, was not investing or saving at all. Seven per cent, however, belonged to an informal savings club, which the survey reported demonstrated the poverty in which numerous South Africans lived.
It was not only savings and investments that were uncommon in South Africa, but also borrowing, with those who do borrow having to do so, mainly, buy food (18%), pay for funerals (10%), to pay school fees (9%) or to cover medical expenses (9%).
The reasons why people would take out a loan also varied by race and FinScope reported that white and Indian/Asian adults were far more likely to borrow money to pay off assets, often improving their long-term financial standing. In contrast, black and coloured adults were more likely to borrow money to meet everyday survival needs, the most common reason being to buy food.
“For most individuals, taking out a loan improves their short-term circumstances, but not their long-term financial well being, as they are not borrowing money to build capital but for everyday survival.
“The reason is clearly a degree of poverty - 17% of South Africans say they have no income at all, and nearly one-third of South Africans testify that they do not even have enough to eat,” FinScope reported.
Unemployment, and not having money to save, were also the main reasons given for not being banked and the survey noted that the banking sector appeared to lack relevance for a significant portion of the population.
Almost a fifth of the country's currently unbanked people would not like an account as they could not see how it would benefit them. Around 44% claimed that they could easily live their lives without a bank account.
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