Assessing banking services for women working in the informal economy : the case of the Mzansi account.

Abstract

Rutherford's research demonstrates that "the poor can save, do save, and want to save money" (Rutherford, 1999: 7). Furthermore, if given a formal bank account this correlates with the poor being more likely to save (Porteous and Hazelhurst, 2004: 63). But in 2004, the unbanked made up 54.5% of the South African adult population (FinScope, 2006: 18). In the same year, to draw more people into the realm of the banked the Mzansi account was launched. The account is a first order transactional product and a saving service which targets poor clients from LSM 1-5. Mzansi account holders are found to be significantly more likely to be informally employed or unemployed (Porteous, 2007: 10). Yet there is a research gap about the financial behaviour of those working informally. This study draws on the experiences of women working in the informal economy who utilise the Mzansi account. It aims to determine the limitations and benefits of the account. It also seeks to learn what role the Mzansi account plays in the savings habits of the women and how it influences their livelihood strategies. This is with a view to recommending how the services of the Mzansi account can be improved so as to maximise its support of informal workers. The research suggests that the intrinsic benefits of the Mzansi account are that the account's bank charges are lower compared to other bank accounts, a small initial deposit is needed to open the Mzansi account and a proper address is not required to open the account. The interviewees highlight five day-to-day limitations on the Mzansi account. First, interviewees identify the lack of a bank book to view the transactional activities occurring in the account as a problem. Second, the cap on the account where a maximum of Rl5 000 is only permitted hinders the potential to save money in the account and receIve insurance pay outs. Third, the cost and frequency of bank charges are still expensive. Fourth, the distance to access banks or ATMs for the women in semi-rural areas makes it difficult and costly for them to access their bank account. Lastly the issue of crime is a problem when utilising ATMs. Savings from the Mzansi account influence livelihood outcomes by enabling investment in funeral insurance through debit orders. This investment helps mitigate future vulnerability. In terms of livelihoods and the women's businesses, the savings from the Mzansi account are used for the purchasing of stock. This may not improve livelihood outcomes by generating further income but it maintains the women's business stability.

money" (Rutherford, 1999: 7). Furthermore, if given a formal bank account this

correlates with the poor being more likely to save (Porteous and Hazelhurst, 2004: 63).

But in 2004, the unbanked made up 54.5% of the South African adult population

(FinScope, 2006: 18). In the same year, to draw more people into the realm of the banked

the Mzansi account was launched. The account is a first order transactional product and a

saving service which targets poor clients from LSM 1-5.

Mzansi account holders are found to be significantly more likely to be informally

employed or unemployed (Porteous, 2007: 10). Yet there is a research gap about the

financial behaviour of those working informally. This study draws on the experiences of

women working in the informal economy who utilise the Mzansi account. It aims to

determine the limitations and benefits of the account. It also seeks to learn what role the

Mzansi account plays in the savings habits of the women and how it influences their

livelihood strategies. This is with a view to recommending how the services of the

Mzansi account can be improved so as to maximise its support of informal workers.

The research suggests that the intrinsic benefits of the Mzansi account are that the

account's bank charges are lower compared to other bank accounts, a small initial deposit

is needed to open the Mzansi account and a proper address is not required to open the

account.

The interviewees highlight five day-to-day limitations on the Mzansi account. First,

interviewees identify the lack of a bank book to view the transactional activities

occurring in the account as a problem. Second, the cap on the account where a maximum

of Rl5 000 is only permitted hinders the potential to save money in the account and

receIve insurance pay outs. Third, the cost and frequency of bank charges are still

expensive. Fourth, the distance to access banks or ATMs for the women in semi-rural

areas makes it difficult and costly for them to access their bank account. Lastly the issue

of crime is a problem when utilising ATMs. Savings from the Mzansi account influence livelihood outcomes by enabling investment

in funeral insurance through debit orders. This investment helps mitigate future

vulnerability. In terms of livelihoods and the women's businesses, the savings from the

Mzansi account are used for the purchasing of stock. This may not improve livelihood

outcomes by generating further income but it maintains the women's business stability.