Financial inclusion, key to reducing poverty

Financial inclusion refers to the access to diverse financial products and services of quality. Up to two billion people worldwide, however, are excluded from the financial system, especially in developing countries: richest adults are twice as likely to own a bank account than the poorest.

Paradoxically, those who have most difficulty acquiring banking products and services are those who could most benefit from them, which is why financial inclusion is urged to play an important role in reducing poverty and inequality to fulfil the UN’s 2030 Agenda for Sustainable Development Goals (SDGs).

Financial inclusion for sustainable development

Why is it so important to facilitate access to financial services in developing countries? Because, apart from enabling people to save money, it could empower women (currently with less access to the financial system) who, with a credit line, could undertake labor activities unthinkable without economic aid; increase consumption and investment, and thus grow revenues; and increase spending on other social aspects, such as preventive health. Many of the worst problems presently endangering developing countries could be resolved through financial inclusion.

Financial inclusion: catalyst for poverty reduction

In line with SDG 1, to end global poverty, financial inclusion will be key. The 2030 Agenda seeks to guarantee human beings, especially those in vulnerable situations, the same rights, not only to financial services, including microfinancing, but also to economic resources, property and new technologies.

The fight for financial inclusion on the ground

People in many developing countries are excluded from the financial system, especially in African and Asian countries such as Bangladesh, Ghana, India, Indonesia, Kenya, Nigeria, Pakistan, Rwanda, Tanzania and Uganda, among others. The Financial Inclusion Insights program says big progress is beginning to be made in different fields of action, but there is still a long way to go. Below are some data to help understand the financial inclusion challenge:

- 61% of Kenyans are active users of mobile money

- 36% of Nigerians have an online bank account

- 48% of Ghana’s inhabitants already consider themselves included in the financial system

- Women in Pakistan doubled their level of financial inclusion from 3% to 6% from 2014 to 2015

- 79% of Bangladeshi men have a mobile phone compared to 48% of women

- 42% of adult Indians are active users of a bank account

- In Rwanda, 13% of the rural and 40% of the urban population use mobile money

- 73% of the Indonesian population say they have savings

- 46% of Tanzanian adults use smartphones

- In Uganda, 17% of men and 7% of women have bank accounts.

Do you know an initiative helping toward global financial inclusion? Tell us about it.

Source: World Bank and Financial Inclusion Insights.