Despite the broad consensus regarding the importance of microfinance as a poverty alleviation tool, it is estimated that over two billion people are currently excluded from access to financial services. The situation is particularly dire in most Least Developed Countries (LDCs) where often more than 90% of the population is excluded from access to the formal financial system.

Numerous studies have demonstrated that access to financial services like credit, savings and insurance is important for people and businesses to generate income, manage cash-flow and protect against risk. The critical importance of microfinance to achieving the Millennium Development Goals was highlighted at the 2005 World Summit, as well as in the endorsement by the Summit for the Monterrey Consensus of the International Conference on Financing for Development. The Monterrey Consensus underscored the contribution that a range of financial institutions can make in providing financial services to enterprise development and calls for public and private institutions and firms to work collaboratively to provide access to all. The final declaration of the Monterrey Consensus put particular emphasis on strengthening domestic financial sectors to include underserved markets, such as rural areas and women.

Despite the positive developments in the area of financial inclusion during the past ten years, many poor and low-income people and micro and small enterprises still lack access to a broad range of financial products and services on a sustainable basis. Key bottlenecks include a lack of:

• strong institutions providing a broad range of financial services on a sustainable basis to serve large numbers of people and small enterprises;
• enabling legal, regulatory, and supervisory environments to facilitate access; and
• government vision and commitment to the development of inclusive financial sectors.

Key challenges to achieving the vision of inclusive finance for the global community, in both the developed and developing world, are to mobilize the political will and financial support, to engage governments, academia, civil society, and the private sector, and to build human and institutional capacity among governments, regulators, microfinance institutions and other financial services providers to make inclusive finance a reality.

What is the UN Advisors Group on Inclusive Financial Sectors?

At the conclusion of the 2005 International Year of Microcredit, one of the main recommendations of the Advisors Group to the Year was that "the UN should appoint a group of experts, for a limited period not exceeding two years, to see the work we have begun through to completion." Following this recommendation, the UN Advisors Group on Inclusive Financial Sectors was established in 2006 for a term of two years. The main role of the Advisors Group is to advise the United Nations system and member states on global issues relating to inclusive finance.

With a strong presence and engagement in financial sector development, access to governments, central banks, bilateral agencies, Bretton Woods institutions, academia, civil society and the private sector, and substantial advocacy and convening power, the United Nations is uniquely positioned to help inspire, support, and coordinate broader efforts toward building inclusive financial sectors in all parts of the world. The Advisors Group will guide, encourage and support the UN in these efforts.

Who are the Advisors?

The Advisors Group consists of 25 individuals representing governments, central banks, regulatory agencies, microfinance institutions and other financial services providers, private sector financial institutions, civil society, development agencies and donors, and academia from all over the world. The Advisors were selected on the basis of their expertise regarding financial services and inclusive finance, their commitment to building inclusive financial sectors, their ability to raise public awareness, and their ability to mobilize wide support in the global effort to increase access to financial services.

What is the overall objective of the Advisors Group?

The Advisors Group seeks to increase sustainable access of poor and low-income households and micro and small entrepreneurs to a broad range of financial products and services through the development of inclusive financial sectors around the world. The Advisors Group will work with governments, regulatory and supervisory bodies, central banks, academia and the private sector to identify and define the key issues constraining access to financial services and will advise the UN regarding strategies and concrete steps that can be taken to remove these constraints. The Advisors Group will also seek new opportunities and approaches for expanding access to financial products and services and is encouraged to explore creative solutions to current industry issues. The work of the Advisors Group will be creative, flexible, broad in scope, and will seek to maximize impact. In addition, it will focus on results.

How will the Advisors Group promote financial inclusion?

The Advisors Group will provide advice and guidance to the United Nations, UN Development Programme (UNDP), UN Department of Economic and Social Affairs (UNDESA), and the UN Capital Development Fund (UNCDF) on the issue of inclusive finance. Using the context and unique comparative advantage of the UN, the Advisors Group will encourage, support, and monitor global progress toward the establishment of inclusive financial sectors. The work of the Advisors Group will be supported and informed by Working Groups focused on the broad issues of advocacy, research and data, regulatory and supervisory issues, and engaging the private sector.

