# Section 3.2. Financial inclusion in the Sahel

Penetration of financial institutions is generally low, and most households do not hold savings, although there is sizeable variation between the five EHCVM countries. Access to financial markets may help households cope with the effects of seasonality through credit or insurance products, while savings may enable households to smooth any losses in consumption that arise in the lean season. Pooling data from across the EHVCM sample, around 28.9 percent of the population live in a household in which any member held an account with a financial institution, and just 16.1 percent of the population live in a household in which any member actually held savings (Figure 4).<sup>18</sup> Nevertheless, financial inclusion differs significantly between the five countries, with more than half of the population of Burkina Faso and Senegal living in a household where someone holds an account compared to less than 1 in 10 in Niger and Chad. This higher financial inclusion in Burkina Faso and Senegal seems to be driven largely by the penetration of mobile banking, the most prevalent form of account in the two countries.<sup>19</sup>

**Figure 4. Share of the population with access to financial institutions and savings, by country**

<!-- Start of picture text --> 60<br>50<br>40<br>30<br>20<br>10<br>0<br>Regular bank Postal Rural savings Mobile Stored-value Any Any (with<br>association / banking / prepaid savings)<br>microfinance card<br>Burkina Faso Mali Niger Senegal Chad All countries<br>(percent)<br>Share of the population living in a household with such an account<br><!-- End of picture text --> Note: Individual-level sampling weights applied. Statistics capture whether any household member had an account or had savings. Source: EHCVM and World Bank estimates.

There is no clear evidence that households take out loans or are able to sell livestock to cope with the lean season. Across the EHCVM sample, around 16.2 percent of households had outstanding loans at the time of the survey, but the dates when these loans were agreed do not reveal any clear seasonal patterns. Additionally, despite the hypothesis that households may use sales of livestock as a buffer to insulate against losses induced by shocks or seasonality, existing evidence from both the Sahel and other countries suggests that this mechanism is not frequently observed in practice.<sup>20</sup> In-keeping with this, in the EHCVM data, the number of animals that households own in fact appears to be very slightly higher in the wave corresponding to the lean season, taking Burkina Faso, Mali, Niger, and Senegal together. These results persist even when disaggregated by animal type – large ruminants, small ruminants, pigs, poultry, and

> 18 The financial institutions considered are regular banks; postal banks; rural savings associations or microfinance institutions; mobile banking; and stored-value or prepaid cards.

> 19 This may partly reflect patterns of mobile phone ownership. According to the EHCVM assets module, around 95.3 percent, 93.7 percent, and 98.8 percent of households own at least one mobile phone in Burkina Faso, Mali, and Senegal respectively, compared to 72.7 percent and 64.4 percent of households in Niger and Chad.

> 20 See Hoogeveen (2003), Fafchamps and Lund (2003), and Kazianga and Udry (2006).

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