Weekly Roundup – 10/19/13: Will the FI2020 movement do for financial exclusion what the MDGs have done for poverty and disease?
Google “Millennium Development Goals, success or failure” and scan the first few of the 38 million-plus results. You’ll see a vast range of opinion and analysis: inspiring success stories, critiques of uneven progress, debates over the effectiveness of setting such ambitious and specific worldwide goals – and attaching them to such a concrete deadline (now just two years away).
But though many of the goals will remain unmet by 2015, one thing’s clear: since they were adopted in 2000, the MDGs have focused the world’s attention on alleviating poverty, hunger and disease to an unprecedented degree, and helped mobilize a massive amount of human and financial capital from governments, NGOs and donors.
And in many countries, the results are impossible to ignore: the goal of reducing extreme poverty rates by half was met five years ahead of the deadline. Child and maternal mortality have decreased dramatically, as have death rates from AIDS, TB and malaria. More kids are going to school, more people have access to clean drinking water, and similar progress has been made on a great many of the world’s most vexing challenges.
For many in the global development community, the takeaway is this: solving big problems requires a unified sense of purpose, specific goals – and a clear timeframe.
In a few weeks, leaders in the financial inclusion community will put that formula to the test to address another intractable global problem: financial exclusion.
Financial Inclusion 2020 (FI2020), led by Accion’s Center for Financial Inclusion (CFI) is building a movement that mobilizes stakeholders around the globe to achieve full financial inclusion, using the year 2020 as a focal point for action. (Disclosure: Accion is a content partner on NextBillion Financial Innovation.)
The scope of the problem is huge: over 2 billion adults worldwide have no formal bank account, and many who do have accounts don’t use them. Exclusion from these and other financial services has major repercussions in the lives of low-income people. Their lack of access to credit, savings, insurance, and payments products makes it harder to manage their money, respond to unexpected events, increase their incomes and build better futures for their families.
But though financial inclusion is increasingly recognized as a policy priority, there hasn’t been a coherent movement in that direction. As CFI explains it, the complexity of addressing this on a global scale raises many issues, including “the diverse range of actors who need to be involved, understanding the financial needs of the underserved, and the changing opportunities technology presents, to name only a few.”
That’s why FI2020 is seeking the support of a range of stakeholders from around the world, starting with its upcoming Global Forum in London on Oct. 28-30. The forum will communicate the findings of CFI’s Roadmap to Financial Inclusion and Mapping the Invisible Market research projects, and seek the input of key players capable of making full financial inclusion a global reality. Together, these stakeholders – representing the private, public, and non-profit sectors – will map an action agenda for achieving this goal by 2020.
At this stage, it seems optimistic to hope that this effort could have the kind of impact on financial exclusion that the Millennium Development Goals have had on poverty and disease. And the comparison is not entirely fair: CFI is a major player in financial inclusion, but it’s not the U.N.
Still, there are positive early signs of the movement’s potential. As CFI puts it, microinsurance is burgeoning, big private sector players are getting involved in the low-income market, high-level policymakers across the global community are promoting financial inclusion, and big data and mobile access are putting new tools into everyone’s hands. And just last week, World Bank Group President Jim Yong Kim endorsed the goal of achieving universal financial access by 2020. “Universal access to financial services is within reach – thanks to new technologies, transformative business models and ambitious reforms,” he said. “As early as 2020, such instruments as e-money accounts, along with debit cards and low-cost regular bank accounts, can significantly increase financial access for those who are now excluded.”
“President Kim’s announcement adds momentum to the Financial Inclusion 2020 campaign,” said CFI managing director Elisabeth Rhyne in an email. “We launched the campaign using 2020 as the focal point believing that a relatively near-term time frame would provoke ambitious and yet realistic thinking about what could be achieved. The World Bank’s commitment to universal access demonstrates exactly that kind of thinking. We can be sure that if the bank put the commitment out there, its staff has looked at facts and trends and sees the goal as reachable. We would love to see other major players – especially financial services providers – make similarly bold yet practical commitments.”
The World Bank hasn’t come forward with concrete proposals yet, but, according to Rhyne, many of the bank’s staff who were involved in setting the commitment have also been involved in the FI2020 process, mainly as working group members. So she’s hopeful that the announcement will herald future support from the bank, and that it might lead other stakeholders in FI2020 to make their own commitments.
If that happens, we might look back on the coming weeks as a turning point in the long march toward global financial inclusion. (And be sure to check back with NextBillion Financial Innovation for coverage of the FI2020 Global Forum and the campaign’s progress.)
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