Where are the Financially Excluded?

> Posted by Elisabeth Rhyne
As part of an effort to Map the Invisible Market, I’ve been looking at data from the World Bank [1] on population and financial inclusion, seeking to answer this question: how many of the world’s people are financially excluded, and where are they? It’s not hard to rough out a basic picture.
To start, let’s focus on people of working age, because data on their use of banks is readily available. In the world today there are approximately 4.2 billion working age people (between the ages of 15 and 65). That’s out of a world population that has just crossed the 7 billion mark. Of those, about 1.9 billion have a bank account in some kind of formal financial institution. They are, to use a word I dislike, “banked”. That leaves 2.3 billion “unbanked” who do not have an account. While having a bank account is not a definitive indicator of financial inclusion, it’s a useful proxy for creating a global big picture. We can consider people with bank accounts at least partially included. Of course there are also many other services that are widely used, like remittances or microloans. But bank accounts are the most widely distributed services in the world, providing a rough proxy for financial inclusion.
So where are those 2.3 billion financially excluded adults? Take a look at the interactive map on this blog, created by Sonja Kelly.

Click on the map to see the numbers.

  • You can probably guess that many of the excluded are in China and India. Together, there are about 950 million excluded working age adults in China and India, about 41 percent of the world’s total.
  • Next, in order of the most excluded people are Indonesia and Pakistan, with nearly 100 million each.
  • Brazil and Nigeria are next with nearly 75 million excluded each.
  • To complete the top 10 we have Bangladesh, Mexico, Vietnam, and the Philippines.

Among the top 20 countries with the most excluded people, 8 are in Asia, 5 in Africa, 3 in Latin America, and 2 each in Eastern Europe/Central Asia and Middle East/North Africa. These top 20 countries account for 77 percent of all excluded people.
What do these countries have in common? The most obvious characteristic is, of course, that they are among the world’s highest population countries. But going deeper, these countries differ from each other in levels of inclusion. In Russia and Thailand (both in the top 20), well over half of all working age people already have bank accounts. Many of the top 20 countries have rates of inclusion in the range of 40 to 49 percent (China, India, Indonesia, Brazil, Egypt, and Turkey). Another set have a quarter to a third of all working age people with accounts (Bangladesh, Mexico, Vietnam, Philippines, Ukraine and Argentina). In fact, 11 of these countries are among the top 20 countries in terms of the number of people who are already included, as well as numbers excluded. On the other hand, in the 5 Sub-Saharan African countries on this list (plus Pakistan), very few are included – fewer than 15 percent of adults have accounts.
These data illuminate where the biggest untapped markets for financial services are. While many of the excluded are, as might be expected, in low income countries with low inclusion, more are actually in medium income countries with substantial inclusion. This may suggest that many of the excluded have sufficient incomes to be viable financial service customers. It also suggests that the challenges of reaching full inclusion are very different for different countries. Thailand, with 59 percent included, must examine why its financial sector does not serve certain population segments, while Tanzania, with only 5 percent included, must focus on the basics of financial institution outreach.
There’s a surprise entrant just beyond the top 20. At number 21, the United States is the developed country with the most excluded people. Although 91 percent of working age adults in the U.S. have an account, the 9 percent who don’t represent 19 million people, about the same number of excluded as in Argentina, Colombia and South Africa.
1 World Bank, Finance for All: Policies and Pitfalls in Expanding Access (2008) and World Development Indicators (2010).
For more information, sign up for updates from the Financial Inclusion 2020 campaign.
Have you read?
Bridging the ‘Financial Capability Gap’ to Financial Inclusion
Confessions of a Long-Distance Banking Customer

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