Expanding Financial Access and Education
Friday, January 10, 2014
For several decades, the exciting promise of microfinance has been to provide the world’s poorest with access to financial services. But along the way, microfinance has too often become conflated with micro-credit. This is not surprising, given that most of the first microfinance institutions (MFIs) were non-profit organizations that took grants from donors and recycled them as loans. Now, however, many MFIs have reincorporated as banks with the ability to accept savings, and the full promise of microfinance is beginning to be realized. Indeed, the expansion of efficient and effective saving mechanisms and other financial services such as insurance is one of today’s most exciting developments in the effort to tackle poverty.
Savings accounts and insurance can help poor people survive unexpected financial shocks brought on by events such as family illness, crop failure, or market downturn. Savings can also improve an individual’s social mobility, ability to invest, and future earning potential. According to the International Monetary Fund’s most recent Financial Access Survey(FAS), “access to commercial bank services has deepened across virtually all regions of the world, with Africa continuing to lead growth in financial access.” In addition, more and more poor people are buying life insurance and internet connectivity and online services continue to boost financial inclusion.