Access to Finance - June 2017

Access to Finance
June 2017

The Reserve Bank’s function was extended in 2014 to include promoting financial inclusion that supports macroeconomic stability and economic growth. Financial inclusion plays a vital role in improving the quality of life for Tongans by ensuring that the products and services provided by the financial service providers, meets the public’s demand and are easily afforded by people at all levels of society. Access to basic financial services is essential for promoting inclusive economic growth by enabling all people to integrate and actively contribute to the economy by using savings and loans products as well as the payment systems. The Reserve Bank conducted a Supply Side Survey (SSS) for the first time in 2015 which focused on the individuals’ level of access to finance as well as the usage of financial services from the perspective of the banking system only. The Supply Side Survey was updated in June 2017 to measure the progress of the level of access to finance in Tonga.

Access to Finance improved over the year to June 2017

Access to Financial Services

Over the year ended June 2017, the total access points in the banking system rose owing to an increase in the number of ATMs, bank branches and EFTPOS terminals (refer to Table 1 below).

Table 1: Summary of the Type of Access Points in Tonga by Banks

June 17

Banks June 17
Total Access Points No. of Branches No. of Agents No. of EFTPOS No. ATMs
ANZ 153 3 0 134 16
BSP 374 4 19 339 12
MBf 3 3 0 0 0
TDB 8 8 0 0 0
PICB 0 CLOSED DOWN
TOTAL 538 18 19 473 28

June 16

Banks June 16
Total Access Points No. of Branches No. of Agents No. of EFTPOS No. ATMs
ANZ 217 3 0 200 14
BSP 280 2 20 250 8
MBf 2 2 0 0 0
TDB 8 8 0 0 0
PICB 1 1 0 0 0
TOTAL 508 16 20 450 22

June 15

Banks June 15
Total Access Points No. of Branches No. of Agents No. of EFTPOS No. ATMs
ANZ 162 3 0 150 9
BSP 33 2 7 16 8
MBf 2 2 0 0 0
TDB 8 8 0 0 0
PICB 1 1 0 0 0
TOTAL 206 16 7 166 17

* Tonga's financial inclusion benchmark
^ Agents is any third party acting on behalf of a bank to deal directly with customers. E.g. retails store, etc.

In terms of the location of the access points, the Tongatapu 3 and Tongatapu 4 constituencies contributed the most to the rise in the EFTPOS and ATMs access points (refer to Table 2 below). The re-opening of bank branches in the outer islands in response to the positive economic activity and the increase in domestic demand supported the overall improvement in total access points.

Table 2: Summary of the Type of Access Points in Tonga by Constituency

June 17

Constituency June 17 2016 Census Report
Total Access Points No. of Branches No. of Agents No. of EFTPOS No. ATMs Total Adult Population
Tongatapu 1 38 1 2 35 0 11,219
Tongatapu 2 186 2 1 169 14 11,874
Tongatapu 3 74 1 0 72 1
Tongatapu 4 54 1 0 50 3
Tongatapu 5 19 1 2 16 0 2,716
Tongatapu 6 11 0 3 7 1 4,975
Tongatapu 7 31 0 1 29 1 8,236
Tongatapu 8 14 0 2 2 11
Tongatapu 9 23 2 1 18 2 4,362
Tongatapu 10 3 0 3 0 0 4,418
'Eua 11 6 2 0 3 1 3,020
Ha'apai 12 11 2 1 7 1 2,779
Ha'apai 13 0 0 0 0 0 1,102
Vava'u 14 11 0 0 11 0 2,514
Vava'u 15 44 3 3 35 3 3,374
Vava'u 16 11 1 0 10 0 2,683
Ongo Niua 17 2 2 0 0 0 804
TOTAL 538 18 19 473 28 64,076

