Opening Remarks by Judith Karl, UNCDF Executive Secretary, to the Roundtable on Financial Inclusion – Innovation and Impacts

  • May 26, 2015

  • Canberra, Australia

Good morning,

I welcome you to this roundtable on “Financial Inclusion – Innovation and Impacts” hosted by the Australian Department of Foreign Affairs and Trade.

Five years ago, at the 2010 G20 Summit in Seoul, the international community recognized financial inclusion as one of the main pillars of the global development agenda. That summit produced a concrete Financial Inclusion Action Plan, and established the Global Partnership for Financial Inclusion (GPFI) to implement it. Since then, more than 50 countries have made formal commitments or set targets for financial inclusion.

Much has happened in the years since. The number of people worldwide having an account grew by 700 million between 2011 and 2014. Today, according to the recently launched Global Findex Database 2014, 62 percent of the world’s adult population has an account; up from 51 percent in 2011.

But much work remains. Worldwide, two billion people are still ‘unbanked,’ excluded from the formal financial system, and women make up 1.1 billion of that figure.

UNCDF, the United Nations Capital Development Fund, supports microfinance institutions, banks, cooperatives, and money transfer companies to ensure that suitable financial products (savings, credit, insurance, payments, and remittances) are available to individuals – notably the ‘unbanked’ – and micro-enterprises as well as small and medium enterprises, at a reasonable cost, and on a sustainable basis, to overcome economic shocks, smooth consumption, and make educational and entrepreneurial investments to help transition out of poverty.

The UNCDF model yields five main benefits that support the priorities of the post-2015 development agenda:

First, the ‘pathway out of poverty’ effect: Access to and use of regulated financial services increases incomes of low-incomes people, helping them to move out of poverty and stay out. Individuals and micro-entrepreneurs have opportunities to build equity, invest in businesses and in themselves (for example better health and education), better manage their small and/or irregular incomes that would otherwise cause vulnerability, and more easily pay for merchants or send to relatives and friends.

Second, a much stronger reliability and stability of national financial systems: Expanding financial inclusion and greater formalization create opportunities for national economies to grow as more savings are captured for investment, while greater business activity and transactions through the formal system widen the base for taxation. Additionally, there is growing evidence of financial inclusion creating more stable financial systems and economies, which in turn help economies grow more quickly and in ways more favorable to poor people.

Third, access to new markets and business-building services for entrepreneurs: Micro, small and medium enterprises (SME) are crucial to employment and equitable economic growth. Yet about 200 million small businesses in developing and emerging markets lack adequate financing2 . Enabling small and medium businesses to use regulated financial services and products designed to meet their needs creates opportunities for these to grow and contribute to creating jobs and growth, which are the surest way out of poverty for individuals and households.

Fourth, the multiplier effect on other development challenges: Financial services can have powerful impacts when used to support specific development priorities such as gender equality, health, and education. For example, financial services improve food security by enabling farmers—including the approximately 500 million smallholder farmers, many of whom are women—and agro-businesses to devote more resources to their crops and businesses. Similarly, women particularly benefit as regulated financial services to individual women and businesses expand women’s role as consumers and employees, increasing women’s earnings and consumption. These also help to transform society by fostering greater investments in child well-being, reducing household poverty, and enhancing aspirations for the next generation of girls and women.

Fifth, we see today more possibilities through new technologies: There are now more than 255 mobile money services around the world , and they are doing more than sending and receiving payments with appropriate regulation and safeguards. Mobile technology can offer access to insurance, credit and savings, clean water, solar energy – all through the ubiquitous handset. Financial inclusion also means that as more governments move benefits such as pensions, social programmes and financial aid to electronic payments, more people can enjoy unfettered access to government benefits without the risks, costs or inconveniences of traditional voucher or other payment methods.

In 2014, UNCDF has supported inclusive finance programming in 25 Least Developed Countries (18 in sub-Saharan Africa and 7 in Asia and the Pacific), through global or regional initiatives, country sector programmes and the Making Access Possible (MAP), UNCDF’s finance diagnostic tool and programmatic framework to support the development of national financial inclusion strategies and roadmaps.

