By Bronagh Loughlin
Many of us in Ireland and other parts of the world cannot even begin to imagine what it would be like not having access to financial services. We swipe our cards each day, visit our local branch to withdraw or deposit, apply for loans and much more.
It may seem surprising but according to Universal Financial Access 2020, around 2 billion people from the global workforce do not have any access to financial services.
Although many of us know what the words financial and inclusion mean by themselves, when slabbed together, many don’t know exactly what the term refers to. Financial inclusion refers to the availability and equality of opportunities to access financial services.
It refers to a process whereby individuals and businesses can access appropriate, affordable and timely financial products and services. These include the likes of loans, banking, insurance products and equity.
Wondering how sustainability fits in here?
The United Nations General Assembly adopted the 2030 Agenda for Sustainable Development which came with a shiny new set of development goals that are collectively referred to as the Sustainable Development Goals (SDGs).
The Sustainable Development Goals are an ambitious set of 17 goals. The Agenda was born out of many years of negotiation and was endorsed by all of the 193 member nations of the General Assembly, and the SDGs apply to all countries.
The Agenda was initially set out to tackle climate change. However, the UN Secretary General Ban Ki-Moon stipulated that the Agenda is also for the people and will help in ending poverty in all of its forms.
Although the Sustainable Development Goals do not necessarily target the concept of financial inclusion, a key enabler for many of the SDGs is greater access to financial services.
Financial inclusion plays a pivotal role in achieving the Sustainable Development Goals by creating jobs, eliminating poverty, improving good health and gender equality to name a few. Financial inclusion can also help in easing the refugee crisis.
Tens of thousands of Syrian refugees are landing in Europe without access to financial services, not even a bank account to their name. Citizens who can access financial services will have greater security and privacy over their money.
In Africa, less than 20% of households are banked, only 12% in Tanzania, compared to over 20% in Organisation for Economic Co-operation and Development Countries (OECD).
Income also increased in areas where bank branches were rapidly opened. In particular, Mexico income increased by 7% as a result of having access to these financial services.
The promotion of gender equality is also goal five on the list of SDGs. Only with equal access to the full range of financial services – credit, insurance, savings, payments and financial education – will women stand the chance of economic and social empowerment.
We mentioned previously about the 2 billion people in the world who do not use financial services, 1.1 billion of them are women. Women face unique obstacles when it comes to financial services. In Kenya, 40% of smallholder farms are run by women. However, these women only receive 10% of Micro, Small and Medium Enterprises (MSME) Credit (IFC).
Financial inclusion will also encourage good health which is goal three of the SDGs. This is because by having a savings account, parents can easily pay for their children’s clinical appointments.
Out of pocket costs are also a huge reason why people are stuck in poverty with difficulty trying to get out. A study was carried out in Kenya about whether or not financial inclusion would improve the good health of people and the study found that giving the people a safe place to store their money increased health spending by 66%.
Financial inclusion is a driving force to achieving the Sustainable Development Goals. Given the link between financial inclusion and development, governments need to keep pushing for equal access to financial services.
Prioritising financial services won’t take away resources from the other priorities which are set out in the sustainable development goals. Rather, the information we have discussed above shows that there is a strong case that financial inclusion helps to create the conditions that allow us to achieve most of the Sustainable Development Goals.
We have no more time to waste. We need to make financial services equally accessible to all.
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