In a recent article on financial access, Tilman Ehrbeck, the CEO of CGAP (an independent microfinance policy and research center housed at the World Bank) reminds us why it is so important. As he says: “Imagine life without access to formal financial services: without a deposit account, a college savings plan, or home mortgage, most of us would be unable to realize simple dreams and aspirations for our families, and simple planning would become a complex affair.”
This perspective strikes me as highly relevant considering much of the current debate surrounding microfinance that often calls into question its real positive impact. While it may not be a silver bullet to poverty eradication, the simple truth is that those of us who do have access to financial products and services like those mentioned above often take for granted the ways in which they can improve our quality of life.
The Hunger Project believes in the importance of financial services and is committed to expanding access through its Epicenter Strategy, which supports rural communities in Africa to establish their own banks. But THP only reaches a small fraction of the unbanked population – at the end of 2011, 45,000+ THP partners were accessing basic financial services like loans, savings and insurance. Recent data from the World Bank estimates that 2.5 billion people lack access to financial services!
One important ingredient for the expansion of financial access, as Mr. Ehrbeck also points out in his article, is an enabling environment for market development. Fortunately, at the recent summit in Los Cabos, G20 leaders affirmed their commitment to financial inclusion as a global development priority and more than 80 countries have endorsed the Maya Declaration, which calls for accelerated financial inclusion.
But more concrete action is needed, especially in the countries where THP is active in Africa, to make this agenda a reality. The Government of Mexico has a plan to advance financial access and 24 other countries have reportedly made specific policy commitments. Other countries must do the same! And THP must continue its efforts to lobby governments in Africa to adopt the Epicenter Strategy as a tool to scale up basic services to under-served populations in rural areas. Until then, financial tools that improve quality of life will be out of reach for over two-thirds of the adult population of this world.