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> Posted by Jeffrey Riecke, Communications Assistant, CFI

What’s the state of funding for financial inclusion initiatives? CGAP’s survey of international funders found that total contributions globally are increasing, more money is coming from public not private funders, funding is extending beyond microfinance to other areas of financial inclusion, and Sub-Saharan Africa (SSA) is increasingly a priority region.

The 2012 CGAP Cross-Border Funder Survey, an annual effort since 2008, surveyed 22 international funders representing 86 percent of the financial inclusion commitments reported for 2012 (a full list of the funders can be found here). The survey, supplemented by data from Symbiotics MIV Surveys, revealed that funders committed $29 billion in 2012, a 12 percent increase over 2011. CGAP indicates that this change stems largely from an improved global economy. This increase might also result from changes to this year’s survey methodology, which, to align with the changing financial services landscape, captures funding activity in a number of additional financial inclusion areas. These areas include financing for small-enterprises and client-level projects, such as financial capability projects.

As was the case in recent years, most funding for financial inclusion initiatives goes toward portfolio financing for retail financial service providers (FSPs). This figure reached $14.8 billion in 2012, representing 78 percent of the year’s commitments. The remaining commitments are in the following areas, all in roughly equal volume: designing suitable products and services, institutional operations, management and governance, and responsible practices. Small levels of support go to policy and market infrastructure. Survey responses indicate that funders identify lack of a suitable range of products and services and limited institutional capacity of FSPs as the major roadblocks to inclusion. In 2012, 10 percent of total funding went towards strengthening FSPs’ institutional capacity.

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> Posted by Sonja E. Kelly, Fellow, CFI

The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

As people age, their use of financial services changes. We explored this in detail when we published a lifecycle approach to financial services in Peter Kasprowicz and Elisabeth Rhyne’s Looking Through the Demographic Window. People of working age need to plan for the future while also providing for their families in the present. People who are elderly need to be able to draw on their savings, manage their wealth, and in many cases, draw on and use their pensions.

When we look at the world as a whole, we see little difference between bank account ownership among the working age population (defined as ages 25 to 64) and those who are older (age 65+):

Source: World Bank Global Findex Microdata, 2012

This global equality between the two age groups masks interesting variation in regions in account ownership by age. In Sub-Saharan Africa and East Asia and the Pacific, a much higher percentage of working age adults than older adults have accounts, while Latin America and the Caribbean shows little difference between those groups. Read the rest of this entry »

> Posted by Center Staff

Corruption at any step in a financial system jeopardizes financial inclusion. Globally, roughly 1 in 4 people paid a bribe to a government employee or institution in the last year. That’s the big finding from the Global Corruption Barometer 2013, the latest in Transparency International’s annual public opinion survey on corruption. This year’s survey polled more than 114,000 people in 117 countries on their experience with bribes, their perceptions of corruption across institution types, and their beliefs on the potential for ordinary people to fight corruption.

Percentage of respondents per country/territory who paid a bribe to a government employee or institution in the last year.

For many, especially those living on less than two dollars a day, a bribe added to the cost of a service can determine if a service is a possibility – this includes basic financial services. Of the countries included in the Barometer, it was found that 7 out of the 9 countries with the highest bribery rates were in sub-Saharan Africa. Sierra Leone recorded the highest rate with 81 percent of polled individuals reporting that they had paid a bribe during the past year, followed by Liberia, Yemen, and Kenya, with 75, 74, and 70 percent, respectively. According to Global Findex data, access to and usage of formal financial services in sub-Saharan Africa is among the lowest in the world.

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> Posted by Sonja E. Kelly and Elisabeth Rhyne, Fellow and Managing Director, CFI

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

This post is based on research from the Mapping the Invisible Market project published in the paper Growing Income, Growing Inclusion by Sonja E. Kelly and Elisabeth Rhyne. The paper was released today, and can be downloaded at mapping.financialinclusion2020.org/growing-income-growing-inclusion.

