Only 3.5% of Malagasy people have taken out a bank loan
A new study reveals that the penetration of bank credit is low in the country.Malagasy people would rather borrow money from a family member than from commercial banks, according to a survey by the National Institute of Statistics and the World Bank.
Only 3.5 per cent of respondents said they have borrowed from a bank, mutual bank or other financial institution before, while 50.1 per cent have contracted a loan from a family member, friend or colleague.
"This can be explained, firstly, by the high rates charged by banks for lending money, by the behaviour of households and by the state of the economy," said the experts that led the study, quoted by the Express.
The development of mobile banking is expected to improve the situation, allowing Malagasy people to buy credit, pay bills, transfer money and to save via mobile phone.
Orange Money and Mvola were both launched in 2010 and mobile banking service Airtel Money has been available since February 2013 through 170 post offices in Madagascar.
These services are emerging as an effective tool to improve access to financial services in a country where bank account holders only represent about five percent of the population.