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Reducing Global Poverty through Financial Inclusion
By admin May 6, 2019

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The World Bank Group has two primary goals to achieve by 2030. One is ending extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3 percent, and the other is promoting shared prosperity by fostering the income growth of the bottom 40 percent in each country. Ceyla Pazarbasioglu, vice-president for equitable growth, finance, and institutions, believes that achieving a world free of poverty must have financial inclusion. Her previous roles at the International Monetary Fund and government official in her native Turkey cause her to advise that financial inclusion has to be expanded in the right way or it could backfire.

In 2017, 1.7 billion adults in the world did not have an account at a financial institution or mobile money providers according to the lasts Global Findex database.  The report names China, India, Indonesia, and Pakistan as the biggest shares of financially excluded individuals, but it remains a pervasive problem across Asia, the Middle East, Latin America, and Africa. Pazarbasioglu said there is “good finance, bad finance, and ugly finance… you need to make sure it serves citizens, the SMEs, and not just the banker or wealthy.” These individuals lacking financial access share several traits such as lower incomes, geographical isolation, lower levels of education and are predominately female.

Fintech is an avenue that can close some of the gaps. Last year, the World Bank and the IMF presented a joint fintech agenda in Bali, Indonesia. There are examples of fintech’s role fostering entrepreneurship, lowering unemployment, and providing access for female small businesses.  Ana Kristalina Georgieva, World Bank’s chief executive officer, has led what is known as the African “digital moonshot” a $25 billion investment in digital transformation between now and 2030 with the potential of $25 billion more from the private sector. While financial inclusion for more people around the world is important to reduce poverty, there are risks of people borrowing excessively and data breaches.

The Global Good Fund, a nonprofit organization that supports high-potential social entrepreneurs in more than 25 countries, highlighted ten social innovators striving to create a ripple effect of change around the world in health, education, and finance. Vaibhav Lodha, Cofounder of ftcash, has one of India’s fastest-growing financial technology ventures that converts cash to digital payments. The venture also provides pre-approved advances and loans that can be disbursed at the click of a button. Lodha said he aligned his ideas with more people who share a common purpose to empower lives and create a just society. Abbey Wemimo, Co-CEO of Esusu Financial Inc., is using data to empower marginalized Americans, students and immigrants financially. Individuals use a smartphone app to save more and access larger sums of capital through digitization of rotational peer-to-peer savings. Wemimo created the app based on his personal experience immigrating to the USA as a child. His mother did not have a credit score and struggled to access bank loans.

Nat Cartwright, chief operating officer of Finn AI, which sells virtual assistants to banks, says technology advancements are lowering cost for the institution. TymeBank is one of Finn AI’s clients in South Africa that is a fully digital bank and uses artificial intelligence to interact with customers online and via kiosks. Citigroup has given $5 million to microloans fund in Jordan that helps give about 10,000 women access to credit.

The financial landscape is slowly changing to include more women and underserved groups. Financial institutions should educate customers about products and services while also reducing the risks of excessive debts and data breaches. Financial systems have to find more inclusive and sustainable solutions to banking the unbanked.

 

For more information:

No end to poverty without financial inclusion, says World Bank

How This Year’s 10 Global Good Fund Fellows Are Saving the World

Banks use fintech to make up for lost time on financial inclusion

What Has Fintech Done, To Make Itself Feel Proud?

Global fintech investment doubled in 2018


Thanks for sharing !


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