Two billion people worldwide still lack access to formal and regulated financial services. In 2015, the Bank Group with private and public sector partners committed to promoting financial inclusion and achieving Universal Financial Access by 2020. We've invited our partners to reflect on why they've joined the UFA2020 initiative and how they're contributing toward this goal. This contribution comes from the Pakistan Microfinance Network. #FinAccess2020
Photo Credit: Muhammad Kaleem, Courtesy of the Farmers Friend Organization (FFO)
Kaneez Fatima is a 50 year-old entrepreneur living in Sheikhupura, a city situated 40 km northwest of Lahore, Pakistan. Years before when her husband passed away, she had no idea to find the means for raising a family of six and her future seemed bleak. In her childhood she had acquired the skill of stitching footballs, and she thought about setting up her own workshop. But as a woman in a male dominated market, in an already challenging entrepreneurial environment, she faced what seemed to be an uphill challenge.
Sadly, Kaneez is not alone. World Bank Group Findex data estimates that Pakistan is home to 100 million unbanked people, or 5.2% of the world’ unbanked population, and the ‘Access to Finance Survey 2015’ commissioned by the State Bank of Pakistan states that only 23% of adults use formal financial services offered by formal financial intermediaries with only 16% of Pakistani adults have an account with a formal financial institution.
The most recent International Women’s Day focused on accelerating gender parity, which makes it a perfect time to highlight the urgent need to boost women’s economic participation worldwide. One way of doing that is by tapping into the power of digital payments and digital financial services.
Interoperability was a trending topic at this week’s Mobile World Congress (MWC) 2016.
Getting payment products to “understand” each other, or to be “interoperable,” is a big challenge to solve if we want to expand overall digital services and financially include the 2 billion people worldwide who are currently excluded from the formal financial system.
Making it easy for people to access transaction accounts and payment services matters.
We see interoperability as a means for people worldwide to make electronic payments in a convenient, affordable, fast, seamless and secure way through a transaction account.
When payment systems are interoperable, they allow two or more proprietary platforms or even different products to interact seamlessly. Interoperability can promote competition, reduce fixed costs and enable economies of scale that help ensure the financial viability of the service and make payment services more convenient.
Having a formally recognized form of identity provides the poor and vulnerable with the opportunity to climb out of poverty. This is critical for achieving a wide range of development outcomes: from opening a bank account and paving the way for broader financial inclusion to accessing education services, tracking childhood vaccinations, and empowering women. It can also strengthen the efficiency and effectiveness of the state in providing critical services, such as government to person (G2P) payments, and reduce unnecessary waste of resources through better targeting.
With the advances in technology including biometrics, data management, and the ubiquity of mobile connectivity, there is an unprecedented opportunity to deliver services faster and more efficiently than ever before. And a country like India has also shown how, with these advances, a unique identity can be done at a scale not previously possible.
To reach the transformational potential of digital identification, the World Bank Group launched the Identification for Development (ID4D) initiative to support progress towards identification systems using 21st century solutions. We are shaping country priorities through technical assistance, financial support and global expertise. At present we are engaged with approximately 20 countries – either supporting through financial and technical advice, or through our assessment to determine gaps and help develop a forward looking roadmap.
Increasing financial access and financial inclusion have proven to be effective in reducing poverty and accelerating economic growth, and are prominent in the new Sustainable Development Goals.
But among different stakeholders.
A recent World Bank and FIRST Initiative project in : Getting the process of developing a financial inclusion strategy right is key to success when implementing reforms later.
While we’ve published these tips for financial policymakers as part of FIRST Initiative’s Lessons Learned Series, here’s a quick summary of Paraguay’s experience.
Globally, around 2 billion people do not use formal financial services. In Southeast Asia, there are 264 million adults who are still “unbanked”; many of them save their money under the mattress and borrow from so-called “loan sharks”, paying exorbitant interest rates on a daily or weekly basis. Recognizing the importance of financial inclusion for economic development, the leaders of the Association of South East Asian Nations (ASEAN) have made this one of their top priorities for the next five years.
Last week, the World Bank Group presented the latest data on financial inclusion in ASEAN to senior representatives of the ministries of finance and central banks of all 10 ASEAN member countries (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam). The session, held in Kuala Lumpur, is one of the joint activities the new World Bank Research and Knowledge Hub and Malaysia is undertaking to support financial inclusion around the world.
Despite transformative innovations in digital technologies, the digital divide is still substantial. What can be done to spread digital dividends - that is, the broader development benefits of digital technologies – more widely? How can digital technologies contribute to the World Bank Group’s twin goals of eradicating extreme poverty and increasing shared prosperity?
As this year’s World Development Report on “Digital Dividends” notes, digital finance is likely to play a key role in answering these questions. One of the main messages of the report is that digital development is not a matter of access alone.
Digital connectivity is key, but it is only a starting point for successful digital development. It is as important to strengthen other factors that interact with technology - such as responsible regulation and accountable institutions - in order to make digital technologies work for the poor. The World Development Report calls these other factors the ‘analog complements’ to digital technologies, which fall into three categories: regulation, skills, and institutions.
Mobile phones are increasingly prevalent throughout the world, and researchers have found that sending text message reminders can help people follow-through with their intentions, significantly increasing the success of development interventions.
“People need to be reminded more often than they need to be instructed.”
These are the wise words of Samuel Johnson, an English author, critic, and lexicographer. Even though he lived more than 200 years ago, international development interventions are proving him correct today.
Reminders for Malaria
It’s widely known that failure to adhere to a full course of antibiotic treatment leads to treatment failure and encourages bacterial resistance to antibiotics, threatening the sustainability of current medications. This is extremely important for malaria, which, according to the World Health Organization, results in 198 million cases each year and around 584,000 deaths. The burden is particularly heavy in Africa, where around 90% of malaria deaths occur, and in children under 5 years of age, who account for 78% of all deaths. Moreover, low rates of adherence to artemisinin-based combination therapy (ACT) treatments has led to a prevalence of antibiotic-resistant Malaria in many parts of the world, particularly Africa. One of the biggest – and simplest – reasons why people fail to complete the full treatment for Malaria is that they forget.