One of the tools used by entrepreneurs as part of good financial management is having an active bank account. However, in developing countries, half of the population do not even have one – compared to just 10% in developed countries – and of those with accounts, only 43% use it for savings.
According to the World Bank, the lag in the utilization of bank accounts include the high banking fees (up to 5$ per withdrawal at the teller), long travelling distances and slow administrative processes involved in opening an account making people shy away.
Being able to save is key to developing new business ideas, increasing a business print, or investing in local communities. But even among people owning a bank account, only 43% will use it to save.
While the cash culture is still prevalent, the use of mobile money or “investment circles” are alternative tools used by African entrepreneurs. To hear more about how Ukumbi entrepreneurs use some of these tools, watch out for our next post (Author: Karin Stumpf)