Asian economies are well positioned for robust growth — with GDPs expected to rise by an average of 6.3% in each of the next two years. Emerging markets in Asia are also the best performers in economic growth in recent years, especially when compared with emerging markets outside of Asia.
But to ensure this growth is equitable and inclusive, Asian business leaders, academics and policymakers need to confront a host of challenges, including significant “unbanked” and “underbanked” populations. More than 1 billion people within the region still have no access to formal financial services — meaning, no formal employment, no bank account, no meaningful ability to engage in commerce online or offline. By some estimates, only 27% percent of adults have a bank account, and only 33% of firms have a loan or line of credit. As was highlighted by the speakers at the recent Mastercard-SMU Forum in Singapore, greater financial inclusion must become an essential component of Asia’s economic development.
Fostering financial inclusion is a highly complex challenge in Asia. This is one of the most diverse regions in the world, where countries vary significantly in per capita GDP and population size, with a dizzying array of cultural, linguistic, religious and ethnic diversity. A “magic bullet” approach to advance financial inclusion is therefore highly unlikely to be successful in Asia. A key theme that emerged from research projects conducted under the auspices of the Mastercard–SMU Program of Financial and Social Inclusion is that a context specific approach is needed, which in turn requires deep operational insights and local knowledge.
In this regard, we believe the private sector has a unique opportunity and responsibility to make a positive difference — leveraging its assets for social good — whether that’s funding important research or advancing financial and social inclusion in partnership with the non-profit sector and with governments.
The ultimate objective for financial inclusion is inclusive growth. Financial inclusion is just one of the means, a very important one at that, for all participants in the economy to reach their true productive potential. In this context, the poor are poor because they are stuck in low productivity activities, not being able to access many indispensable inputs, including basic services like water, electricity, and affordable transport; as well as financial services and associated information and knowhow. Said another way, the growing wealth gap isn’t about any differences in ability per se but the poor’s lack of access to critical conditions and resources.
In this regard, advancing inclusive growth is therefore tantamount to “democratizingproductivity.” The rich and diverse research findings being generated by the Mastercard-SMU Program on Financial and Social Inclusion are therefore extremely valuable to guide our work going forward. The next step is for us to summarize and synthesize the insights and lessons learned and to publish them as a book later this year for the use of practitioners, business executives, government officials, as well as researchers working on financial and social inclusion in Asia and beyond.