The Advisors Group will draw upon past initiatives, such as the Statement of the Advisors Group to the International Year of Microcredit, which summarizes important issues regarding access to financial services that need to be addressed. In addition, the UN publication on Building Inclusive Financial Sectors for Development is the result of a one-year consultative process regarding inclusive finance and provides a reference point for policymakers to collectively discuss strategies, share best practices and improve processes with respect to inclusive finance. Together, these documents establish a preliminary analytical framework for the work of the Group.

The Advisors Group will continue efforts by central bankers, leading economists and statisticians from the UN, the World Bank, the International Monetary Fund (IMF), Britain's Department for International Development (DFID), the Central Bank of West Africa (BCEAO) and the private and non-governmental sectors "to develop common measures of financial sector inclusion and to answer the central question of how many poor people have access to what kinds of financial services and what is the quality and impact of those services."

Advisors Group Activities

• Developing and implementing a communications and public awareness programme that will assure that access to financial services is on the global development agenda;
• Encouraging and supporting governments and their regulatory institutions to review their regulations to ensure that they encourage prudent and sound provision of financial services to poor and low-income people and to micro and small enterprises while at the same time minimizing or removing regulatory constraints that discourage financial inclusion;
• Assuring that national governments and regulatory agencies adopt common indicators and methodologies for measuring access to financial services and then gather and analyze data and other information using these indicators and methodologies in a systematic and regular way;
• Collecting and disseminating learning and best practices with regard to financial inclusion and the policies related thereto and encouraging and supporting governments and policy makers who seek to adopt policies to develop and strengthen financial infrastructure at regional and local levels;
• Working closely with the private sector (and particularly private financial institutions) to enhance their participation in facilitating infrastructure expansion, product and service design, expanding retail outreach, investment, facilitating access to capital, technology, training and management support, and public-private partnerships; and
• Promoting research critical to the ongoing expansion and maturity of the microfinance industry and supporting and further developing a network of academic institutions engaged in issues related to financial inclusion and microfinance.

Key Messages for Governments, Regulators, Development Partners and the Private Sector

For Governments

• Inclusive financial sectors require building and supporting permanent, local financial institutions and embracing new technologies and systems that deliver a diverse range of financial products and services to the poor.
• Governments' vision for a well-functioning financial system should include access for all citizens to a broad range of financial products and services including savings, credit, insurance, and money transfers.
• The role of government is to create a helpful policy environment: broadening access while protecting consumers. When the government itself provides financial services, politics almost always limits access.
• Governments should refrain from imposing interest rate ceilings, as they may limit credit expansion and shift the cost burden to hidden fees. The best policy of governments to lower interest rates is to promote transparent prices and an open, competitive market.
• Broadening access to financial services is an important policy goal, but will not in and of itself eliminate poverty.

For Regulators

• Financial inclusion should be a major objective of financial regulation. The role of regulators is to establish environments that allow a diverse range of institutions to provide a wide variety of financial products and services.
• Regulators must be flexible in their approach; they must mitigate risks, without limiting access to financial services.
• Regulators must assure appropriate supervision of both financial services providers and their supporting industries, such as telecommunications.
• Regulators must exercise caution that anti-money laundering and related regulations do not block access to financial transfers that are critical for poor people.
• Broad-based access to financial services requires an enabling regulatory environment for telecommunications and technology infrastructures.

For the Private Sector

• Providing financial products and services to poor people represents a large business opportunity for the private sector. Providers of financial products and services should use their strengths to develop a range of products that better serve the needs of the poor.
• The private sector has an important role to play in expanding access to financial services for poor people.
• Private sector participants in inclusive financial sectors should include not only direct providers of financial products and services, such as banks, insurers and money transfer companies, but also telecommunications, technology, credit bureaus, retailers and other companies that support the financial services industry.
• For the private sector to realize the market opportunity of expanding access to financial services, it must be engaged in establishing appropriate enabling environments.
• The private sector can expand access to financial services in many ways. These include providing capital; building infrastructure; developing new products, services and technologies; and improving human and institutional capacity.

