1. Demographic Trends and the Future
of Financial Inclusion
Financial Inclusion 2020 Project: Mapping the Invisible
Market
Elisabeth Rhyne
Global Youth Economic Opportunities Conference
Washington, September 2012
2. Three Parts
1. Changing global demographics
2. A lifecycle model of financial service demand
3. Implications for financial inclusion policy
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3. Thank you to the Financial Inclusion 2020
Project’s Funding Partners
Lead Partner Principal Partner
CFI Founding Sponsor
5. By 2100 total population will level off at 10 billion
In October, 2011 world population reached 7 billion.
Throughout the 21st century nearly all growth will come from
the developing world.
Source: United Nations 2010
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6. Most of the world’s “unbanked” are in middle
income countries. (gold)
Top 20 countries by number of people age 15+ without bank accounts (in millions):
Rank Country Millions Unbanked
1 India 793.2
2 China 484.2 Totals
3 Indonesia 192.9 Top 20: 2,581
4 Pakistan 155.7
World: 3,413
5 Nigeria 111.4
6 Bangladesh 89.9
7 Brazil 86
8 Mexico 82.3
Low income
9 Russia 73.5
10 Egypt 73.2 Middle income
11 Philippines 68.5 High income
12 Vietnam 68.4
13 Congo, Dem. Rep. 63.5
14 Sudan 40.5
15 United States 37.3
16 Tanzania 37.1
17 Colombia 32.2
18 Afghanistan 31.3 Source: World Bank Global Findex 2012,
World Bank Data Bank 2012, author’s
19 Turkey 30.8 calculations.
20 Iraq 28.7
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18. Expanding working age population
The working age population in middle income countries is
surging. The challenge is to enable these people to fulfill
their productive potential.
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19. Total dependency ratios
When countries have a low dependency ratio, they are poised
for economic growth. This is called the demographic window.
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20. South Africa is in the demographic window
In South Africa, fertility rates are slowing, reducing the percentage of young
children, while there will be increasing numbers of elderly (though still a small fraction of
the total population).
2010 2020
100+ 100+
90-94 90-94
80-84 80-84
70-74 70-74
60-64 60-64
50-54 50-54
40-44 40-44
30-34 30-34
20-24 20-24
10-14 10-14
0-4 0-4
3,000 1,000 1,000 3,000 3,000 1,000 1,000 3,000
Source: United Nations 2010
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21. South Africa’s middle-aged population is growing
There will be many more 30-39 year olds and 60-69 year olds during the next decade.
South Africa net change in population 2010-2020
1400
1200
1000
Popula on change ('000s)
800
600
400
200
0
-200 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90+
-400
-600
-800
Age Group
Source: United Nations 2010
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22. Mexico is also in the demographic window
Mexico also will see more adults, fewer children, and an increasingly older population
along with declining fertility.
Mexico population pyramids
2010 2020
100+ 100+
90-94 90-94
80-84 80-84
70-74 70-74
60-64 60-64
50-54 50-54
40-44 40-44
30-34 30-34
20-24 20-24
10-14 10-14
0-4 0-4
6,000 3,000 0 3,000 6,000 6,000 3,000 0 3,000 6,000
Source: United Nations 2010
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23. Mature adults dominate population growth in Mexico
The number of children will actually shrink over the next decade. Financial inclusion
policy in Mexico must address the needs of mature adults.
Mexico net change in population 2010-2020
4000
3000
Popula on change ('000s)
2000
1000
0
0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90+
-1000
-2000
Age Group
Source: United Nations 2010
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24. Nigeria’s population pyramid will still have
the traditional shape
Nigeria population pyramids
2010 2020
100+ 100+
90-94 90-94
80-84 80-84
70-74 70-74
60-64 60-64
50-54 50-54
40-44 40-44
30-34 30-34
20-24 20-24
10-14 10-14
0-4 0-4
15,000 5,000 5,000 15,000 15,000 5,000 5,000 15,000
Source: United Nations 2010
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25. The youth bulge in Nigeria will be enormous
In Nigeria financial inclusion policy will be all about access and youth
Nigeria net change in population 2010-2020
14000
12000
Popula on change ('000s)
10000
8000
6000
4000
2000
0
0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-
Age Group
Source: United Nations 2010
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26. A lifecycle approach to financial services
Childhood Youth Young Adult Mature Adult Old Age
birth marry children born children marry parents die
Lifecycle events death
Education enter school finish school child in school child ends school
enter workforce set up household migrate leave
Economic life workforce
Activities, need establish identity continue learning contribute to workforce workforce contribution wind down economic
begin learning prepare for work launch business grow business activity
s, and care for children launch children care for
food, clothing food, clothing care for parents grandchildren
responsibilities identity, food, clothing prepare for old age
early childhood housing food, clothing
health & nutrition start-up business investment food, clothing medical care
children’s school and business investment source of income
medical children’s school, wedding post-retirement
parent’s medical, funeral illness and death
Payments + receive salary, pay bills, business transactions, send pay bills, receive
receive support payments
management remittances support payments
Savings, short learn to use
learn to save seasonal needs, consumption smoothing, emergencies
term savings services
save for draw-down of
Savings, long save for business save for life cycle events for
learn to save schooling and savings; annuity or
term investment, housing self, parents, children
“launch” pension payouts
some business business loans; home loans; consumer credit; school loans,
Credit emergency loan
credit emergency loans
Insurance health health, property, crop, life, disability health, funeral
setting financial goals, use of use new
Financial intro to thrift, begin using financing business growth,
more complex services; technologies, access
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education, etc. financial identity savings
establish credit history
planning for old age,
for PWD
27. A lifecycle approach to financial services
Continued business finance Youth savings
Health insurance Education loans
Remittances Initial business finance
Government benefits Basic financial education
Disability insurance
Older Children and
People Youth
Mature Young
Families Families
Health insurance
Housing finance Health insurance
Business maintenance Housing finance
Weddings and funerals Business start-up and growth
Savings for old age Consumer loans
Bill payment and salary deposit
Note: Financial decisions by people in their productive years (young and mature families) will vary not only by their economic
status, but also by their responsibility for dependents and expectations of their own future dependency.
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28. Implications for financial inclusion
1. Demography suggests that financial inclusion is a critical
enabler of a country’s ability to achieve its economic
potential. Much more than “banking the unbanked”.
2. Countries with different demographic characteristics will
have different financial inclusion strategies
– Middle income countries – window countries – where most of the
unbanked live. Focus on mature families, elderly.
– Poorest countries – Africa. Focus on youth and access.
3. Use lifecycle model to segment customers – young
families and mature families have different financial needs
4. Urgency – and difficulty – of increasing savings rates
5. Financial education at critical life points
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29. FI2020’s Definition of Financial Inclusion
1. Access to a full suite of financial services
• Including credit, savings, insurance, and payments
2. Provided with quality
• Services are convenient, affordable, suitable, provided with dignity and client
protection
3. To everyone who can use financial services
• Both excluded and under-served populations. Special attention to rural, people
with disabilities, women, and other often-excluded groups
4. With financial capability
• Clients are informed and able to make good decisions about their use of
financial services
5. Through a diverse and competitive marketplace
• A range of financial service providers, supported by robust financial
infrastructure and a clear regulatory framework
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30. Rising numbers of elderly
In middle income countries the percentage of elderly is rising
steeply. This will happen later in the poorest countries.
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