Two billion adults - more than half of the world’s working adults - are still excluded from formal financial services.
This is most acute among low-income populations in emerging and developing economies. Including people in the formal economy is a critical contribution to poverty reduction, tackling inequality, and fostering inclusive growth.
Financial inclusion means that individuals and enterprises can access and use a range of appropriate and responsibly provided financial services offered in a well-regulated environment. There is a growing evidence that increased levels of financial inclusion – through the extension of savings, credit, insurance, and payment services – contributes significantly to sustainable economic growth.
UNCDF provides capital and technical support through Inclusive Finance programmes to ensure that more households and small businesses gain access to financial services that expand opportunities and reduce vulnerabilities. UNCDF's ability to provide risk capital directly to the private sector is helping bring new financial products to under-served and hard to reach markets and spurring innovations. Through flexible grant and loan instruments UNCDF supports a wide range of financial services providers (e.g. banks, cooperatives, microfinance institutions, money transfer operators, and mobile networks operators) and financial products and services (e.g. savings, credit, insurance, payment services, remittances).
UNCDF also supports data driven financial inclusion diagnostics, including through generating and gathering data that is being used to help develop national financial inclusion roadmaps and strategies as well as sector-specific or market segment strategies. This enables governments and stakeholders to make evidence-based decisions and investments focused on the priorities and opportunities for financial inclusion at country level. All collected data is a public good.
UNCDF has been ranked in the top two of all agencies scored by CGAP’s SmartAid reviews since its inception:
“Over the years, UNCDF has established a solid base of good practice, whose oversight and execution lie with seasoned and competent professionals. Many of its strengths are reference points for peer institutions.” (CGAP SmartAid Report 2013).
The first is consumer protection regulation and supervision by financial authorities who set and enforce rules relating to the provision of services, especially regarding transparency, recourse and other aspects of market conduct.
The second is industry action—taken either individually or collectively—and shaped by principles, standards, codes of conduct, and guidelines, such as the Smart Campaign Client Protection Principles.
The third is enhanced financial capability of consumers to make sound financial decisions and protect themselves from harm.
To learn more about UNCDF’s approach in Inclusive Finance and its investment instruments, please download our Inclusive Finance Brochure.