In all these endeavors, Innovation has been, and always will be, at the core of what we do. Innovation is not an end in itself. It is about using the most up-to-date concepts and means available to get the best development results.

Allow me to provide you with some concrete examples of UNCDF’s innovative initiatives and the high profile results they have achieved.

  1. Based on an initial pilot in several countries, UNCDF is now ready to scale up our Making Access Possible (MAP) programme, a multi-country initiative to support financial inclusion through evidence-based country diagnostic, stakeholder dialogue, and roadmap development. MAP provides a powerful data-driven platform for harmonization and coordination of financial inclusion actors at the country level, and is led by national authorities. The pilot phase of MAP has gained a great deal of visibility and support as a key enabler for public and private investment in financial inclusion, and we are very excited to expand MAP to 20 countries during the expansion phase.
  2. In 2014, we have expanded our Mobile Money for the Poor (MM4P) programme. It will now be able to increase mobile-enabled delivery channels for financial services to serve 17.75 million active digital financial clients, representing a net increase of 11.58 million users across eight LDCs. These targets aim to catalyse the uptake needed for the market to have sufficient momentum to ultimately reach the majority of the adult population.
  3. We host the Better Than Cash Alliance (BTCA), an alliance of governments, private sector and development organizations committed to accelerating the shift from cash to electronic payments. BTCA – which Under the Australian Presidency of the G20 in 2014, BTCA was invited to become one of Implementing Partners the G20’s Global Partnership for Financial Inclusion (GPFI) – has also seen a steep increase in the number of new partners who have made the concrete commitment to transition from cash to digital payments in their work and has reached a total of 40 members.
  4. In Nepal, CleanStart – a UNCDF global thematic initiative to help poor households and micro-entrepreneurs to access financing for low-cost clean energy – collaborates closely with the Central Renewable Energy Fund, a $120 million multidonor wholesale fund dedicated to renewable energy, to build confidence among commercial banks about the prospects of financing the clean energy sector. In 2014, four financial institutions in Nepal extended loans for solar home systems, biogas and improved cook stoves to over 10,000 clients, testing innovations in consumer financing for clean energy.
  5. With the generous support of the Australian Department of Foreign Affairs and Trade, the first phase of the joint UNDP/UNCDF Pacific Financial Inclusion Programme (PFIP) – a Pacific-wide UNDP/UNCDF joint programme helping lowincome households gain access to quality and affordable financial services and financial education – reached almost 700,000 Pacific Islanders with a new financial product or service, including almost 400,000 people with regulated savings products. The private sector has introduced and scaled up some of the programme’s first and most successful technology-linked financial service delivery channels, including mobile money, branchless banking and low-cost international remittances. PFIP’s expansion was approved in 2014 with a target of adding an additional 500,000 lowincome clients with financial services.
  6. In 2014, we have also launched the new Shaping Inclusive Finance Transformations (SHIFT) programme, possible thank to additional support from DFAT.

    The SHIFT Programme aims to assist 6 million low-income consumers, microentrepreneurs, and small and medium enterprises, especially women, within these markets to use well-regulated and affordable financial services by 2020. The programme aims to influence change in the behavior of market actors that will, in turn, significantly alter the underlying policy and regulatory environment and sustain increased investments in the financial market.

    At the core of the entire programme is credible data and analysis to inform decisions of financial institutions and regulators. SHIFT will work directly with private sector to offer matching funds to make smart investments to developing new prototypes and bring to scale viable business models. It will coordinate relevant market actors and public interest groups to build momentum and political will to reform policies and regulations. And it will develop e-learning applications and modules that will be used to increase the capacity of professionals working in financial and adjacent markets.


To contribute to sustainable and equitable development, UNCDF will continue to invest in innovation in its programing and in its ways of working.

We will continue in drawing on a strong and expanding network of partners. Partnerships support innovation labs, which bring together a range of partners to find cost-effective and scalable solutions to some of the biggest challenges affecting developing countries. Partnerships like the excellent one we have with the Australian Government enable us to reach those most in need faster and more efficiently.

And we will continually examine our work to make it more effective, legitimate, and nationally owned.

I look forward to hearing from this roundtable and share experiences.

Thank you for your attention.