Financial Inclusion

"Financial inclusion is a key ingredient to help the world achieve the UN Sustainable Development Goals (SDGs). Technology has allowed us to reach more people with affordable financial products that are really changing people’s lives. These digital financial solutions are creating innovations that amplify our work toward the SDGs. Not only can we improve people’s incomes and their financial resilience, but innovation is also making it possible to access goods such as off-grid electricity, water provision, health provision and food security. By working on Financial Inclusion, we will work towards an inclusive society and economy."

- Her Majesty Queen Máxima of the Netherlands, UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA)

Financial Inclusion

According to the latest World Bank Global Findex, 3.8 billion adults have access to formal financial services. This represents nearly 70% of all adults. However, 1.7 billion adults remain excluded from the benefits of having access to financial services. Financial exclusion is greatest among poor people and in emerging and developing countries, including rural households, which account for over 70% of global poverty. Women are particularly underserved with a 7% gender gap globally—and 9% in developing nations.

Financial exclusion hampers people’s ability to earn, protect themselves in times of crisis, and build for the future. Additionally, 131 million (or 41%) of formal small- and medium-sized enterprises (SMEs) in developing countries have unmet financing needs, which limits their ability to grow and thrive.

The UN includes financial inclusion high in its agenda. Accordingly, in 2009, UN Secretary-General Ban Ki-moon appointed Her Majesty Queen Máxima of the Netherlands as his Special Advocate for Inclusive Finance for Development (UNSGSA). As Special Advocate, she is a leading global voice on advancing universal access to and responsible usage of affordable, and safe financial services that helps families and small business owners generate income, manage irregular cash flow, invest in opportunities, strengthen resilience to downturns, and work their way out of poverty. The UNSGSA raises awareness, serves as a convener, encourages leaders and supports actions to expand financial inclusion at a global and country level, all in close collaboration with partners from the public and private sector. An important focus of her work is on enabling technology responsible for (digital) financial inclusion in support of the Sustainable Development Goals (SDGs).

Digital financial inclusion is a key element of the UNSGSA’s advocacy efforts. She convened the working group that published the compendium Igniting SDG Progress through Digital Financial Inclusion, which identifies how digital finance, can contribute faster progress toward the SDGs, as well as create long-lasting social and economic impact for millions of people worldwide. Inclusive digital financial services, such as mobile money, online accounts, electronic payments, insurance and credit mean that poor people can increase savings, cope with unexpected economic shocks, access social benefits in an easier, faster and cheaper manner, and make investments in economic opportunities that can lead them out of poverty. Newer fintech apps can now reach people who were formerly excluded with a variety of financial services and products.

For example, the widespread use of digital financial services in Kenya helped lift approximately 1 million people out of extreme poverty between 2008 and 2014 (SDG 1). With digital financial services farmers manage risks and make investments that result in higher yields and incomes (SDG 2). Women gain more control over their finances and greater economic opportunity (SDG 5). Businesses access working capital to grow and create new jobs (SDG 8 and SDG 9).

Financial inclusion is a critical component to the SDGs and is referenced in seven. This happened in part with great support from the UN representatives of the 32 nations which comprise the Group of Friends of Financial Inclusion.

Financial inclusion and digital financial services are also a priority for national governments. Since 2010, more than 60 countries have either launched or are currently developing a national strategy. G20 leaders have recognized financial inclusion as a cross-cutting issue for development and economic system stability, and endorsed High Level Principles on Digital Financial Inclusion. Unique partnerships are forming—for example the Better Than Cash Alliance, which brings together private sector, donors and governments to advance the use of digital channels. Global standard setters for the financial sector have incorporated financial inclusion considerations into their guidelines. CEOs of leading global companies, convened by the UNSGSA, have also established a partnership for economic inclusion,  to develop scalable and profitable solutions that bring financial inclusion solutions to the underserved populations.

Moving forward, there is more to accomplish to ensure inclusive finance helps enable the world to achieve the 2030 Agenda. There is a great challenge to guarantee the remaining 30% of the world’s excluded adults gain access to formal savings, payments, credit and insurance. And not only access, but usage and quality, which represents the key step from access to development impact. These services are essential for all human beings to seize economic opportunities and protect themselves against adverse situations.

United Nations