Enhancing financial inclusion: The role of policymakers

Sung-Ah Lee


While progress has been made in increasing financial inclusion in some countries, meaningful scale has not yet been achieved. An estimated 2.5 billion adults worldwide still lack access to formal financial services, 90 per cent of whom live in developing and emerging countries. The need for greater financial inclusion – in terms of access, usage and quality of services – remains significant.

In recent years, technological and infrastructural innovations brought significant opportunities to expand financial inclusion, particularly in developing and emerging countries. For example, the explosive growth of mobile financial services (MFS) and the use of non-bank agents have lowered the costs of providing financial services on a large scale in many countries.

This new trend has not only brought financial inclusion within closer reach, it also paved the way for a broadened mandate for policymakers and regulators, particularly in leading the development of appropriate regulatory responses based on a solid understanding of the potential risks that come with these innovations.

To support the development of these appropriate regulatory responses, policymakers and regulators expressed a willingness to learn from the experiences of their peers from developing and emerging countries. Thus in 2008, the Alliance for Financial Inclusion (AFI) established itself as the world’s first peer-to-peer learning and knowledge sharing platform for financial inclusion.

AFI’s approach is based on the understanding that sustainable and effective policy changes reduce barriers and incentivize the private sector to innovate and provide more services to the unbanked, and that effective policy solutions are grounded in empirical evidence.

In September 2011, AFI members publicly committed to measurable progress within the four pillars of financial inclusion, namely: creating an enabling environment to harness new technology that increases access to and lowers the costs of financial services; implementing a proportional regulatory framework that advances synergies in financial inclusion, integrity, and stability; integrating consumer protection and empowerment as a key pillar of financial inclusion; and utilizing data for informed policy making and tracking results.

This collective commitment is also known as the Maya Declaration – the first global and measurable set of commitments to unlock the economic and social potential of the world’s 2.5 billion unbanked through greater financial inclusion.

The Maya Declaration capitalizes on the collective strengths of its signatories in two ways: first, it commits countries to sharing their financial inclusion insights through AFI’s peer-to-peer platform; second, it fosters and promotes new forms of cooperation and coordination led by country ownership.

The commitments vary in scale and the choice of policy solutions, but they are all owned and created by the policymakers themselves, providing a unique and powerful incentive for each institution to meet their goals and measure progress over time.

For financial inclusion to meet its full potential, it must be truly inclusive, bringing together the expertise of a broad cross-section of partners beyond AFI. This effort to expand knowledge exchanges among all financial inclusion stakeholders will be an important focus in the coming months.

Through the Maya Declaration, policymakers are providing a clear tipping point for financial inclusion, but everyone needs to push to unlock its full potential.

1. Demirguc-Kunt, A. and Klapper, L., April 2012, “Measuring Financial Inclusion: The Global Findex Database”, The World Bank, Policy Research Working Paper 6025.

2. 17 pioneering AFI member institutions stepped forward with their institutional commitments to the Maya Declaration in Riviera Maya, Mexico, in September 2011. A year later at the 2012 Global Policy Forum (GPF) in Cape Town, South Africa, 18 institutional commitments were added to this growing movement. New commitments from El Salvador, Papua New Guinea, and Samoa have been received earlier this year, and more are expected to be announced at the 2013 GPF to be held from 10 to 12 September, in Kuala Lumpur, Malaysia.

This article originally appeared in Microfinance Barometer 2013. Click here to access.

Sung-Ah Lee is responsible for developing the overall strategy for AFI and implementing plans in line with AFI’s objectives and mandates. To accomplish this, she maintains and organizes the governance structure, coordinates involvement in global initiatives and provides leadership and guidance to her team.

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