The World Bank, UN, and The Economist are all talking about it: growing income around the world. The UN’s goal to halve the number of people living in poverty by 2015 has already been achieved, and the media frequently spotlights growth in emerging markets contrasted with reports of malaise in the EU and US economies. In low and middle-income economies, it isn’t just the wealthy or the well-connected who benefit from this growth. Real incomes are rising among the poor, moving hundreds of millions of people from extreme levels of poverty into levels at which they begin to have more income flexibility.

Over the course of this decade, the bottom two quintiles in many of the world’s most populous countries will see movement into and even beyond the “vulnerable class,” defined as having an income of $4 to $10 per day. Read the rest of this entry »

> Posted by Syed Mohsin Ahmed, Chief Executive Officer, Pakistan Microfinance Network

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

At the Pakistan Microfinance Network, we are always in search of more data on financial inclusion in Pakistan. So imagine my delight when I heard about the Country Profiles feature on the Center for Financial Inclusion’s Mapping the Invisible Market website that features data from the World Bank Global Findex among other sources. My exploration of the Pakistan country profile page gave me some new insights and raised a few questions for future research.

First, a very high proportion of the people who took loans (largely informal) in the past year in Pakistan took them to deal with health and emergencies. Seventeen percent of all adults in Pakistan borrowed in the past year for health and emergencies, while only about 10 percent of the people in other middle income economies did so, even though in Pakistan, people are less likely to take out loans overall.

Reasons for taking out a loan

This observation makes me wonder if there is a pent-up demand for insurance in Pakistan. For a country that has seen a number of major disasters in the last few years, no doubt there is a great need for insurance products in Pakistan to help prepare for emergencies.

When I looked further at who it was that was taking out these loans (again, both formal and informal) for health or emergencies, I noticed that they were disproportionately rural, or poor, or to have only completed primary school. These observations offer a picture of what vulnerability looks like in Pakistan, and where financial inclusion efforts might be targeted for maximum impact.

Looking specifically at formal financial services, I found that the percent of people who have an account at a formal financial institution in Pakistan is quite low—10 percent—compared to the rest of South Asia—33 percent. In both, the number one use of accounts is to receive wages. Unsurprisingly, in Pakistan, education and gender have a great impact on the use of accounts—25 percent of people whose education level is secondary school or higher have an account compared to only four percent of people who have just a primary school education. Seventeen percent of men have an account compared to three percent of women. Read the rest of this entry »

> Posted by Elisabeth Rhyne, Managing Director, CFI

The following post was originally published in the Guardian Development Professionals Network DAI Partner Zone.

When the Global Findex, an unprecedented demand-side survey by the World Bank and Gallup, was released last year, it marked the first time financial inclusion statistics from the demand side were available on a globally consistent basis. The headline: 2.5 billion adults (including 59 percent of adults in developing countries) are “unbanked” — that is, they do not have an account at a bank or other formal financial institution.

Why is having a bank account the top indicator of financial inclusion?

Setting aside the obvious point that bank accounts are among the easiest indicators to track, the policy focus on “banking the unbanked” seems to rest on the premise that bank accounts have a special role in financial inclusion. Three important functions ascribed to bank accounts are: a place to save, a money management hub, and a way to establish an ongoing relationship with a formal financial institution (an “on-ramp” to other services). These assumptions appear to underpin much of financial inclusion thinking and policy.

If a bank account is a money management tool – a central node through which a person’s financial transactions flow – it will be used regularly. This is the way most people in the developed world (and, I suspect, most financial inclusion policy makers) use bank accounts. However, many accounts in the developing world are relatively inactive. Taking the frequency with which people make more than two withdrawals per month as a proxy for operating an account as a money management hub, the following chart divides the “banked” into low – and high – activity accounts.

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> Posted by Sonja E. Kelly, Fellow, CFI

There’s a lot of data out there. And some of us are brave enough to use it (including you, my friend).

Recently we released an interactive Data Explorer tool and individual Country Profiles, allowing users to visually explore financial inclusion data in comparison with other development indicators in one central location. You can see our analysis of some of the data, but more importantly, we would like to invite you to explore the data for yourself.

