Patterns of savings culture in Pakistan, 'committees' most popular: World Bank

[Naveed Yaseen]

Only one per cent of the adult population invests in NSS, two per cent in prize bonds, 1.9pc uses insurance

Saturday, March 21, 2009
By Mehtab Haider

ISLAMABAD: Pakistan’s three per cent population out of 160 million is saving their hard-earned money in formal sectors as only two per cent are investing in prize bonds and one per cent in National Savings Schemes (NSS), a survey sponsored by the donors shows.

The survey, sponsored by the World Bank and UK-based DFID, on Pakistan’s banking and financial sector on request of the finance ministry, states that 39 per cent people save regularly but saving at home is widely practiced across all segments.

The top four means of saving across Pakistan are all informal, the survey finds and said that only eight per cent of those who save do so with a bank. Almost a quarter of the adult population (23pc) saves through Committees.

“Contrary to expectations, committees are an urban (38pc) phenomenon rather than rural (14pc) with nearly equal popularity among men and women (about a quarter each),” the survey found.

Even among the banked people, saving at home is very popular, as is participation in savings committees. Saving at home is popular among the banked across urban and rural areas. Committees are more popular among the banked urban rather than the banked rural people.

“Investments in land and livestock are more popular means of saving among the banked rural and among men rather than in urban areas and among women,” the survey findings states.

There are 56 per cent of the total adult population saves/invests either formally or informally, however, 53 per cent save informally while formal savers are only 3 per cent.

Out of total banked, there are 19 per cent men, 4 per cent women and predominantly those with university level education having age between 30 - 60 years and over. Their earning are in the range of Rs100,000 and above per annum, mostly married and widowed and more urban than rural, it further states.

According to the findings of the survey, the banked women are 4 per cent having age between 20 - 49 year olds (71 per cent) who are mostly housewives and students (76 per cent). There are 69 per cent having some level of education, though 31 per cent are illiterate, 55 per cent are urban and 45 per cent are rural.

Access related reasons, interestingly, are not the most important reasons for being unbanked, income related reasons are (for 55 per cent of the unbanked.

The survey states that there are 35 per cent of the total adult population who is using loan/credit facility either formally or informally but formal borrowers are only 2 per cent while informal borrowers are 33 per cent.

Moneylenders also known as the traditional ‘loan sharks’ are being used by only 3 per cent of the population. It is the shopkeepers/local grocery store owners who are the prime source of loan/credit for all market segments (78 per cent)

Only 2.3 per cent of the total population is using formal or informal modes of money transfer. Negligible portion (1.9 per cent) of the total adult population uses Insurances. Across all segments insurance is not being availed firstly due to choice and secondly due to inability to afford it.

Over 50 per cent of even the educated (including graduates and post graduates) have actually never thought about getting insurance even though lack of understanding about what is meant by insurance, how it works and where it may be obtained are not major issues keeping the educated from buying insurance.

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