CGAP Annual Report 2011
An estimated 2.7 billion working-age adults globally at the base of the economic pyramid have no access to formal financial services even though poor families in the informal economy need financial intermediation as much as wealthier households, if not more so. Their income and expense streams are more irregular, and they have less of an economic cushion to begin with. Without formal access, they have to rely on informal financial mechanisms that are typically incomplete, less reliable, and considerably more expensive.
Against this backdrop, the concept of “financial inclusion” has gained prominence on the global development agenda. A growing body of empirical evidence shows that access to the right financial service at the right time helps households build assets, generate income, smooth consumption, and protect themselves from risks. At the policy level, decision-makers have recognized that an inclusive financial system that reaches all citizens also allows for more effective and efficient execution of other social policies, for example through conditional payment transfers in health and education. And at the macro level, we know that deeper financial intermediation in an economy leads to more growth, and less inequality.
CGAP is a consortium of 33 donors with the common goals to advance access to financial services for the poor. As a global public good, our role is to push the frontiers of the field. CGAP’s 2011 Annual Report describes the progress made last year, and CGAP’s contributions to:
- Better understand end-user needs
- Advance the imperative of responsible delivery
- Capture the opportunities from business model innovations
- Work towards enabling policies and regulation
- Deepen the consensus on the broader benefits of access to financial services.
CGAP generates and shares practically relevant knowledge on how to advance access to financial services for the poor. Our work is aimed at helping the community better understand clients’ needs and behaviors as a central input for product and business model innovations to prove new concepts to reach more people, with a broader range of products, at lower costs. Our research and advice on best practice policies are helping policy makers create an environment in which financial access for the poor is appropriately supported. Most important, the CGAP system builds into its work direct and immediate peer learning among its members to ensure we remain collectively at the cutting edge. We remain committed to advance our collective mission in 2012.