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Financial Inclusion Programmes are not Changing the World

Categories : Cash is the first step of financial inclusion
January 21, 2020
Tags : Cash, Financial inclusion, Unbanked
Financial inclusion programmes play an increasingly important part in international development but two researchers find that the effects on economic poverty are small and inconsistent.
Guillaume Lepecq

This post is also available in: Spanish

Financial inclusion programmes play an increasingly important part in international development and aim to increase the welfare of low-income households in low-and middle-income countries. According to the United Nations Capital Development Fund (UNCDF), “Financial inclusion is positioned prominently as an enabler of other developmental goals in the 2030 Sustainable Development Goals (SDGs), where it is featured as a target in eight of the seventeen goals.”

Financial Inclusion is featured in eight of the seventeen Sustainable Development Goals


For many international organisations, financial inclusion boils down to access to digital finance. The UNCDF quote a McKinsey Global Institute Digital report which claims that digital finance alone could benefit billions of people by spurring inclusive growth that adds $3.7 trillion to the GDP of emerging economies within a decade. For Leora Klapper, Lead Economist in the Development Research Group at the World Bank, “we can’t meet the SDGs without Financial Inclusion”. The Global Findex database which is funded by the Bill and Melinda Gates Foundation aims specifically at measuring progress towards the World Bank Goal of Universal Financial Access by 2020.

A long way to go, before we achieve Universal Financial Access

According to the latest available Findex data (2017), approximately 31% of the world population or 1.7 billion adults remain unbanked in 2017 – without an account at a financial institution or through a mobile money provider. Remarkable progress has been achieved as the share of adults holding an account has risen from 51% in 2011 to 69% in 2017, but a third of the population remain excluded from banking. Moreover, holding an account is different from using it. Only 52% of adults – or 76% of account owners – around the world reported making or receiving at least one digital payment in the past year. In high-income economies 80% of adults reported using a debit or credit card to make at least one payment in the past 12 months, while in developing economies only 22% did so.

Financial Services: nice to have but not essential

However, two researchers have undertaken a comprehensive evaluation of financial inclusion programmes and conclude that their impacts are small and variable. The paper entitled Impact of financial inclusion in low- and middle-income countries: a systematic review of reviews is authored by two academics specialised in international development, Maren Duvendack and Philip Mader. The methodology consists in a “review of studies that synthesise the findings of other studies (meta-studies) regarding the impacts of a range of financial inclusion interventions on economic, social, gender and behavioural outcomes.”

The authors conclude:

According to Philip Mader “We think that, if one were to ask poor households to place financial services somewhere in a Maslow-type hierarchy of needs, they would place them near the top – nice to have, but not as essential as things like schooling, health, safety, water, nutrition, sanitation, and so on.”


This post is also available in: Spanish