The U.S. Congress has recently been involved in debate on immigration, a theme also explored in President Obama’s State of the Union Address last week. Such conversations have led me to wonder… what does financial inclusion mean for people who are living outside of their home country?

There has been a marked increase in countries that have released definitions of financial inclusion, national strategies for financial inclusion, and regulations that support financial inclusion. The focus of these efforts is in part determined by how countries define the target population for financial inclusion. Often, financial inclusion is not for everyone.

At the Center for Financial Inclusion, our definition specifies that financial services are “for all who can use them.” For us, age, disability, gender, or citizen status should not keep people from formal financial services.

In the implementation of financial inclusion policy, regulation, and strategy, however, there are legal and security-based concerns affecting why our definition of financial inclusion “for all who can use financial services” isn’t reflected in every definition of financial inclusion. The OECD and the EU, for example, are very clear that financial inclusion is for citizens only. Other countries around the world similarly adopt this definition. It makes sense that banks would want to know whether a prospective client is a citizen. Proof of citizenship means lower risk. It implies that legal problems can be routed through the national justice system. It ensures that the owner of the account or the holder of a line of credit can more likely be found in case of a problem.

It also means, however, that there are many migrants and refugees who are by virtue of their citizenship status excluded from the formal financial system. In Saudi Arabia, over 30 percent of people in the country are not citizens. In UAE, over 80 percent of people are not citizens. In Jordan and Hong Kong, this number is about 40 percent, and in Kuwait and Qatar, around 70 percent. In sheer numbers, the U.S., Germany, and Russia lead the way, with an estimated 70 million people living in one of these three countries without citizenship.

If we fail to create solutions to serve migrants and refugees, we ignore a huge number of those who are excluded from formal financial services.

Potential solutions should remind policymakers of financial inclusion’s intent: to serve marginalized and vulnerable populations, and in my opinion, that includes those without citizenship. Regardless of which side of the political spectrum you stand, extending financial services to migrants and refugees has the potential to increase their economic potential and contribute to the gross domestic product. In other words, if migrants and refugees are managing their finances in the formal financial system in which they are working, the money they earn can contribute to the economy in their country of employment rather than solely in their country of citizenship. With an estimated 232 million migrants around the world, and remittances expected to reach $515 billion by 2015, this presents a significant business opportunity for providers.

If financial inclusion is just for citizens, then we will continue to have an enormous exclusion problem even with the benefit of inclusive policy, regulation, and strategy at the national level. Financial inclusion shouldn’t be just for citizens—it should be for all.

Image credit: joiseyshowaa

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The FI2020 Global Forum in London gets underway this Sunday with a pre-Forum side meeting on financial inclusion for persons with disabilities (PWDs). This client-centric start feels like a fitting precursor for an event to expand financial inclusion.

Financial inclusion requires that financial services meet the unique needs of all clients, especially the needs of the most underserved and vulnerable client groups. Sessions throughout the Forum reflect this key tenet. In addition, there are side meetings on the Financial Capability Roadmap and the Consumer Protection Roadmap, focused on moving these roadmap principles and recommendations to action. These and the other three financial inclusion roadmaps were developed through a consultative process that collected and incorporated the perspectives of specific client groups.

Among Forum participants are representatives of various client segments – such as PWDs, women, the elderly, youth, rural populations, and migrants – to help raise awareness of their unique needs and assets. Here’s a collection of pertinent statistics for financial inclusion on these client segments:

Youth:

• 1.8 billion of the world’s population is between the ages of 10 and 24
• 87 percent of youth are concentrated in the developing world
• About half the world’s youth report being economically active
• 38 percent of young adults have an account compared to over 54 percent of older adults

The Elderly:

• In 1950, globally, 1 in 20 people were elderly. By 2050, it will be 1 in 5.
• In 2000, only 6 percent of people in less developed countries were over 65 years old. By 2050, that number will grow to 20 percent.

Women:

• In all regions, women are less likely to have a bank account than men

Source: World Bank, Global Findex (Washington, DC: World Bank, 2011)

Persons With Disabilities:

• Over 15 percent of the world’s adult population, or 785 million people, live with a disability
• Unemployment for persons with disabilities is as high as 90 percent in the developing world
• In developing countries, 80 percent of persons with disabilities live in rural areas

Migrants:

• There are an estimated 214 million international migrants around the globe, and over 700 million more people migrate within their own countries
• Developing countries will receive over $410 billion in remittances in 2013
• Cross-border remittances are a growing market
• The top recipient countries of remittances include India, China, Mexico, the Philippines, and Bangladesh
• For the Philippines and Bangladesh, more than 10 percent of their GDP comes from remittances

Rural Populations:

• About 20 percent of the world is living in rural areas, compared to about 40 percent in 1950. This trend, however, does not mean a shrinking of all rural populations.                         
• In low and middle income economies, those who live in rural areas are much less likely to have an account than those living in urban areas
• An estimated 30 to 40 percent of remittances go to rural areas

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International Women’s Day 2013: Where Are We With Women’s Access to Financial Services?

Today marks 2013’s International Youth Day, a day set aside for governments and individuals around the world to bring attention to youth issues. First designated by the United Nations in 1999, this year’s day is themed “Youth Migration: Moving Development Forward,” and seeks to raise awareness of the opportunities and risks associated with youth migration, share knowledge coming out of recent research and analysis, and engage stakeholders, including youth migrants, in discussing their experiences and in taking action.

Globally, there are about 214 million migrants, with more than 10 percent of these being youth. Like all who migrate, youth face serious rewards in departing their native country, such as economic opportunities and escaping persecution, as well as serious risks, such as discrimination and inadequate living conditions. Youth migrants also face particular challenges, like a heightened vulnerability to sexual abuse and exploitation.

In UN Secretary General Ban Ki-moon’s message for this year’s Youth Day, he indicated that too little is known about youth migrants’ struggles and experiences. For ways to get involved, including channels for sharing personal experiences, visit the UN website, here.

In the Roadmap to Financial Inclusion, the Financial Inclusion 2020 is creating an action agenda to advance financial inclusion for all client segments, including youth and migrants. To learn more about the Roadmap and to explore becoming a Roadmap reviewer, visit the FI2020 website, here. FI2020 also offers the opportunity to engage with financial inclusion among youth and migrant segments through the Mapping the Invisible Market initiative’s interactive data tools. With the Data Explorer, you can create visualizations illustrating how changing economics, technologies, demographics – including on youth and migration – and other variables are affecting financial inclusion. Check out the Data Explorer, here.

Image credit: United Nations World Youth Report

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