Last year, we participated in a financial inclusion summit – Seamless 2018 – to share on how we can use financial literacy to accelerate financial inclusion at the bottom of the pyramid (BoP). Mostly, the first thing that comes to mind when we think of people not embracing financial products is lack of resources. People at the BoP have money, it could be irregular and in small amounts hence their affinity for micro-purchases but its there. According to businesstoday.co.ke, gambling revenues for 2016/2017 financial year was around Kes.20B ($198 million). A survey by geopoll.com confirms that BoP offers a rich target market for the betting industry. They state that BoP is easily lured into gambling by the low betting amounts that obiviously multiply into millions. This can be attributed to aggressive advertising and the betting industry’s rags-to-riches testimonials that conveniently feature poor rural folks. It’s interesting how the celebration is always a village affair. Here’s a video of a winners’ celebration and testimonial – courtesy of Citizen TV, urging his peers to indulge as many times as possible since its only Usd 0.20 per day. He mentions that he gambled consistently (on a daily basis) for six months.
Insurance is a no-brainer for most of us, its an integral part of our lives. There’s also no doubt on the impact micro-insurance would have on cushioning the BoP. It is a great strategy for helping BoP plan for predictable eventualities in life such as college education and move away from the hand-to-mouth routine. Most of these folks shop daily for necessities and purchase low-cost, single use products in sachets. Its a long-shot convincing them to put aside money for securing their future. Or is it? Gambling seems to suggest otherwise. Most of the winners while giving their testimonials admit to having gambled consistently for months. They state that the amount is negligible. In their list of priorities, gambling shows up higher than micro-insurance despite the unfavorable odds gambling accrues. How can we change this? With the hopelessness and cynism that prevails with this group, does telling them about their death or accidents motivate them? Is fear a good motivator for this group or should we try hope when selling insurance? Gambling peddles hope, uses sports (social habits) and a familiar face giving testimonies (creating trust) and this works perfectly.
When creating products for social-cultural markets that are different from our own, its imperative to immerse ourselves into the lives of the customer, understand the problem as well as the person who is experiencing it. Gambling companies in Kenya seem to have perfected this. They have established a market niche with the youth and rural markets. As HBR states in this article, rural customers are not all poor, in many countries, a rural middle class is emerging and technology is helping them to connect. Rural markets present an overlooked opportunity due to challenges such as market development, product design, logistics and communication. These challenges deter many companies from even considering rural markets in developing countries. Gambling companies have maximized on this opportunity through branding and visibility; vernacular radio station advertisements, billboards and branded shops at the grassroot level. This ensures that they’re top of mind for such people who are limited in terms of sources of information as highlighted in our previous blog. In the rural areas, most people are cash rich since they harvest and sell their produce (coffee, tea, grains, milk etc) on a regular basis and they don’t incur rent expenses.
Micro-insurance companies use various models of insurance to cover the poor. One of the models is the partner-agent distribution model which uses a delivery channel of a company that already has ties with the customers the micro-insurance company is targeting. Companies such as Microensure use this strategy and it has helped them impact and empower people who would previously struggle with medical bills and accessing doctors. An article by Cgap highights that in order to be successful, micro-insurance products need to provide both near-term and long-term benefits to be more relevant to the poor. They state that insurance companies need to come up with strategies that ensure constant engagement with their customers. Acting as an empowering partner in terms of educational content can help insurance companies satisfy their customers immediate needs. As an industry, Insurance firms need to educate the BoP on the product, change the narrative around it, empasize the importance, package and sell it according to the customers needs.