The vast unbanked populations of Myanmar deserves to be able to access financial services, according to experts.
Although less than 5 percent of the population currently has bank accounts, a roadmap developed under the auspices of the Ministry of Finance is calling for banked rates of over 30pc by 2020.
Deputy Minister of Finance U Maung Maung Thein said that while the goal is to provide access to financial services and insurance to everyone in Myanmar, there are logical supply and demand barriers.
Speaking at a May 22-23 Financial Inclusion Roadmap Conference in Nay Pyi Taw, he said more needs to be done to extend banking, with 2.6 billion worldwide with no banking access and 5.9 million in Myanmar with access only to unregulated financial services.
A FinScope survey in May 2013 shows that less than 5 percent of Myanmar’s adults have a bank account, though the income of people with bank accounts is on average 2.1 times that of the unbanked.
“We can call the people of Myanmar cash lovers, as only about 4.8 percent have bank accounts, while 91.5pc of the US and 75pc of Thailand are using bank accounts,” said Hennie Bester, director of non-profit Centre for Financial Regulation and Inclusion (Cenfri).
Some 62pc of surveyed adults had no savings, with 17pc saying they saved through storing gold and other valuables in secret places.
Many Myanmar people are reluctant to save in banks and instead purchase jewellery and gold to store value. Mr Bester said this limits the opportunity for banks in turn to lend money and fuel economic development.
“It’s really important to have savings from some and loans to others to provide investment and create job opportunities,” he said.
Savings are particularly limited for those with low income. Some 27pc of survey respondents earned no income and relied on someone else, while 30pc earned income through farming, 5pc as full time farm workers, 11pc through informal business, and only about 40pc earned regular income.
Myanma Microfinance Supervisory Enterprise general manager U Win Aung said a roadmap being put together under the auspices of the Ministry of Finance aims to create an action plan for extending financial services to the unbanked.
The aim is to increase banking rates to between 30 and 40pc of the population by 2020. Easing borrowing and credit restrictions for the unbanked is the main priority, particularly as up to 59pc of lending currently comes from local informal money lenders.
The roadmap focuses on a number of areas including increasing electronic options, providing more low-cost savings vehicles, extending the availability of savings accounts, promoting agricultural credit, increasing unsecured credit, growing the insurance market and providing insurance for credit extensions and agricultural producers.
Part of the plan to promote financial services is to protect deposits through a strong legal framework, Central Bank of Myanmar monetary management department director general Daw Sandar Oo told The Myanmar Times.
Source Myanmar Times