Ladies and gentlemen,
Thank you all for attending today’s side event on “Financial Inclusion: Innovation Solutions for the LDCs”.
We are very pleased to co-organize this event with Italy, and look forward to building on our collaboration with Italy in support of LDCs and their graduation ambitions.
Financial inclusion is recognized in the Istanbul Programme of Action and the SDGs as a key enabler for so many development objectives, including graduation.
More people are gaining access to financial services worldwide. Between 2011 and 2014, the global unbanked population dropped by 20 percent, from 2.5 billion to 2 billion.
The impacts on development are significant.
Financial inclusion provides poor people with the services and products they need to build ladders out of poverty, improve their lives, and manage risks they face.
It can activate savings stored under mattresses and get domestic resources flowing productively through the economy, supporting small businesses, job creation, and entrepreneurship.
It can empower smallholder farmers and poor households, women and young people, to actively engage in their local economy. African agricultural output could more than triple if farmers were able to access the finance they need to expand both the quality and quantity of their produce.
Yet, nearly 40% of adults in the world are financially excluded. The gender gap has persisted at 9% in developing countries.
For many financial institutions, the biggest constraint in expanding access is the high cost of delivering basic services to the poor. This usually involves high-volume, low-value transactions that require a retail infrastructure often lacking in LDCs. Investors perceive high risks and low returns.
So something needs to change.
The good news is that the growing attention to financial inclusion from policymakers, development actors, investors, regulators, civil society, mobile network operators, and social entrepreneurs is making this field fertile ground for innovation.
Across LDCs, we’re seeing how public-private partnerships can overcome market failures. In many cases, ODA is incentivizing financial service providers to adapt their business models to meet the real needs of poor women and men, and is crowding in domestic and South-South capital to scale up and replicate what works.
We’re seeing new approaches that successfully reach the unbanked through informal savings groups that can be linked to the formal financial sector and greatly expand the options for those women to grow their savings and access other financial services.
We’re seeing mobile banking and digital technology reduce the cost of expanding financial services to excluded and poor communities and households, making it safer and cheaper to make payments and send and receive remittances.
We’re seeing the power of global partnerships, like the Better Than Cash Alliance, to accelerate the transition from a cash to a digital economy.
We’re seeing new approaches – such as “pay-as-you-go” systems – being adapted to bring essential technologies to underserved communities, as in the case of clean energy. There is potential to apply these models to other technologies too.
We’re also seeing new data sources and diagnostic tools create a nuanced understanding of financial inclusion at the country-level, using robust demand-side surveys combined with in-depth supply and regulatory analysis.
UNCDF has developed a robust diagnostic tool and programmatic approach that help governments and national stakeholders to develop financial inclusion strategies and roadmaps based on a clear understanding of the demand, supply and regulatory environments, as well as market development trends. It is called “Making Access Possible” or MAP. We have been analyzing the data and lessons learned from the six original countries where MAP was implemented. This analysis has been compiled in a series of Insight Notes which are available at the back of the room. These Notes provide LDC governments and other policy makers with an important perspective on a range of issues. These include:
- Understanding who the customer is;
- An introduction of new ways of measuring financial inclusion that shift away from an
- Exclusive focus on access but also analyses usage;
- Questioning whether banks accounts are always the appropriate products for increasing
- Customer welfare; and
- Assessing different country experience with mobile money.
By compiling such lessons and knowledge, and arranging events like this, we are able to share what innovative solutions work, to challenge perceived wisdoms, and to chart new paths forward based on evidence and experience– ensuring that we can continue to advance financial inclusion.
To meet the SDGs, to meet graduation targets in LDCs, and to make growth inclusive, we need to make finance more inclusive.
We have with us today distinguished panelists. I hope today’s discussion generates strong support for the partnerships and innovations needed to increase financial inclusion over the remaining period of the Istanbul Programme of Action and throughout the SDG period.