Inclusion in Myanmar: A New Hope

After decades of isolation, Myanmar in 2011 started to implement a range of economic and political reforms. With that, international donors and investors are tracking Myanmar’s financial transition, looking for any new data that might shed light on the country’s economic potential.
And there is encouraging data. Released in April, the World Bank’s 2014 Global Financial Inclusion database (known as Findex) included Myanmar for the first time. Still, the survey results underscore the monumental task of expanding financial services access in Myanmar, particularly among the poor and women. Three results from the report are especially noteworthy:
Myanmar still has very low levels of financial inclusion.
Only 23 percent of adults reported having an account at a formal institution in 2014—among the lowest in the region. By comparison, China and Thailand reported that 79 percent and 77 percent of adults, respectively, have a formal account. Not surprisingly, women and the poor fare the worst in Myanmar. Only 17 percent of women and 16 percent of the poorest people have an account, the lowest recorded in the region.
Total percentage of adults with a formal account:

Source: Findex (Used with permission).
Usage of formal services is low.
In addition to low levels of access, actual usage of formal financial services is also very low compared with other countries in the region. Findex defines “high-use” accounts as those where people make at least three transactions a month. In the case of Myanmar, only 11 percent of accounts are “high-use” compared to 50 percent in China. Only 12 percent of adults in Myanmar saved formally in 2014, and only 5 percent of adults said they saved for their old age. Moreover, only 2 percent of adults in Myanmar made a payment with their account last year compared with 14 percent in the Philippines or 16 percent in Indonesia.
Quality of usage of accounts by percentage of adults:

Source: Findex (Used with permission). Note that the height of the bar represents the percentage of adults who report having an account.
Cash rules in Myanmar.
Although cash is the most common form of payment in most developing countries throughout the region, Myanmar nevertheless stands out. For example, of the 24 percent of adults who had a wage in 2014, none received these funds digitally. Only 1 percent received government payments, and these payments were all made in cash. All school and utility fees paid in 2014 are also reported to be in cash.
Wage payments received by total percentage of adults:

Source: Findex (Used with permission). Note that the height of the bar represents the percentage of adults receiving wage payments.
Despite these huge challenges, there are plenty of reasons to be optimistic for real progress in Myanmar. Here’s why:

• The microfinance sector is expanding, with a few solid microfinance institutions in place and high-caliber international providers.
• 10 finance companies have been set up in just over a year. The liberalization of the banking sector could also increase financial access, though it will take time to build staff capacity.
• The biggest opportunity for improved financial inclusion is the growth of mobile money. This will require that the Central Bank authorize mobile network operators to offer mobile wallets that enable customers to make payments and store value. Predictions are that mobile penetration will rise from 11 percent in 2013 to 80 percent by 2016, which will create tremendous opportunities for mobile banking.

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The Consultative Group to Assist the Poor (CGAP) is a partnership organization which seeks to advance financial inclusion. Housed at the World Bank, CGAP was established in 1995 and is a collaboration of more than 30 member agencies, united by the mission of improving the lives of poor people through better access to appropriate financial services.
Photo Credit: Leesa Shrader, CGAP
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