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World Bank reveals 75% of world’s poor unbanked; paper work, travel distance cited as reasons

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About 75% of adults worldwide earning less than $2 a day don’t have a bank account, a new data released by the World Bank April 19, 2012 has revealed.

In numbers, the data collected by Gallup Inc. for the World Bank Global Financial Inclusion Database, showed that more than 2.5 billion people around the world don’t have a bank account.

The report cited not only poverty, but the cost, travel distance and amount of paper work involved in opening an account as reasons why these numbers are unbanked.

More than half of the population in developing countries doesn’t have a bank account, compared with just 10% in rich countries, the data noted.

“The problem of being “unbanked” is also linked to income inequality: the richest 20% of adults in developing countries are more than twice as likely to have a formal account as the poorest 20%,” it explained.

The Financial Inclusion Database of the World Bank indicated that even among those who do have a formal bank account, only 43% use their account to save and “61% of account holders worldwide use their account to receive payments from an employer, the government or family members living elsewhere.”

The Database showed that women make up a disproportionately large share of the unbanked. For example, it said, while 37% of women in developing countries have an account, 46% of men do. “That gap is even bigger among those in poverty: women living below $2 a day are 28% less likely than men to have a bank account,” it noted.

Commenting on the findings, World Bank Group President Robert B. Zoellick said “Providing financial services to the 2.5 billion people who are ‘unbanked’ could boost economic growth and opportunity for the world’s poor.”

According to Zoellick, harnessing the power of financial services can really help people to pay for schooling, save for a home, or start a small business that can provide jobs for others.

“This new report on the world’s ‘unbanked’ makes the case: the more poor people are banking today, the more they are banking on their future,” he adds.

By Ekow Quandzie

View the original article here

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