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financial inclusion

Increasing the Impact of Financial Education: Approaches to Designing Financial Education Programs

Andrej Popovic's picture

Recent evaluations of a number of worldwide financial education programs reported widely varied outcomes. While some found evidence of effectiveness, others reported mixed or no evidence. Yet an increasing number of developing countries are putting financial education strategies in place or are expanding financial education programs. The quality of design of such strategies and programs is therefore crucial.

Financial education programs can be ad hoc targeted interventions, aimed at addressing specific financial education gaps, or they can be more comprehensive approaches through financial education or literacy strategies that aim to address a number of priorities. Regardless of the approach – which depends on the local context – financial education programs have a higher likelihood of greater positive impact if they are based on reliable diagnostic tools and focused on clearly defined and sequenced priorities.
 
Over the past two years, the Financial Inclusion and Consumer Protection team at the World Bank Group has conducted substantial technical and diagnostic work in the area of responsible finance. For example, we have developed methodologies for financial capability surveys and impact evaluation, and we have conducted a series of diagnostic reviews in the area of consumer protection and financial literacy on a global scale.

Financial Inclusion Up Close in Rwanda

Douglas Randall's picture

You don’t have to spend very long in Rwanda before you start to be impressed by the financial inclusion landscape in this country – not only by the progress made over the past several years, but by the scale of ambition for the rest of this decade and beyond.

The government has set a target of 90 percent financial inclusion by 2020 and the evidence of progress toward this goal is everywhere: Advertisements for mobile-money products are painted and plastered onto almost every available surface and, if you know what to look for, it doesn’t take long to spot an Umurenge Savings and Credit Cooperative (Umurenge SACCO) – Rwanda’s signature financial inclusion initiative.

Six years ago, the 2008 FinScope survey found that that 47 percent of Rwandan adults used some type of financial product or service, but just 21 percent were participating in the formal financial sector, which was at the time made up mostly of banks but which also included a handful of microfinance institutions and SACCOs.

Largely in response to these figures – and in particular to the large urban/rural divide illustrated by the data – and the government set out to establish a SACCO in each of the country’s 416 umurenges, or sectors. The Umurenge SACCO was born.

Anti-Money Laundering Regulations: Can Somalia survive without remittances?

Sonia Plaza's picture

Remittances have been the main source of foreign exchange supporting Somalia during the conflict for the last twenty years. A recent IMF fact-finding mission to Somalia found that about $2 billion in remittances are handled by money transfer companies. These companies are located throughout the country and they are providing shadow banking services since there are no licensed commercial banks. Somalis called this system “xawilaad” which is the Somali rendering of the Arabic word “hawala”.

Since the events of September 11, 2001, many countries have adopted stringent Anti-Money Laundering and Combatting the Financing of Terror (AML-CFT) regulations for funds transfers. Several banks in the US (Wells Fargo, US Bank, the TCF bank, and Sunrise Community Bank) and in the UK closed the accounts of money services business to avoid incurring in penalties for not complying with the new regulations. (Note: HSBC was fined $1.9 billion for not complying with money laundering controls in 2012.)

Hidden Roadblocks: Structural Barriers that Limit Women's Financial Inclusion

Garam Dexter's picture

"Financial inclusion." This phrase has been found in several recent reports.  But what does “financial inclusion" truly mean? More important, what does it mean for women who constitute nearly half of the global population?

Financial inclusion is defined in the Global Financial Development Report as the “proportion of individuals and firms that use financial services.”  It is one of the main catalysts of economic growth and helps to reduce poverty in the world.  Access to financial services is one approach to greater financial inclusion.  As all formal transactions are tied to accounts, ownership of accounts is an important aspect to measure the degree of financial inclusion.  There are several crucial benefits to having a bank account, such as: facilitating the saving process; facilitating the receiving of government payments; and enabling entrepreneurship through the building of credit.

Acess to financial services has been expanding steadily as many countries have been adopting national strategies to achieve financial inclusion. (Financial inclusion strategy is defined as “road maps of actions, agreed and defined at the national or subnational level, that stakeholders follow to achieve financial inclusion objectives.”) Yet large gaps and hurdles to access financial systems remain worldwide. (See female percentages with bank accounts at formal financial institutions in 2011 based on the World Bank’s Financial Inclusion Data.)

These gaps and obstacles are especially arduous for women, for no reason other than their gender!  The Findex survey, for example, shows that women refrain from opening personal accounts because they rely on their relatives’ accounts. The Global Financial Development Report of 2014 links this matter to the income inequality and the quality of the economic institutions.

What matters – and what doesn’t – for youth financial inclusion

YouthSave, created in partnership with The MasterCard Foundation in 2010, investigates the potential of savings accounts as a tool for youth development and financial inclusion in developing countries by co-designing tailored, sustainable savings products with local financial institutions and assessing their performance and development outcomes with local researchers.
 
The project is an initiative of the YouthSave Consortium, led by Save the Children in partnership with the Center for Social Development (CSD) at Washington University in St. Louis, the New America Foundation, and the Consultative Group to Assist the Poor (CGAP).
 