June 16

Constituency June 16 2016 Census Report
Total Access Points No. of Branches No. of Agents No. of EFTPOS No. ATMs Total Adult Population
Tongatapu 1 23 0 2 20 1 11,219
Tongatapu 2 347 6 2 323 16 11,874
Tongatapu 3 0 0 0 0 0
Tongatapu 4 0 0 0 0 0
Tongatapu 5 10 0 2 8 0 2,716
Tongatapu 6 5 1 2 1 1 4,975
Tongatapu 7 7 0 2 5 0 8,236
Tongatapu 8 1 0 0 0 0
Tongatapu 9 11 1 1 8 1 4,362
Tongatapu 10 4 0 3 1 0 4,418
'Eua 11 4 1 1 2 0 3,020
Ha'apai 12 10 1 2 7 0 2,779
Ha'apai 13 0 0 0 0 0 1,102
Vava'u 14 0 0 0 0 0 2,514
Vava'u 15 85 4 3 75 3 3,374
Vava'u 16 0 0 0 0 0 2,683
Ongo Niua 17 2 2 0 0 0 804
TOTAL 508 16 20 450 22 64,076

June 15

Constituency June 15 2016 Census Report
Total Access Points No. of Branches No. of Agents No. of EFTPOS No. ATMs Total Adult Population
Tongatapu 1 17 0 1 14 2 11,219
Tongatapu 2 112 6 0 95 11 11,874
Tongatapu 3 0 0 0 0 0
Tongatapu 4 0 0 0 0 0
Tongatapu 5 2 0 0 2 0 2,716
Tongatapu 6 3 1 0 2 0 4,975
Tongatapu 7 3 0 0 2 1 8,236
Tongatapu 8 1 0 0 1 0
Tongatapu 9 5 1 0 3 1 4,362
Tongatapu 10 6 0 1 5 0 4,418
'Eua 11 4 1 1 2 0 3,020
Ha'apai 12 2 1 1 0 0 2,779
Ha'apai 13 0 0 0 0 0 1,102
Vava'u 14 0 0 0 0 0 2,514
Vava'u 15 49 4 2 41 2 3,374
Vava'u 16 0 0 0 0 0 2,683
Ongo Niua 17 3 2 1 0 0 804
TOTAL 207 16 7 167 17 64,076

In terms of bank account ownership, according to the Demand Side Survey (DSS) conducted in 2016, both adult women and men report similar levels of bank account ownership at 41%. However, more than one third of men (35%) and women (34%) are financially excluded.

Ha’apai has the highest number of unbanked adults which represents 60% of the adult population (2,329 people) in Tonga. The rugged geography, costly transportation, and the low density of population dispersed among many islands makes it challenging for banks to provide relevant and affordable formal banking services in the outer islands including Ha’apai. Red marks on Figure 1 reflect the access points in the Ha’apai Group which are all located in the Ha’apai 12 constituency.

Usage of Financial Services

Usage of Financial Services is the frequency or how often a product or a service is being used by an individual. From the SSS, the usage of bank accounts rose over the year to June 2017 owing to an increase in the number of loan accounts outweighing the decline in the number of deposit accounts (refer to Figure 2).

The fall in the number of deposit accounts was due to data cleansing by banks leading to closing of inactive accounts. In contrast, the increase in total number of individuals’ loan accounts is due to the lower lending rates for housing loans, the banks housing loans campaigns, the continuous excess liquidity in the banking system and the Reserve Bank’s accommodative monetary policy stance to encourage the utilisation of the excess liquidity and the positive economic growth which has supported further lending by the banks.

Peer Comparison

According to reports from Alliance for Financial Inclusion (AFI), Tonga leads in financial access points, particularly in bank branches, when compared to the rest of the Pacific Island countries. For every 10,000 adults, Tongan adults can access 3 bank branches compared to 1 bank branch in Fiji and 2 bank branches in Samoa per 10,000 adults. Tonga’s lower population size compared to other Pacific countries may have contributed to its higher access points particularly branches in the Pacific region.

Conclusion

Tonga’s access to financial services indicators showed some positive outcomes over the year ended June 2017 in terms of higher loan accounts as well as higher access points. The Reserve Bank will continue to collect quality data and develop policy solutions to address the gaps in access to financial services. This would also include exploring digital financial services as an avenue to increase the access points and ensure the financial services are more accessible in the remote areas.


Enquiries

Financial Inclusion Department
National Reserve Bank of Tonga
NUKU'ALOFA

Telephone: (676) 24057
Fax: (676) 24201 

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Resources

Access To Finance - June 2017
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