Study on Deposit Mobilization for Readymade Garments Workers in Bangladesh
Towards Financial Inclusion:
Readymade Garments is a $16 billion dollar industry in Bangladesh. It is the second biggest employer in the country, employing about three million people of which 85% are female, and contributing significantly to social inclusion. However, the extent of transformation is yet to be fully realized, as 86% of the workers in the garment factories do not have access to suitable financial services, according to our Readymade Garment Workers Deposit Mobilization study. This constraint precludes leveraging banking services and workers are limited to traditional and informal financial sources.
Gaps in education and awareness are at the heart of the problem. And, if banks were fully aware of the profitable space that readymade garment workers and small entrepreneurs can provide, more financial products targeting this segment of the market would be offered. Garment workers, too, need to be educated on new and existing banking products and ways to access them, which in turn, would make them less risk averse.
IFC’s objective of making financial services accessible and affordable for the excluded, together with the strong demand from the financial sector to better understand this untapped market, led to this market study. Jointly commissioned by SEDF, managed by IFC, in partnership with DFID and Norad, and BICF, managed by IFC, in partnership with DFID and EU, the study explores key trends, challenges and opportunities that exist in banking services aimed at readymade garment workers. Financial awareness is part of IFC's larger responsible finance initiative both in South Asia and globally.
The study finds important potential for bankers, for bringing readymade garment workers into the formal financial sector. Interestingly, some key findings in the study shows that 14% of readymade garment workers have bank accounts and only 19% of the workers have a savings account, although 82% believe that they need it. This represents an “opportunity gap” of 63%. The market is there and the products are there. There is a need to match demand with supply as well as financial awareness and education for theses garment workers.
We trust this contribution will add value to the efforts of those committed to making affordable financing available for millions of garment workers who work hard to keep Bangladesh among the top garment exporters.