CGAP Launches New Five-Year Strategy
CGAP Launches New Strategy as Digital Disruption Reshapes the Financial Inclusion Landscape
DAKAR, SENEGAL, May 31, 2018 - CGAP announced a new five-year strategy ("CGAP VI") today to guide its work in helping poor people access and use the financial services they need to help them adapt to disruptive forces reshaping the world.
New technologies are altering the way the financial system works. Globalization of data, increased migration and sweeping changes in employment are pushing CGAP to rethink the ways it addresses the challenges and risks ahead for poor people, making its work at the leading edge of financial inclusion more relevant than ever.
These dramatic changes have the power to disrupt, yet they have the potential to create new opportunities for the 1.7 billion people - many whom are poor - without access to formal banking, savings and credit. Connectivity and digitization lower transaction costs and thereby encourage financial service providers to innovate by developing new business models and products that can effectively serve poor customers.
In addressing the CGAP Annual Meeting, CGAP CEO Greta Bull said: "Our new strategy Is centered around helping poor people adapt to the disruptive forces in an increasingly digital world. Poor people know that financial services can help them manage their lives more securely. It is our job to make sure that we make financial services available, affordable and useful so that poor people can capture opportunities and build resilience."
Under its new strategy, which shapes its work from July 2018 through June 2023, CGAP will place effort and resources in the following areas:
- Shift emphasis from financial access toward well-being- Expand consumer protection initiatives to encompass an approach that requires financial services providers and policy makers to consider product suitability and fair treatment of customers.
- Focus on excluded segments - Identify and help groups most affected by the increasing digital divide, including rural women, smallholders, youth and migrants.
- Explore connected market infrastructure - Determine ways market infrastructure can be opened through interoperability and Open Application Program Interfaces, enabling more businesses to deliver services and innovative products to the poor.
- Understand the role of data - Explore how the digital collection of data presents opportunities for inclusive business models and develop new consumer-focused approaches for managing data protection and privacy risks.
- Recognize the role of Big Techs - Deepen the understanding, including regulatory implications, of new technologies and business models as global players such as Google Inc, Facebook and Alibaba enter the financial services space.
Globally, 69 percent of adults now have accounts, up from 51 percent in 2011, according to the latest Findex data. But many challenges persist in reaching the remaining 1.7 billion people without accounts, improving usage of financial services and ensuring they contribute value to people's lives. The CGAP VI strategy is designed to address some of these challenges that lie ahead. The new plan of action is grounded in CGAP's theory of change, which provides a clear framework for focusing its work, aligned to specific industry outcomes and development objectives. CGAP will measure progress and impact against a results framework.
Among the many successes of the CGAP V strategy was the program Graduating the Extreme Poor into Sustainable Livelihoods. CGAP successfully proved through a decade of experiments that interventions combining asset transfer, training, financial services and social mentoring can lift families out of poverty. Rigorous assessment through 10 pilots in eight countries showed that incomes and household consumption rose at all but one site. Today, this approach is being adapted in almost 100 programs in 43 countries. Another success was CGAP's work in Ghana supporting the government's efforts to revise its mobile money regulations. After more enabling regulations took effect in 2015, account access grew significantly to reach over 11 million active mobile money users by 2017. The average number of mobile transactions per month doubled, and the balance in mobile money accounts grew sevenfold between 2013 and 2017.
Ceyla Pazarbasioglu, chair of CGAP’s Council of Governors, praised CGAP's new strategy at the annual meeting, saying it complements the work of the World Bank and creates an excellent framework for addressing the challenges ahead for financial inclusion:
"We at the World Bank are delighted to be part of that process and serve as CGAP's trustee. But we are much more than trustee. Like all of you here, the World Bank works in partnership with CGAP. We mutually complement and reinforce each other. We derive great benefit from our membership in CGAP and frequently use its work,” she said.
CGAP develops innovative solutions through practical research and active engagement with financial service providers, policy makers, and funders on advancing financial services as a means to improve the lives of poor people. Housed at the World Bank, it is an independent global partnership of more than 30 bilateral and multilateral development agencies, private foundations and leading development finance institutions. The Executive Committee functions as CGAP's Board of Directors, overseeing strategic direction and providing guidance to CGAP staff. The Council of Governors, which was holding its 2018 annual meeting in Dakar, Senegal, is made up of CGAP members and is responsible for setting broad policies, budget and strategy.