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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 5 / September - October 2004 |
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News | Why Are So Many Bankable Clients Unbanked? The Blue Book Project on Building Inclusive Financial Sectors It is estimated that over a billion poor people in the world lack access to essential financial services. Numerous studies have shown the positive link between greater access to financial services and an increase in household economic welfare and enterprise stability. Yet, the financial infrastructure in many countries, including the legal regulatory and supervisory framework and the financial markets, is designed to reach only a fraction of the bankable population. The mismatch in the demand and supply of financial services acts as one of the major impediments for individual households, micro to small and medium enterprises to become fully integrated into the country’s economic activity and contribute to economic growth. The United Nations Capital Development Fund and the UNDESA Office for Financing for Development will together lead a global effort to identify the constraints to building inclusive financial sectors and lay out avenues of opportunity for expanding access to financial services. The results of this exercise will be presented in a “Blue Book”, the centrepiece of this collaborative effort. The initiative will consolidate and refine input from a wide range of constituents including national governments, central banks and other financial institution supervisory bodies, multilateral institutions, civil society, the private sector and other stakeholders in the microfinance industry. “The Blue Book will be the result of an innovative process of stakeholder consultations, based on a solid analytical underpinning,” said Kathryn Imboden, of UNCDF. “Owned by the wide range of stakeholders participating in the process, it will capture, analyse and synthesize the challenges in building inclusive financial sectors, laying out avenues of opportunity for the future. We expect that it will be a very compelling document.” The conceptual foundation for this initiative was largely provided by the Monterrey Consensus, adopted by heads of state and governments at the International Conference on Financing for Development in March 2002. The Monterrey Consensus is a declaration of a global commitment to collectively address the complex policy challenges that shape financing for development, including improved access to financial services. The International Year of Microcredit 2005 has as its main objective: the promotion of inclusive and sustainable financial sectors. These two initiatives provide an opportunity to explore ways to increase access to financial services in developing countries. "The Monterrey Summit also evolved a unique process for open and informal dialogue among all relevant stakeholders as a way to help develop policy thinking on specific issues, and this is being used to help develop the Blue Book,” said Barry Herman, Inter-regional Advisor at the Financing for Development Office of UNDESA. “To succeed it must fully raise the voice of developing country governments, financial service providers and clients on the ground, as well as the donor agencies that have the resources." This initiative encourages collaboration, through a series of stakeholder dialogues, by a broad range of financial institutions including national governments, central banks, supervisory bodies, multilateral institutions, civil society, and the private sector to address the constraints to equitable access to financial services. The dialogues will be built around the central theme of why so many “bankable” clients do not have access to financial services. The series of consultations will take place between October 2004 and May 2005, leading up to a Global Meeting in May 2005. The publication of the Blue Book in 2005 will be a culmination of the reflection and expertise of practitioners in the public sector, financial sector and development communities on the constraints to the development and effective functioning of financial institutions and markets serving the wide-ranging needs of households and businesses. A solid yet accessible document drawing from qualitative analysis and a broad-range of consultations, the Blue Book will provide a foundation for the various constituencies at the national level to develop concrete action plans for building inclusive financial sectors. It is expected that:
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