Last April 21, representatives from government, the private sector, and the financial inclusion world came together for Financial Inclusion Pathways for Women and the Poor. Panels covered a range of topics, including financial education, mobile banking and SME finance. But at the heart of all the discussions was the challenge posed by 2.5 billion unbanked people around the world –1.35 billion of them women. What actions can the public and private sector take to give the financially excluded—especially women who have the potential to transform economies-- access to finance?
What breakthrough will involve barefoot banking for millions of people, allow welfare and other benefits to be electronically transferred to some of the poorest people in the world and be scaled up in a few years time to reach 1 billion people or more? The answer is 'Aadhaar', the Hindi name that the Unique Identification Authority of India has given to the massive project that will provide unique I.Ds to 600 million by 2014 and eventually to the entire population of the country if all goes as planned.
An increasing number of countries are developing national strategies for financial education and implementing programs to enhance people’s financial capability. At least 36 countries have already established or are in the process of designing a national strategy for financial education according to the OECD. Boosting people’s ability to take sound financial decisions has emerged as a new policy objective, both in developed and developing countries. The recent financial crisis has reinforced the view that being financially capable is important. However, let’s take a step back. What do we know about how capable people are in different countries across the world in managing their finances? Which knowledge and skills gaps exist that could be filled with financial capability enhancing programs? Which populations are the least financially knowledgeable and capable and would benefit the most from any interventions?
Do men and women use financial services differently? This is the question we set out to answer when we conducted six country studies on gender finance in sub- Saharan Africa.
The purpose of our study was twofold. First, we wanted to explore the reasons behind differences in usage of financial products. Second, based on these underlying reasons, we wanted to formulate workable intervention strategies that we could recommend as gender-sensitive financial sector policy approaches for policymakers and stakeholders. The countries we studied included Botswana, Malawi, Namibia, Rwanda, Uganda, and Zambia. Based on 50 to 75 interviews per country with individuals from both urban and rural areas, we analysed how and why men and women are using credit, savings and insurance products.
Image courtesy of UPU
In October 2012, when the first version of the Global Panorama was published, several news agencies and papers wrote: “UN urges increase in role of financial services across global postal sector” or “Posts must exploit untapped potential for financial inclusion”. The surprise was not in the titles but in the interest generated by reports on the postal sector. The intersection between two things which the general public does not automatically associate: the Post and financial services, especially for the poor, seemed to spark interest.
It has become mainstream to think that digital technologies will have a significant role to play in addressing the financial inclusion challenge in developing countries. This may be so, but if all we in the financial inclusion community do is merely add the mobile phone (or the smart card) to our stock of dearly-held beliefs, we will accomplish little. Technology will not work additively; if technology-based models work it will be because they will have changed pretty much everything. I’m not saying that everything will change: I’m just saying that that should be the bet.
International Women’s Day is when we celebrate the strides made towards equality, but it also reminds us that gender is a powerful determinant of economic opportunities, particularly in developing countries. Financial inclusion is one of the areas where we observe a gender gap—women in developing economies are still relatively more excluded from the financial sector than men, even after controlling for income and education
For the first time, we can quantify this gap using hard data and evaluate how women around the world save, borrow, make payments and manage risk, both inside and outside the formal financial sector. With the release of the Global Financial Inclusion (Global Findex) data, we now have a comprehensive, individual-level, and publicly-available database that allows for comparisons based on more than 150,000 nationally representative adults in 148 economies in 2011. The dataset includes over 40 indicators, but here we’ll focus on three main categories: account ownership, savings behavior and credit.
In the old times, the post office was the main connector between cities and villages, moving letters and money to every corner of the country, and contributing towards the territorial consolidation of states under construction.
Nowadays in developing countries, the post office is often seen as an old, inefficient, deficit-making, and outdated public service which has not been able to keep up with the evolving markets. It takes some imagination to see the post office as a potential engine for economic growth and social inclusion.
Migrant workers, earning money in jobs far from home, sent more than $400 billion to their families back home in 2012. Such remittances remain a vital source of income for millions of people in developing countries: Food, housing, education, health care and more are paid for every day by workers who earn money abroad. Through a simple and repetitive transaction – sending money home – those workers are really sending heart-warming feelings like hope for a better future and love of family.
With over 50% of world’s population lacking proper access to payments and financial services, closing the global gap in the access and the use of payment services remains a challenge. Underdeveloped or missing payment services infrastructure has often resulted in high transaction costs and low penetration of payment services for lower income populations, mainly due to a large number of low value of payment transactions conducted by the underserved segments. This in turn has resulted in the lack of investments in appropriate payments infrastructure to satisfy the payment needs of people at the base of the pyramid.
The underserved segments have payment needs that are similar to other consumers. Evidence has shown that even very poor people save small amounts, send and receive money from relatives, pay bills and school fees, and borrow from suppliers and others to meet obligations or take advantage of financial opportunities even in the absence of bank access. To satisfy their payment needs, most low income people end up using informal mechanisms that may be convenient but are not safe or efficient. Those who do have marginal access to payment services, usually endure high transaction costs and poor service.
- financial inclusion