Access for All: Building Inclusive Financial Systems
Make poverty history. This rallying cry is galvanizing world leaders and public opinion in developed countries in an unprecedented way. A new era has dawned when dinner table conversation from Seattle to Stuttgart to Sydney regularly turns to how to address poverty through equitable trade, debt relief, and increased aid flows. These big-picture issues are indeed crucial for reducing poverty in the long term. But for the 3 billion people living on less than $2 per day, access to even basic financial services can be a critical ingredient in alleviating poverty.
Most people in the developing world—that is, the majority of the world’s population—do not have access to formal financial services. Very few benefit from a savings account, loan, or convenient way to transfer money. Those who do manage to, say, open a bank account, are often faced with sub-optimal services.
Why should we care? Because the lack of access to financial services prevents poor and low-income people from making everyday decisions that most people around those dinner tables take for granted. How to pay for a child’s schooling—or even schoolbooks—next year? Where to get the cash to bury a loved one? How to send money from the capital city back to family living in a remote rural area? Where will the funds come from to fix the leaky roof? How to acquire inventory for a business?
Financial services for the poor, often referred to as microfinance, cannot solve all the problems caused by poverty. But they can help put resources and power into the hands of poor and low-income people themselves, letting them make those everyday decisions and chart their own paths out of poverty. The potential is enormous, and so is the challenge. Meeting this challenge is the topic of this book.
CGAP envisions a world in which poor people everywhere enjoy permanent access to a range of financial services that are delivered by different financial service providers through a variety of convenient delivery channels. It is a world where poor and low-income people in developing countries are not viewed as marginal but, rather, as central and legitimate clients of their countries’ financial systems. In other words, this vision is about inclusive financial systems, which are the only way to reach large numbers of poor and low-income people. To get there, diverse approaches are needed—a one-size-fits-all solution will not work.
Diverse channels are needed to get diverse financial services into the hands of a diverse range of people who are currently excluded. Making this vision a reality entails breaking down the walls—real and imaginary—that currently separate microfinance from the much broader world of financial systems.