For Development Partners

• For development partners, quality of funding for inclusive finance is at least as important as quantity. Good funding requires technical expertise and appropriate funding instruments.
• The key bottleneck for development partners supporting inclusive finance is the shortage of strong institutions and managers.
• Development assistance for inclusive finance should complement private sector activities, not compete with them.
• Better information on the performance of development partner investment portfolios is essential. What is not measured cannot be managed.
• For development partners, both an effective division of labor and coordination of efforts are needed for maximum efficiency and impact of development assistance to inclusive finance.

List of Advisors

Mr. Sulaiman Arif Ariento	Director, Microbanking, Bank Rakyat Indonesia (BRI)
Mr. Goanpot Asvinvichit	Chairman, Government Savings Bank of Thailand
Dr. Zeti Akhtar Aziz	Governor, Central Bank of Malaysia
Mr. Marc Bichler	Director, Cooperation for Development, Ministry of Foreign Affairs, Luxembourg
Mr. Philippe-Henri Dacoury-Tabley	Governor, BCEAO (Central Bank of West African States)
Mr. Joseph B. Eichenberger	Vice President, Country Operations and Policy, Africa Development Bank
Mr. John Elkins	EVP, Global Brand and Marketing, Visa International
Dr. Stanley Fischer	Governor, Bank of Israel
Mr. Grzegorz Galusek	Executive Director, Microfinance Center for Central and Eastern Europe
Ms. Petra van Hoeken	Corporate Executive Vice President, ABN AMRO
Mr. Bob Hormats	Vice Chairman of Goldman Sachs International and Chairman of the Advisory Board of the Global Markets Institute
Mr. Bo Jerlström	Ambassador, Ministry for Foreign Affairs, Sweden
Ms. Elizabeth Littlefield	Chief Executive Officer, Consultative Group to Assist the Poor (CGAP)
Mr. L.R. McVeigh	First Vice-Chairman and Director, Credit Union Central of Canada (CUCC), and Immediate Past Chairman, World Council of Credit Unions (WOCCU)
HRH Princess Maxima	Princess of the Netherlands
Dr. Jonathan Morduch	Professor of Public Policy and Economics, Wagner Graduate School of Public Service and Department of Economics, New York University
Mr. James N. Mwangi	Managing Director and Chief Executive, Equity Bank
Ms. Maria Otero	Chief Executive Officer, ACCION International
Mr. Henrik Parl	Managing Director, Eurogiro Network A/S
Lady Lynn Forester de Rothschild	Deutsche Bank and ELR Holdings LLC
Mr. Sanjay Sinha	Managing Director, M-CRIL
Ms. Diana L. Taylor	Managing Director, Wolfensohn & Co.
Mr. Jacques Toureille	General Manager, Aga Khan Agency for Microfinance
Ms. Roshaneh Zafar	Managing Director, KASHF Foundation
Ex Officio Agencies
Mr. Sami Al-Basheer	Director, Telecommunication Development Bureau, International Telecommunication Union (ITU)
Mr. Jaime Caruana	Counsellor and Director, International Monetary Fund (IMF)
Mr. Kemal Derviş	Administrator, United Nations Development Programme (UNDP)
Ms. Henriette Keijzers	Deputy Executive Secretary, United Nations Capital Development Fund (UNCDF)
Mr. Jomo Kwame Sundaram	Assistant Secretary General for Economic Development, UN DESA

Find out more

To find out more about the Advisors Group and how you or your organization can get involved, please visit www.uncdf.org/ag or contact:

UN Capital Development Fund
Ms. Hyewon Jung
Programme Manager
Secretariat for the UN Advisors Group on Inclusive Financial Sectors
United Nations Capital Development Fund
+1 212 906-6693
hyewon.jung@undp.org

Media queries:
Mr. Adam Rogers
Head, Communications
United Nations Capital Development Fund
+1 212 906-6082
info@undp.org

What is the UN Advisors Group on Inclusive Financial Sectors? Who are the Advisors? What is the overall objective of the Advisors Group? How will the Advisors Group promote financial inclusion? Advisors Group activities Key Messages for Governments, Regulators, Development Partners and the Private Sector List of Advisors Find out more