A CONSUMER survey conducted last year on the demand for financial services in Vanuatu found that 32 per cent of Ni-Vanuatu adults are completely excluded from financial services.
The Financial Services Demand Side Survey (DSS) Report for Vanuatu also reported that a further 21per cent only access informal financial service instruments such as savings clubs, shop credit, moneylenders, or hire purchases, while 37 per cent of Ni-Vanuatu adults have a bank account.
Joe Natuman, Deputy Prime Minister and Minister of Trades, Tourism, Commerce & Ni-Vanuatu Business, launched the publication at the Economic Symposium held by the Reserve Bank of Vanuatu (RBV) in Port Vila Wednesday.
The report provides a comprehensive picture of access and usage of financial services in Vanuatu from a consumer perspective, garnering insights into the financial needs of Ni-Vanuatu as well as establishing baseline information on access, usage and quality of the financial services currently available.
According to the nationally representative survey conducted in June 2016, ni-Vanuatu adults more likely to be financially excluded are low-income earners, women, those who earn income from agriculture and those from rural areas.
Mr Natuman said the report is an important tool for the Government and other stakeholders to promote financial inclusion as part of an equitable, inclusive economic environment, in the interest of including all citizens of Vanuatu in sustainable economic growth to improve their well-being.
“The findings will assist and guide regulators in developing evidence-based policy solutions to shape the country’s financial inclusion strategy.
“Policy makers seeking to increase account ownership among agricultural workers should address barriers such as lack of identification, distance to access points, preference for cash, and the perceived cost of setting up formal account,” Mr Natuman said.
Pacific Financial Inclusion Program (PFIP) Deputy Program Manager Krishnan Narasimhan, in presenting the key findings, said the survey shows that although the majority of adults in Vanuatu earn income from agriculture, many are unbanked.
“The findings show that informal savings and credit are used by 80 per cent of adults,” he said.
“Even those with bank accounts save almost 50 per cent of their total savings informally, either at home, with family or other money guard, or with savings clubs. This suggests that formal financial services are not fully meeting the needs of Ni-Vanuatu, such as convenience and flexibility of savings, hence we urge financial providers to examine how they can meet this demand.”
The report also highlighted that though there is a significant gender gap in bank account ownership, with only 32 per cent of female adults report owning a bank account compared to 41 per cent of men, women are more likely to save and those with bank accounts use them more frequently than men.
Vanuatu is the fourth Pacific Island Regional Initiative (PIRI) member to conduct a financial inclusion demand-side survey, after Fiji, Solomon Islands, and Samoa. Formal financial inclusion is widely accepted as contributing significantly to sustainable economic growth.