ESAF Report: Savings Demand Market Research Study West Bank and Gaza

This study was requested by the Expanded and Sustained Access to Financial Services (ESAF) program in 2009.

The findings and recommendations in this report are based on data collected by the Alpha Survey Company of 858 respondents who were interviewed in the West Bank and Gaza Strip. The data was then analyzed and summarized by Mennonite Economic Development Advisors (MEDA), in accordance with the objectives set by AED and its subcontractor, ShoreBank International (SBI).

The ESAF program supports USAID in its efforts to build a more inclusive financial sector that increases financial services for Palestinian households and micro, small and medium enterprises. Through a variety of interventions, ESAF addresses identified weaknesses in the financial system at the consumer, institution, and regulatory environment levels. The program also includes a fixed capital financing mechanism that funds Small and Medium Enterprise equipment upgrades, assists with the creation of joint ventures and technology transfers.

Summary Findings
 

• Low-income levels and the perception that they did not need a savings account, were the main reasons that respondents do not save.
• There is a lack of financial and banking knowledge reported by respondents, as well as an interest in learning more about financial issues.
• A high number of survey participants in both regions stated that they would save for retirement.
• The overwhelming preference amongst respondents, both current and potential savers, was for an account where their savings is accessible to them at any time. The desire for accessibility far outweighs the desire for a high-interest rate.
• A small number of potential savers were not interested in earning interest due to their religious beliefs. In addition, there was a much greater interest in Islamic savings in rural residences than in urban ones.

Summary Recommendations

• There is an opportunity for banks in both geographic areas to reach out to existing and potential clients by using financial education. FIs should examine the issue of financial knowledge further to determine if there is a lack of income to save or a lack of financial knowledge on amounts required to save and the types of FIs savings products.
• There is an opportunity for FIs to develop a savings product that is specifically targeted to individuals saving for retirement.
• In order to encourage clients to save in an account for a longer-term, it is essential that banks focus on relationship-building and outreach in an attempt to build trust.
• There are three groups that are potential markets for savings products: entrepreneurs, unbanked women, adults saving for their children, unbanked youth and individuals with salary deposits.