“The Arab world has the lowest level of financial inclusion.”
This was the statement made by Dr. Abdulrahman Al Hamidi, director general and chairman of the Arab Monetary Fund (AMF) at the opening of the 18th Microcredit Summit in Abu Dhabi in March.
He cited World Bank data stating that 16 to 17 million small businesses in the Arab region have no access to financing and official financial services.
The theme of the summit, “Frontier Innovations in Financial Inclusion,” attracted 1,000 delegates from 60 countries. Jointly organized by the Khalifa Fund for Enterprise Development, the Arab Gulf Programme for Development (AGFUND), and the Microcredit Summit Campaign, the event was held March 14-17.
Rodger Voorhies, director of financial services for the poor at the Bill & Melinda Gates Foundation in the United States, talked to Larry Reed, director of the Microcredit Summit Campaign, for the 2013 State of the Campaign Report.
Larry Reed: What opportunities do you see for digital transactions making a difference in the lives of the very poor?
Rodger Voorhies: Like most of us, poor people live their lives through a lot of different kinds of financial connections, and payments are really the connective tissue that hold those financial transactions together. Unless we can figure out ways to help poor people transact in a way that is profitable for them and profitable for providers, we’re really not going to see large-scale financial inclusion take place.
Now, one of the most exciting things that’s going on for us is the ability of mobile money to reach down into really poor households, and so right now in a country like Tanzania 47 percent of households have a mobile money user. An exciting bit of that is not so much, okay, there’s one person in the household sending money to friends, but it might open up all kinds of innovations that before were previously unavailable.
So, let’s think about savings, because we know savings have a big impact on poor people. Well, it’s really hard to save, and poor people have to take a lot of self-control and we expect a lot of self-discipline out of them if they’re going to be able to save. If I can actually begin to transact digitally and I had defaulted into commitments accounts and savings accounts for school fees or whatever the mental maps are that work for me, I think we can see large scale inclusion that actually has a big development impact. And we know that the empirical evidence around these pieces work, so we know commitment accounts work, but poor people just don’t have a way to get those commitment accounts.
>>Authored by Larry Reed, Director, Microcredit Summit Campaign
Last week, Beth Rhyne posted a well-deserved tribute to Alex Counts, who recently retired as CEO of Grameen Foundation. I’d like to add to her thoughtful articulation of Alex’s contributions to microfinance and the lives of people living in poverty.
I once sat with Alex at a dinner in Dhaka that brought together many different strands of the Grameen family. Our table included several of the board members of Grameen Bank, women clients of the bank. They laughed at Alex as he talked with them in Bangla, and then let us know exactly what they thought about how the government was treating Prof. Yunus. As I watched their delighted conversation, I was struck with how it traversed so many traditional barriers of gender, age, caste, education, experience and income. It was just Alex and his friends, who were not only clients of Grameen but were also mothers, daughters, board members and business owners. He wanted to learn as much as he could from them.
Are you attending the 2015 Annual Meetings of the World Bank Group and the International Monetary Fund in Lima, Peru? Join us at the Civil Society Policy Forum* for a workshop to explore how microfinance and financial inclusion can contribute to the fight against extreme poverty.
The Microcredit Summit Campaign will host a workshop at the Forum at the World Bank Annual Meeting in Lima from October 6-9. The Forum promotes substantive dialogue and an exchange of views between Bank/Fund staff, civil society organizations (CSO), government officials, academics, and other stakeholders.
6 Financial Inclusion Pathways to End Extreme Poverty — What Role Can You Play?
Larry Reed began the session by introducing the Campaign’s role in pushing for an understanding that achieving full financial inclusion means including those living in extreme poverty.
From the start, the Microcredit Summit Campaign has advocated scaling up microfinance and other financial inclusion interventions. They can provide those living in extreme poverty with the diverse array of financial and non-financial services that will support their journey out of poverty.
On Wednesday, March 12th in celebration of Global Money Week 2014, we co-hosted with Child and Youth Finance International (CYFI) a webinar that explored how microfinance can be more inclusive to children and youth. A small but increasing number of MFIs now offer financial and non-financial services to children and youth. By doing so, they are building the next generation’s capability to save, build assets and, if needed acquire microloans to support their livelihood activities.