So there is still work to be done trying to close the gender and income gaps.
What are the reasons why the many people in that region don’t have a bank account?
We asked the unbanked “why don’t you have a bank account?” In different regions different things jump out and in ECA the lack of trust in banks is a very significant reason. 30% of the people across different countries say that a lack of trust in banks is the reason why they don’t have a bank account. That is much more than the developing country average of 15%.
That also means that among those without a bank account informal borrowing is prevalent. So you go to families and friends to borrow money. While in high income countries 90% of people borrow from formal financial institutions, in ECA this is about 25%. So I think all those things associated with each other and it is important to figure out a way of addressing this whole trust issue.
What then would you advise government’s to do to increase financial inclusion?
There are fairly easy ways to increase account ownership. Moving government payments, private wages or agricultural payments directly into accounts would make a significant dent in the number of unbanked. About 25 million adults in ECA countries are unbanked and they still receive government payments in cash. If you would directly deposit government pensions into accounts that would increase the number of banked by 20 million. About 19 million adults are unbanked and receive private wages in cash. And about 15 million adults are unbanked and receive agricultural payments in cash. Switching that would be another easy win.