Bank Group Contribution
Data: The World Bank is a leading global source of data on financial inclusion, including through the Global Findex survey, Enterprise Surveys, and the Global Payments Systems Survey. Country level surveys and assessments underpin public sector reforms and private sector actions, and inform a coordinated and effective approach. They also enable progress in reaching financial inclusion targets and in implementing actions outlined in financial inclusion strategies, as well as the impact of those actions. The Consultative Group to Assist the Poor (CGAP), a multi-donor partnership supported by over 30 development agencies and private foundations and housed at the World Bank, also provides important research and thought leadership for financial inclusion and microfinance.
Lending: The World Bank has an active lending portfolio for access to finance of more than $3 billion globally, including $600 million in IDA and $1.4 billion in IBRD lending, in more than 60 countries. Principal lending tools include:
- Development Policy Loans (DPLs), based on a series of policy, regulatory and institutional actions/reforms agreed with the Government
- Investment loans, with credit lines for MSME and low income individual lending by financial institutions, and/or support to credit guarantees (risk-sharing) to encourage financial institutions to lend more of their own resources to MSMEs and low income individuals
In fiscal year 2012, IFC committed an additional $546 million in 51 projects with financial institutions to support microloans.
Technical Assistance: The World Bank has technical assistance projects in more than 60 countries, including technical assistance and advice for reforms, institutions and capacity-building, systems development, analytical reports and data, and knowledge sharing.
The Bank has also been working with governments to design and implement national financial inclusion strategies. Governments are increasingly demanding assistance in innovative areas including Government-to-Person (G2P) payments and financial consumer protection. Totaling more than $6 million in 2012, technical assistance has largely been funded by the Responsible Financial Inclusion and Financial Infrastructure trust fund and the Financial Literacy and Consumer Protection trust fund (see more below), along with FIRST, a World Bank-managed, donor-funded initiative that supports low- and middle-income countries in their efforts to strengthen financial sectors and ultimately achieve greater economic development and poverty alleviation.
Trust Funds: the Bank has continued to expand its support to countries on Financial Inclusion, including with new trust funds: $4.5 million from the government of Switzerland for a Financial Literacy and Consumer Protection trust fund, and $3.5 million from the government of Australia as a first contribution (for remittances and payments) to a new programmatic Responsible Financial Inclusion and Financial Infrastructure trust fund. Funding support is also received from USAID, Russia, Austria and Italy.
The Bank works globally with standard-setting bodies to develop guidelines, standards, and good practices and with the G20 to develop guidance for regulators and policymakers and to catalyze new actions in support of financial inclusion. The Bank and IFC, along with CGAP and AFI, are implementing partners for the G20 Global Partnership for Financial Inclusion (GPFI).
The Bank increasingly adopts a joint approach with IFC on financial inclusion, given the complementarity in terms of different instruments, approaches and focus. The Bank also works closely, where appropriate, with a variety of organizations to advance financial inclusion, including the Alliance for Financial Inclusion (AFI), financial sector development trusts, the United Nations Capital Development Fund (UNCDF), the Organization for Economic Coordination and Development, the German government’s development agency GIZ, the U.S. Agency for International Development, the Australian government’s development agency AusAid, the Swiss government’s development agency SECO, the Bill and Melinda Gates Foundation, and regional development banks.
Alliance for Financial Inclusion: A global regulator network focused on financial inclusion.
CGAP: leading knowledge partner for the Framework, including for microfinance and for mobile payments.
UNCDF: plans diagnostics and surveys in a number of low income countries linked to its new MAP initiative, which will feed into the Financial Inclusion Support Framework.
Financial Sector Development Trusts (FSDTs): active in a number of countries Sub-Saharan Africa.
To ensure that countries have access to comprehensive technical assistance, capacity-building support, and knowledge for meeting their national financial inclusion commitments and targets, the World Bank is creating a Financial Inclusion Support Framework to support country priority actions in areas such as MSME Finance, Financial Infrastructure, Financial Capability and Consumer Protection, Mobile and Government Payments , Remittances, and Agricultural Finance. The Framework will support up to 15 countries over five years with a projected $70 million in technical assistance and capacity-building, to be complemented by a potential $700 million in additional World Bank Group financing and investment. The Framework closely complements the IFC’s SME Finance Initiative and CGAP’s knowledge agenda.
The World Bank is stepping up its support for monitoring and impact evaluation to strengthen the impact and quality of financial inclusion policies and initiatives. The World Bank monitors progress on the G20 Basic Set of Financial Inclusion Indicators that were endorsed by the June 2012 G20 Summit and is supporting the G20 in developing a broader set of indicators that cover innovative approaches, such as mobile phone banking and the use of agents for delivering financial services, and the quality of financial inclusion (through consumer protection and financial capability measures).
The World Bank will continue to develop guidelines, good practices, and toolkits to inform more effective financial inclusion policies, regulations, and private sector actions. Recent guidelines include: Financial Inclusion Strategies Reference Framework (at the request of the G20 Presidency), Good Practices for Financial Consumer Protection, and General Guidelines for the Development of Government Payment Programs.
In 2011, with development assistance from the World Bank's Financial Sector Development Program, the National Bank of Rwanda implemented a real-time gross settlement system for high-value payments. Thanks to a modern and interconnected payments system, thousands of teachers, students, civil servants, and urban workers are now able to make payments, pay bills, borrow money, save, and invest through their commercial banks, including some of the estimated 4 million unbanked Rwandans (Global Findex – 2011 data). The modernized financial environment is benefiting Rwanda’s low-income citizens by giving them access to broader financial services.
Urban workers like Dominique, who sends home US$20 a week to support his family outside Kigali, can trust that their hard-earned money is safely reaching their intended beneficiaries. “I send money to my brother because it's better than going 80 kilometers to give it to him. It's a good system because sending and receiving money is easy and fast,” he says. “No time is wasted.”
In Kigali, high school teacher Toms Tibigambwa has finally realized his dream of building a house for his family. Ever since the Rwandan National Bank began paying his salary on-time, he has been able to make regular loan repayments. “Because the pay is little, saving it is rather hard. If you don't get a loan, it is hard to improve your socio-economic welfare,” he said. Thanks to the Rwandan government's commitment to a modern banking infrastructure, Toms is now getting the opportunity to make things better for himself and his family.
These results support the following Millennium Development Goals:
- Eradicate extreme poverty and hunger
- Promote gender equality and empower women
- Develop a global partnership for development
Promoting Commercially Sustainable Lending to Micro- and Small Enterprises in China
Building the Middle Class by Supporting Small Businesses in Turkey
Understanding the Role of Remittances in Moldova
Helping the Poorest Help Themselves in Tamil Nadu, India
Fueling a Women-Owned Business Boom in Egypt