For those interested in financial inclusion figures in specific countries, regions, or income groups of interest, visit Country Profiles. There we display data from the Global Findex along with demographic data relevant to understanding financial inclusion across the lifecycle. As we continue our own analysis of global trends, we will add figures on income, urbanization, technology, and more for each country.

Click on the financial inclusion bars to see a breakdown of the data by client segment, and use the tool to understand why or how people use financial services in particular countries. At the bottom of the page, you can interact with the demographic data by scrolling through the years to see past and projected population trends from 1950 to 2100. (This is very cool.)

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> Posted by Jeffrey Riecke, Communications Assistant, CFI

In this decade, Africa is undergoing urbanization at a faster rate than Latin America, Asia, or anywhere else in the world. In these burgeoning areas, the majority of people are building their own housing, and doing so in an incremental fashion – adding what they can, when they can, and developing their facilities as their means allow.

There are a few big challenges to this. In Africa’s urban centers, there is a limited supply of affordable housing, and financial services to aid housing development are also scarce. Global Findex Data indicate that access to and usage of credit in sub-Saharan Africa is among the lowest in the world. Specifically looking at mortgages, a recent study from FinMark Trust revealed that across the populations of Zambia, Malawi, Botswana, and Tanzania, less than 1.5 percent of individuals utilize mortgages.

Enter microfinance. Typical mortgages don’t fit well with the financial profile of most Africans. Compared to microloans, they’re generally for longer terms, larger amounts, and they are less flexible. Most mortgages require clients to provide documentation of regular incomes. Many Africans operate in the informal sector and lack regular income streams. In Tanzania, for example, only 28 percent of the population is able to satisfy this income requirement.

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> Posted by Eric Zuehlke, Web and Communications Director, CFI

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

The world is undergoing a profound demographic shift with big implications for financial inclusion, according to the new CFI report, Looking Through the Demographic Window: Implications for Financial Inclusion. The report is the first from Financial Inclusion 2020’s Mapping the Invisible Market, sponsored by MasterCard. This research project examines forces that are instrumental in the world achieving full financial inclusion by 2020 including demographic change, economic growth, technology, and more.

Our new Mapping the Invisible Market website features two cool interactive data visualization tools that show the relationship between financial inclusion and demography. Data Explorer is a dashboard that displays the information from over 80 indicators and geographic areas in bar charts, bubble graphs, and maps. Country Profiles allows users to explore any country or region’s financial inclusion and demographic profiles.

So what does the first report have to say? Poorer countries are experiencing lower birthrates and longer life expectancies, leading to larger working-age populations (see figures below). As the share of the population below age 15 and above 65 lessens, a “demographic window” opens for social and economic opportunity since fewer resources are required to care for these “dependent” populations. The window presents a significant opportunity for the developing countries of middle income where most of the world’s population lives. But, benefitting from the demographic window depends on access to quality education and sufficient economic and employment opportunities – and financial inclusion.

It is well understood that more developed countries are already beyond this stage, facing different challenges as their populations age. The working-age population is decreasing, creating more dependency as caring for older people requires more public investment and individual resources through health care. Not only is the working-age population decreasing, but older populations are living longer due to health care advances. In the poorest countries, the window has yet to open, as birthrates are still high and life expectancies low.

So what does this all mean for financial inclusion?

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> Posted by Merene Botsio and Sonja E. Kelly, Financial Inclusion 2020 Project Coordinator and Fellow, CFI

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

People across the world are four times more likely to recognize the Coca-Cola logo than to have saved money in a formal financial institution in the past year. Almost everyone—94 percent of adults in the world—recognizes the Coca-Cola logo, whereas only 23 percent of people have saved at a formal financial institution. When we bring big statistics down to our everyday lives, it often becomes easier to understand their magnitude. Here are some other surprising figures that emerge when we compare the Global Findex numbers on financial services usage to other figures.* Read the rest of this entry »

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.
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