How do Low-Income People in Cote d’Ivoire Manage their Money?

Did you know that 82% of low-income people in Côte d’Ivoire save, but only 28% borrow? This is one of many rich findings from a survey of 1,000 Ivorians.

Over the last several months, CGAP worked with EY and Horus Development Finance to find out more about financial lives of low-income people in Côte d’Ivoire – how they use financial services, how they want to use financial services, and what the unmet demand might be for savings, credit, insurance or money transfer products.

Researchers targeted Ivorians just above and below the poverty line (between $20 and $100 per month per individual) with a quantitative survey and obtained additional nuance from about 20 qualitative interviews. Through questions about savings, credit, insurance and money transfers, our team found common behaviors and attitudes towards the use of formal bank accounts, the use of e-wallets, the perception of formal versus informal services, and the overall financial strategies employed in Côte d’Ivoire. The survey is representative of 71% of the population over 15 years old.

In addition to uncovering interesting details about how people in Côte d’Ivoire manage their money and their rationale behind these behaviors, six segments emerged among survey recipients based on needs and behaviors. We learned that 55% of respondents did not use any type of formal account. However, unique behavior groups emerged within this umbrella group – not everyone behaved the same way.

• “Borrowers without accounts,” about 13% of respondents, borrow at least once a year, save in a moderate fashion and occasionally use money transfers.
• “Relatively inactive without accounts,” about 28% of respondents, never borrow and never use money transfers. Relatively few of them use money transfers.
• “Recipients without accounts,” were an interesting group. These people, 14% of respondents, receive money regularly via transfers and save in a moderate fashion but never borrow and rarely send money.

Our researchers spoke with Daboné, a fresh produce vendor, who falls under the category of “relatively inactive without accounts” (the largest of the 6 segments). She said that in order to send money to Burkina Faso, she entrusts her uncle to go to Western Union for her because she “doesn’t know how it works.

This illustrates an important point from the survey results, which found that 49% of respondents have sent money at least once in the past year, either through formal or informal means. Many people who send money in Côte d’Ivoire do so through informal means – such as sending money with family members – even though it can be risky (money can easily be lost or stolen). People who preferred this type of informal method did so because they valued the low cost and reliance on trust of people they knew to complete the transfer. However, 59% of households who received money in the past year would prefer to receive funds through a mobile wallet if they had the choice. Transfer recipients perceived that their funds would arrive faster and more reliably if they used a mobile wallet.

This is one area where unmet demand – perhaps for more education and awareness about e-wallets – could go a long way towards building healthy financial habits among low-income people in Cote d’Ivoire.

Other interesting takeaways from the research included:

• Illness is by far the biggest cause of unexpected expenses, mentioned by 74% of respondents. Cash savings is the primary means used by respondents to address financial threats.
• 62% of non-account holders of a financial institution think that they do not have the resources to open an account at a formal financial institution. But 63% would be interested in opening an account if they could make deposits and withdrawals at a nearby agent.
• 60% know about the possibility of making a bill payment at an agent, but only 3% use this service. The lack of information about how it works is the main reason why it is not used.
• 42% of respondents use formal services to send money; 39% use informal services; 20% use both. The biggest perceived advantage of formal services is its rapidity, whereas the biggest perceived advantage of informal services is its simplicity of use.
• The majority of respondents (72%) have not borrowed during the 12 months. Those that do borrow do so predominately from family and friends, with only 7% borrowing from banks and another 7% from MFIs.
• 82% of respondents save. 62% of them keep the money on them to make sure it is accessible when needed, while 28% put it in an account for security reasons.

There is a detailed deck on this research in French and summary decks in French and English. Results from similar research in Senegal are forthcoming.

-------------Sarah Rotman manages CGAP’s branchless banking work in WAEMU. Franck Chevalier leads the Studies, Survey and Statistics Services at EY. Luc Veyssiere is the manager of the economic department within this service at EY. Juliette David is Head of Research & Consulting at Horus Development Finance.