Universal Financial Access Is Vital to Reducing Poverty, Innovation Key to Overcoming the Enormous Challenge, Says President Jim Yong Kim
October 11, 2013
WASHINGTON, October 11, 2013— Recognizing that 2.5 billion adults worldwide are ‘unbanked’ and that close to 200 million micro to medium enterprises in developing economies lack access to affordable financial services and credit, leaders today at a major World Bank Group forum put forward a vision for achieving universal financial access by 2020.
“Universal access to financial services is within reach – thanks to new technologies, transformative business models and ambitious reforms,” said World Bank Group President Jim Yong Kim “As early as 2020, such instruments as e-money accounts, along with debit cards and low-cost regular bank accounts, can significantly increase financial access for those who are now excluded.”
More than 50 countries have now made commitments to financial inclusion targets. “If they fulfill their commitments, if other countries also set bold targets, and if the private sector responds by unleashing its resources and know-how – then we can reach universal access by 2020,” said Kim.
In a dialogue with Her Majesty Queen Máxima of the Netherlands – who is the United Nations Secretary General’s Special Advocate for Inclusive Finance for Development and the Honorary Patron of the G20 Global Partnership for Financial Inclusion – Kim noted that financial inclusion can be a powerful accelerator of economic progress, and can help achieve the World Bank Group’s goals of eliminating extreme poverty and building shared prosperity.
The importance of universal access to financial services was also emphasized by Queen Máxima who pointed out that every person and every business in any country deserves that opportunity.
The priority of broadening financial inclusion to individuals and small businesses globally was underscored by a panel of government and business leaders.
“Beyond ensuring universal financial access, a challenge which we all face is to ensure that financial services are available to meet the range of household and enterprise needs,” remarked Ngozi Okonjo-Iweala, the Coordinating Minister of the Economy and Minister of Finance of Nigeria who recently launched Nigeria’s financial inclusion strategy.
"Rwanda has an ambitious vision for financial inclusion, and I am pleased to say that we have made significant progress already towards that target, almost doubling formal financial inclusion from 21 per cent of adults in 2008 to 42 per cent in 2012," said John Rwangombwa, the Governor of the Central Bank of Rwanda.
“When low-income workers or poor families gain access to basic financial services, they gain a foothold on the first rung of the ladder toward prosperity,” Kim said. “Access to savings accounts, credit or remittances can help families afford essential services like water, electricity, housing, education and health care. When firms gain access to financial services such as credit or insurance, they can reduce business risks, expand their firms and create more jobs.” Low cost, accessible transactions instruments and bank accounts can provide a gateway to this range of financial services.
Setting and then achieving country-led national targets will open the way toward broadening financial inclusion, Kim said. Adopting ambitious financial inclusion commitments can unleash private-sector innovation and investment, helping advance the goals of eliminating poverty and building shared prosperity.
Constrained access to finance for small businesses in many emerging markets hinders their growth and ability to generate much needed new jobs. Most of the 2.5 billion adults who lack accounts at formal financial institutions often use informal methods to save, borrow and secure their assets. These undermine efforts to reduce poverty levels worldwide.
Kim emphasized that by energizing all the parts of the World Bank Group, the institution is committed to fulfilling its role as the leading global partner – for both public-sector and private-sector institutions – in supporting countries as they work toward these goals.
About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and development expertise for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in pursuing the World Bank Group’s mission to fight poverty and improve living standards for people in the developing world. For more information, please visit www.worldbank.org, www.miga.org, and www.ifc.org.
About the Bank Group’s work on Financial Inclusion
The World Bank Group now conducts financial inclusion projects in more than 70 countries through such vehicles as the IFC’s network of 900 financial institutions and funds; the new Financial Inclusion Support Framework; the Global SME Finance Facility; the Global Financial Consumer Protection and Financial Literacy program; and open datasets including the Global Financial Inclusion database (Findex) and diagnostic tools. The upcoming Global Financial Development Report 2014: Financial Inclusion provides new evidence about which policies work—and which ones do not—in addressing financial inclusion.
- World Bank Group ready to provide financial support worth $15-18 billion over the next three years
- Youth Voices on Climate Change Take Times Square
- World Bank to Begin Discussions on Proposal to Strengthen Social and Environmental Safeguards
- Ebola: Tackling The Outbreak in West Africa
- Joint Vietnam-World Bank Group Study Will Seek Path for Higher Economic Growth