Today, 2 billion people lack access to formal financial services. This represents a pool of customers with the potential to save US$145bn a year. This global challenge requires global solutions. Financial inclusion – starting with supporting people to save – can enable poverty reduction, social equality and the economic growth of the next generation.
Since 2009, Banking on Change, the partnership between Barclays and the charities CARE International and Plan UK, has been using a savings-led approach to financial inclusion that has already opened up access to financial services, and given the skills to save, to over half a million people. It has developed a model for linking informal savings groups to formal banking services.
To bring this solution to scale, many organizations will need to work together. That’s why Banking on Change has created the Linking for Change Savings Charter which sets out international principles for effectively and responsibly linking informal groups of savers to formal banking products and services.
As a leading player in the global financial inclusion landscape, UNCDF joins today the Linking for Change Savings Charter, aimed at setting out international principles that enable organizations to effectively and responsibly link informal groups of savers to formal banking products and services.
“By signing the Linking for Change Savings Charter as an implementer, UNCDF commits to the Charter principles which are already deeply entrenched in the programming, tradition and culture of UNCDF,” said Ms. Judith Karl, Executive Secretary of UNCDF.
“Targeting the ’last mile’ unbanked populations in LDCs is at the core of our mission and programming. In rural Sub-Saharan Africa, where there is a dearth of infrastructure and where few formal financial institutions operate, savings groups are sprouting up with the help of INGOs and of their own accord. Savings groups are the community-based systems that rural populations, mostly women, use to support their household and livelihood goals. UNCDF strongly believes in a savings led approach to financial inclusion and in bringing these savings groups to another level through linkages. UNCDF’s vision is that these linkages have the power to increase women’s options, create greater security and resilience by connecting them to the opportunities formal institutions can offer.” she added.
Programming at UNCDF reflects many of the principles the Savings Charter espouses, from financial education to the importance of collaboration and banking the poor through the springboard of savings. MicroLead, one of UNCDF’s flagship programmes, which focuses on financial inclusion through savings at regulated institutions, is a prime example of this. MicroLead grantees include 39 Financial Service Providers and over 100 SACCOs, many of which have designed products and services specifically for savings groups or are in the planning stages to develop services for this target group in order to deepen and widen their customer base. MicroLead plans to reach over 2 million low-income depositors by 2017.
With over 25 signatories including Barclays, VISA, The MasterCard Foundation, The SEEP Network, CARE International and PLAN UK, UNCDF joins the ranks of prominent players in the financial inclusion sector leading the way to promoting a savings-led approach to financial inclusion.