> Posted by Syed Mohsin Ahmed, Chief Executive Officer, Pakistan Microfinance Network

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

At the Pakistan Microfinance Network, we are always in search of more data on financial inclusion in Pakistan. So imagine my delight when I heard about the Country Profiles feature on the Center for Financial Inclusion’s Mapping the Invisible Market website that features data from the World Bank Global Findex among other sources. My exploration of the Pakistan country profile page gave me some new insights and raised a few questions for future research.

First, a very high proportion of the people who took loans (largely informal) in the past year in Pakistan took them to deal with health and emergencies. Seventeen percent of all adults in Pakistan borrowed in the past year for health and emergencies, while only about 10 percent of the people in other middle income economies did so, even though in Pakistan, people are less likely to take out loans overall.

Reasons for taking out a loan

This observation makes me wonder if there is a pent-up demand for insurance in Pakistan. For a country that has seen a number of major disasters in the last few years, no doubt there is a great need for insurance products in Pakistan to help prepare for emergencies.

When I looked further at who it was that was taking out these loans (again, both formal and informal) for health or emergencies, I noticed that they were disproportionately rural, or poor, or to have only completed primary school. These observations offer a picture of what vulnerability looks like in Pakistan, and where financial inclusion efforts might be targeted for maximum impact.

Looking specifically at formal financial services, I found that the percent of people who have an account at a formal financial institution in Pakistan is quite low—10 percent—compared to the rest of South Asia—33 percent. In both, the number one use of accounts is to receive wages. Unsurprisingly, in Pakistan, education and gender have a great impact on the use of accounts—25 percent of people whose education level is secondary school or higher have an account compared to only four percent of people who have just a primary school education. Seventeen percent of men have an account compared to three percent of women.

Individuals with an account at a formal financial institution

These observations are indicative of accounts being dependent in part on employment. In Pakistan, when someone has a job in the formal sector, it is often tied to a bank account through which to receive wages. Since education and gender in Pakistan are also tied to employment, it means that women and those in primary school are not as likely to have that convenient on-ramp to inclusion.

Having this data and being able to visualize it is a giant step toward understanding financial services use in Pakistan. While the Pakistan Microfinance Network has great data on microfinance organizations in Pakistan, there are particular questions that we are answering right now that are pushing us to look deeper. Since discovering this tool, we have been using it to build a baseline of our understanding of financial inclusion within Pakistan.

If you want to take your own tour and explore Pakistan further (or your own country), visit the Center for Financial Inclusion’s Mapping the Invisible Market website. If you want to know more about our work at the Pakistan Microfinance Network, visit us here.

For more information on Financial Inclusion 2020, sign up for campaign updates.

Charts’ data source: Global Financial Inclusion Index (Global Findex), World Bank 2012

Have you read?

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