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From Microcredit to Inclusive Finance

From Microcredit to Inclusive Finance. The Story . Microcredit's story begins in the mid seventies in South Asia. Credit is a part of most people's lives, this is also true for the very poor.

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From Microcredit to Inclusive Finance

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  1. From Microcredit to Inclusive Finance

  2. The Story Microcredit's story begins in the mid seventies in South Asia. Credit is a part of most people's lives, this is also true for the very poor. Of course, if you think about it, this should be obvious: the less you have the more you need to borrow -- the more you need credit. Credit, however, is hard to get the more you need it. We hear talk of a "credit crunch", But the truth is, for billions of the world's poor, this credit crunch is a permanent denial of access to credit.

  3. Poor clients already manage a wide range of financial instruments Microfinance loan Microfinance savings account Life insurance Interest free loan from neighbor Remittance to home village Shopkeeper credit Savings held for neighbors Home savings Rent arrears Cash in hand Saving with a moneyguard Savings Groups Wage advance Loans to others Source: Portfolios of the Poor Photo Credit: AKDN / Jean-Luc Ray

  4. Global Evolution towards Inclusive Finance

  5. What is Inclusive Finance? Universal access, At a reasonable cost, To a wide range of financial services, Provided by a variety of sound and sustainable institutions.”

  6. 5 Yet, “Half the world is unbanked” ~2.5 billion adults around the world do not use formal or semi-formal financial services Adults who use and do not use formal or semi-formal financial services globally Billions of adults, 2005 Total adult population Use financial services Do not use financial services SOURCE: McKinsey & Company’s global Financial Inclusion Practice , from Chaia et al., “Half the world is unbanked,” Financial Access Initiative, 2009

  7. What do poor people want want? How to serve them better? • Not just credit Source: Helms

  8. Mobile Technology : financial inclusion game-changer?

  9. Clear impact on financial inclusion • The evidence of financial inclusion driven by Mobile Financial Services in Kenya has been strongly highlighted by the Finscope study released in June this year. • In three years, the formal inclusion has increased from 26,4% in 2006, to 40,5% in 2009 with clear development due to M-Pesa (in “Formal Other” category). Source: FSD Kenya

  10. The big questions • Financial crisis • Social Impact • Client protection • Women empowerment

  11. hanadi.toutonji@uncdf.org

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