Financial service providers looking to serve the low-income market in Myanmar should focus on helping people “move savings from under the mattress.” This is one of the conclusions of the Financial Diaries Workshop, which was led by Guy Stuart, Ph.D., Executive Director of Microfinance Opportunities (MFO). He presented findings from the year-long Financial Diaries study at an interactive workshop at the Inya Lake Hotel in Yangon to an audience of policy-makers, financial service providers, researchers and economic development experts.

The workshop was part of the MicroLead Programme, which aims to contribute to the development of a strong, inclusive financial sector in Myanmar.  With funding provided by Livelihoods and Food Security Trust Fund (LIFT), UNCDF commissioned MFO and TNS Myanmar to conduct the Financial Diaries research study to provide in-depth market intelligence on the economic behavior of low-income residents of Myanmar.

The study focused on low-income women living in urban, peri-urban and rural areas of the Mandalay region. The Diaries gathered information each week between August 2014 and July 2015 on the respondents’ purchases, sales, earnings, loans (including store credit), loan repayments, savings deposits and withdrawals, and transfers of money both within the household and outside of it. The respondents also reported on any unusual events that occurred each week.

The research found that the women in the study have a number of different roles within their households as earners, money managers and financial managers, as well as being in charge of household spending. They filled these roles in diverse ways, with no one “typical” mix of roles. At the same time, the earnings also come through a diverse set of activities including farming, market selling, handicraft production, employment in an informal enterprise, casual labor and factory work. 

A focus of the study was on the extent to which women had access to financial services. The research found that women were largely financially excluded and relied on their earnings, home savings and intra-household transfers to fund their day-to-day cash flow and their unusually large expenses.

The women in the study showed diverse attitudes towards debt. About one-third did not borrow during the year-long study, while about 40 percent borrowed infrequently. But one-quarter borrowed eight times or more, including a subset who made heavy use of store credit. This last group of regular borrowers was also most likely to have taken a loan from a microfinance institution or a bank. The research also uncovered signs of over-indebtedness and households being caught in a debt trap. One indication of this is that women used new loans to make repayments on existing loans about 30 percent of the time. The most common interest rate the women reported paying was about 20 percent per month on loans with monthly interest rates.

The study only covered respondents from the Mandalay region and was intended as a “deep dive” into the economic lives of the respondents. Nevertheless, the study has considerable policy implications. Dr. Stuart noted: “The data suggest that the emphasis of efforts in deepening financial markets in Myanmar should be on enabling women to save in a safe, convenient manner. Entry into the loan market should take place with caution and focus on ensuring that low-income households not get caught in a debt trap.”

Paul Luchtenburg, UNCDF Programme Specialist, stated that this study supplements the extensive Making Access Possible (MAP) research, which took a broad look at the state of financial inclusion in Myanmar. The Financial Diaries research takes a deeper dive and highlights the key role women play as money managers in the household and the need for appropriate and affordable financial services.