Afford Two, Eat One: Financial Inclusion in Rural Myanmar
The aim of this report is to provide a foundational reference for organisations wishing to develop products and services for financially constrained consumers in Myanmar.
The Afford Two, Eat One report explores the financial landscape for the poor in Myanmar, mapping behaviours around and attitudes to savings, investments, loans and transactions. The report identifies thirteen findings and twenty one insights, as well as a number of opportunities for future products and services.
This project was made possible through funding by the Institute for Money Technology and Financial Inclusion. It was carried out by Proximity Designs, Studio D Radiodurans and frog. The report is the result of over two hundred in-context, in-depth and ad-hoc interviews conducted across Myanmar over an eight week period in 2014. It draws on well-established human centered design and research principles from a team made up of local staff and internationals. The team uses a pop-up studio approach.
The Financial Landscape
The report starts by mapping the diverse informal and formal financial landscape including banks, peer savings groups, pawnshops and loan sharks and explores issues such as motivations for saving, strategies for investment, triggers for borrowing.
Findings & Insights
Some of the findings map to what is known in other markets (all be they with Myanmar characteristics), while some are unique to the locale. For example:
- In Myanmar (mostly buddhist) faith based lending groups are growing in popularity and have relatively low default rates, especially given cyclical and seasonal pressures. Savers and borrowers appreciate that unlike the larger banks, all loans, profits and other benefits are circulated into the local community. Globally, motivations for paying back a loan vary depending on on context, culture, personality and circumstance. For many borrowers in Myanmar defaulting on the loan would place a heavy burden on them and their family not just in this life, but also in the next.
- There are many examples of loan cycles out of sync with local crop cycles. Addressing this and many other known service offering and service design issues such as sign-up processes and opening hours would already have a significant impact.
- Gold is often cited as a safe haven for savings, especially in Asia and particularly amongst the poor. In Myanmar one of the most obvious measures of financial fortitude is the number of gold bangles worn by the female traders in the town market. Gold jewellery has benefits for social occasions but is often pawned or sold at a steep discount: gold-merchants melt it and fashion new jewellery. However, not all gold of the the same purity is of equal value: branded gold ingots from particular suppliers have a higher value than those bought elsewhere -- clues are in the packaging and presentation, and some believe that the long term value of gold will rise if bought on "auspicious" days.
- While the informal sector is diverse, a significant gap for mid-sized and medium/long-term loans exist.
- We introduce the concept of proximate banking, the notion of that recognises that, under the right conditions, informal solutions can relatively efficiently address gaps in the market by bridging to more formal offerings. It challenges the idea that every part of the service ecosystem needs to be designed from the top down. Similarly, it helps to identify where the proximate user's needs still aren't being met. Read more about the concept of proximate banking here.
- Economic migration within the country and to neighbouring countries has created regional labour shortages. Manual labour costs are rising and many farmers consider investing in a tractor tiller or other piece of farm equipment. The very narrow window of time between harvesting rice crops and preparing the next season’s field make current loan options unviable.
- While education is seen as a path to a better life beyond the village it is hindered by cost, the distance to the school and the opportunity cost of going to school. For those who can afford it, higher education is seen as the next step. For others, Grade 5 and beyond often involves choosing which one child will be educated.
- The title of this report, “Afford Two, Eat One," is a quote from a lady in Hnaw Pin village as she reflected upon her family's well-being and her outlook for Myanmar, thoughts that were echoed in the words and deeds of numerous participants in this study. Although Myanmar is experiencing a period of openness, growth and opportunity, the poor still face significant challenges to achieving a stable income and lifestyle. Many people prefer to re-invest their earnings in business, family and the community rather than spend it on short-term comforts.
The nascent mobile culture provide opportunities for understanding global technology trends, explored in this sidebar on Mobile Myanmar.
All thirteen findings and twenty-one insights are written up in full in the main report.
Three case studies explore the rise of faith based lending, the motivation behind many family's most significant saving event and the economics of a a small market stall.
The HEISIL Framework
The HIESIL framework (Household Income, Expenditure, Savings, Investments and Loans) was used to map family and household income. This consistent yet flexible data-collection method, allowing the team to understand money and value movement through the family unit, as well as perceptions and attitudes towards loans, savings and investments.
Six archetypes were created, modelled on human traits and behaviours. Archetypes can capture a person in a particular moment in time while acknowledging that individuals are dynamic, changing with the season, circumstance, over the course of time, sometimes even within a single day. They provide a useful foundation for the design of new services.
Nyo Gyi farms ten acres, enough to put food on his family's table and sell produce at the market. He is a faithful Buddhist, has strong family values and believes the community should always support one another. His family donates to the monastery every day and, when it can, saves small amounts for the education of their five children and for their 3-year-old son's future novitiation. While Nyo Gyi believes secondary education can provide a better life beyond the village, he worries he will only be able to afford to send one of his children to secondary school.
Though his entire farm operation is dependent on loans, he is generally risk-averse, and will only be involved in investments he knows works or is recommended by someone he trusts.
Each archetype documents the financial services used, available collateral and a financial snapshot. We also explore the evolution of archetypes over time.
The report includes a photo archive of over 200 photos released under a creative commons license.
Studio D Radiodurans offers half, full and two day workshops on:
- Designing for Emerging Markets
- Designing for Resource Constrained Consumers
- Designing for Social Impact
All three workshops are structured to give multinational product, service, design and strategy teams a grounded understanding of consumer lives, behaviours and motivations. They draw on over a decade's primary research across industry segments from shanty town dwellers to the upper middle class.
The team has worked on products and services that are in the hands of hundreds of millions of emerging market consumers today.
Download the Full Report