Financial Sector Development in Africa: Opportunities ... - World Bank

22 Jarotschkin
suite, MFIs need to understand how to deliver these suites conveniently
to customers (FSD Kenya and CGAP 2009).
How to improve and use client knowledge. To better determine which
product customers demand most, MFIs need to enhance their understanding
of their customers’ needs. They need to find out whether
MFIs lack credit, insurance, payment services, and/or deposits through
market research. Research is costly, however, and—as with all other
improvements—needs to be done in a cost-efficient way. Thus far, 84
percent of MFIs in Africa have “used market research to identify client
needs.” 12 Together with MFIs in East Asia and the Pacific (84 percent) and
Latin America and the Caribbean (85 percent), this is the lowest percentage
of MFIs—in all other regions, 91 to 100 percent of reporting MFIs
carry out market research to identify clients’ needs. Moreover, only 43
percent of MFIs in Africa commission market research occasionally and
14 percent claim to order these services on a biannual basis; only 12 percent
commission research regularly. In terms of regularly commissioned
market research, this is the weakest performance across all regions: in
East Asia and the Pacific it is 22 percent; in Europe and Central Asia, 40
percent; in Latin America and the Caribbean, 25 percent; in the Middle
East, 42 percent; and in South Asia, 28 percent.
Although it is difficult to replace one’s own market research, such
research is frequently expensive. Yet research results that are already
available can also be used to good advantage. In recent years, publicly
available information on demand constraints has increased. For various
African countries, FinScope delivers a report every two years that deals
with financial access questions about what kind of access customers
have (that is, whether their access is formal, semi-formal, or even informal);
on which grounds customers make their financial decisions; and
which constraints frame their choices and in some cases make it impossible
for them to be financially included in any way. These studies are
also broken down along areas within a country. Other in-depth studies,
frequently in the form of randomized control trials, have been provided
by the World Bank and J-PAL–affiliated professors. 13 More information
about specific questions and countries has been provided by
Gallup, Financial Sector Deepening (FSD) Kenya, and Financial Sector
Deepening Trust (FSDT) Tanzania. Even if not directly applicable to
very specific areas, this information may help to frame knowledge that
MFIs have in hand about an area, and can help cut down on market
research design costs.