Access to Savings in LSM 1-5 2007

The FinMark Trust and the Savings Institute of South Africa have begun a comprehensive evaluation of access to savings products in South Africa. The methodology used for this study is based on CGAP’s Country-Level Savings Assessment. This assessment explores the savings environment in a holistic manner in order to identify potential bottlenecks and opportunities in the provision of savings services for the poor. The assessment is broken down into four levels:

1. The macro layer comprises the regulatory and institutional environment including the policies, regulations and laws that govern conduct in the market for provision of savings services

2. The meso or support layer facilitates the functioning of the market for savings provision, and includes the payment system as well as other supporting services that enable consumers and providers to purchase and provide savings products respectively

3. The micro layer includes the various providers of savings products (banks, cooperatives, mutuals, insurance companies etc), the nature of the products themselves and the organizational constraints that inhibit the development of accessible or attractive savings products

4. The consumer, including usage of savings products and other characteristics that are likely to impact on savings behaviour The focus of this report is on the latter, namely the consumer. This document explores available survey data to assess the extent to which the poor in South Africa have access to various savings products.

Before undertaking the analysis it is useful to develop a working definition of savings. In addition, the term ‘access’ also requires clarification. Finally, it is also necessary to identify which market segments are regarded as poor.