YouthSave provides an opportunity to assess the effects of savings on tens of thousands of youth and find out what matters – and what doesn’t – for youth financial inclusion. Which youth will participate in a savings program? How will participants use their accounts? To track this, YouthSave has built the largest database of its kind and recently released a report on 10,710 young participants.

The Promise of Financial Inclusion

Mahmoud Mohieldin's picture

The following post first appeared on the Huffington Post.

Half the world's adults, approximately 2.5 billion individuals, do not have an account with a formal financial institution. Lack of access to finance is disproportionately skewed towards the poor, women, youth, and rural residents. Defined as the proportion of individuals and firms that use financial services, financial inclusion is increasingly seen as critical for ending extreme poverty and supporting inclusive and sustainable development. It provides people with the tools to invest in themselves by saving for retirement, investing in education, capitalizing on business opportunities, and confronting shocks (Global Financial Development Report, 2014). According to the World Bank Group's newly launched Global Financial Development Report 2014 on Financial Inclusion, most of the unbanked cite barriers such as cost, lack of documentation, distance, lack of trust, or religious reasons.

Financial Inclusion and the Role of the Post Office

Leora Klapper's picture

Financial inclusion is a topic of increasing interest on the international policy agenda. Last week the Universal Postal Union (UPU) hosted the 2013 Global Forum on Financial Inclusion for Development. With over a billion people using the postal sector for savings and deposit accounts and a widespread presence in rural and poor areas, post offices (or “posts”) can play a leading role in advancing financial inclusion. In Brazil more than 10 million bank accounts were opened between 2002 and 2011 after the post established Banco Postal in partnership with an existing financial institution. However, leveraging the large physical network of the post is not without challenges. Posts generally have little or no expertise in running a bank and the business model that a government pursues in providing financial services through the postal network may be critical to its success.

Annual Meetings: World Bank’s Future Path, Malala, Gender-Based Violence, Help for Children

Donna Barne's picture

World Bank Group President Jim Yong Kim addresses the plenary session of the Annual Meetings. © Ryan Rayburn/World Bank

President Jim Yong Kim outlined his plan for a leaner, more efficient and tightly knit World Bank Group in his opening address at the Annual Meetings — and listed several ways changes would be visible to countries working with the institution. Among them: reducing by a third the amount of time a project takes to get off the ground; gathering feedback from all beneficiaries on development projects; and openly sharing knowledge and experience, including making it easy to see exactly where the Bank is working and what it is doing.  “Together, we must urgently lift a billion people from extreme poverty, help them to regain dignity, help them find hope, and help them change their own lives — and the whole world’s future — for the better,” said Kim. The Development Committee discusses the Bank Group’s new strategy on Saturday.

An excited crowd greeted Malala Yousafzai, the 16-year-old whose fight for girls’ education earned her the European Union’s Sakharov prize for freedom of thought and a Nobel Peace Prize nomination this year. In an often humorous, sometimes touching conversation with President Kim and young people in the audience on International Day of the Girl, Malala talked about her life before and after an assassination attempt by the Taliban. Her cause, education, is the best way to fight poverty and should be the top priority of development institutions, she said. “I believe that when we work together, that it’s really easy for us to achieve our goals,” she said. Kim pledged $200,000 to the Malala Fund on behalf of the World Bank. Replay the webcast and read our Youthink blog.

Financial Inclusion Targets and Transformational Change

Douglas Pearce's picture

Financial Inclusion Commitments through the Maya Declaration, the G20 Peer Learning Program, and the Better Than Cash Alliance.
 

Today at 2 o’clock in the Preston Auditorium, Jim Kim, the President of the World Bank Group – along with Queen Máxima of the Netherlands, the U.N. Secretary General’s Special Advocate for Inclusive Finance for Development – will challenge the global community to focus on transformational change in the level and quality of financial inclusion.

Why financial inclusion? Because it is an enabler for poverty reduction and shared prosperity, as has been recognized by the U.N. Secretary General’s High-Level Panel on the Post-2015 Development Agenda.

Progress in tackling financial exclusion can be accelerated through the current global wave of nation-by-nation financial inclusion targets and commitments; through improved data availability; and through transformative business models for providing financial services.

The Economic Cost of Gender Inequality

Katrin Schulz's picture


Madame Ngetsi of the Democratic Republic of the Congo
is one of thousands of women in the world who—despite their talent, drive, and potential to contribute to the economic development of their countries—may never be able to fulfill their dreams of starting their own businesses. Their dreams may be dashed because of outdated legislation that reproduces debilitating gender roles. 

If she were a man in the DRC, Madame Ngetsi’s initial steps in starting her business would be to obtain a certificate confirming the headquarters location, notarize the articles of association, and register with the Commercial Registry.  As a woman, however, a significant roadblock stands in her way:  She is legally mandated to first obtain her husband’s permission to register a business.  This legal requirement, found in the family code rather than in any commercial or business code, is fully in effect in the DRC.  Permission letters are readily found on file at women-owned company registries.  Married men face no such requirement.


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