The Group of Twenty Finance Ministers and Central Bankers (G20) is targeting financial inclusion through the G20 Development Working Group (DWG), which is in the process of finalizing an agenda for its 2014 goals. The DWG focuses on developing an agenda for tackling development challenges, with the intent to remove constraints to sustainable growth and poverty alleviation. Recently, through our participation in InterAction’s G20/G8 Advocacy Alliance, CFI teamed up with other non-profits in the financial inclusion community to develop a set of recommendations for G20 leaders. While the Alliance and DWG span a diverse range of issues, our focus was, of course, on financial inclusion.
Our recommendations to the G20 were developed in coordination with CARE International UK, the Grameen Foundation, the Cherie Blair Foundation for Women, HelpAge USA, and the Microcredit Summit Campaign, among others. They urge governments to implement national strategies for financial capability and client protection, ensuring that these strategies and targets address a full suite of financial services and include underserved groups. You can read the full set of recommendations and contributing organizations here.
Last week we had the opportunity to discuss our recommendations with senior leadership from the Australian G20 presidency. As you may know, the G20 Presidency rotates each year, and this is Australia’s year. Each presidency takes a lead in setting the agenda and priorities, which are then discussed and (ideally) implemented by all G20 members.
The G20 Australian presidency issued a global development agenda, which was supported by the DWG. It highlighted two major outcomes for 2014 related to financial inclusion and remittances. We were happy to see an expressed desire to move beyond a focus on cost reduction for remittances, where there has been a great deal of progress, to maximizing the potential of remittances to increase financial inclusion.
During the meeting, our financial inclusion team brought three key points to the conversation:
1. No Financial Inclusion without Financial Capability. An example illustrating this point is CARE’s work with village savings groups for women. In order to ensure that women will benefit from the new formal financial services made possible when savings groups are linked to banks, we must ensure that the women will have the combination of knowledge, skills, attitudes, and ultimately behaviors that translate into sound financial decisions and the appropriate use of the new formal services. The methodology of savings groups is conducive to teaching members about financial services. While the G20 has been supportive of financial capability building efforts, we are calling for countries to incorporate lessons from behavioral economics and also ensure that government-to-person payments promote financial capability.
2. One Product Does Not Mean Full Financial Inclusion. Along with its support of financial capability, we’d like to applaud the G20 Development Working Group’s focus on remittances and migrants (one of the vulnerable groups we’ve identified in our Financial Inclusion 2020 (FI2020) project). But let’s not look at remittances as a stand-alone product. Remittances can be an on-ramp to additional financial services. In our FI2020 consultative process, Developing Markets Associates shared one innovative model with us, which provides financial counseling to remittance recipients, encouraging them to open a savings account.
3. National Strategies Should Focus on the Most Vulnerable Populations Backed by Data. While the current development agenda references vulnerable groups, such as youth, women, and migrants, we asked that the DWG also include the following groups: persons with disabilities, older adults, the extremely poor, rural households, refugees, subsistence farmers, and the LGBT community. We highlight a particular population that is growing in importance: older adults. In fact, older adults are the fastest growing population in the world and by 2050 will reach 2 billion people. In this light, when countries develop national strategies for financial inclusion, they need to make sure that vulnerable groups are fully considered. To ensure that we are doing this, countries should track data for each vulnerable group.
During the meeting, we learned that the G20 Development Working Group is working with the Global Alliance for Financial Inclusion (GPFI) to push the development agenda beyond government stakeholders to include private sector players (e.g. telecommunications companies, technology providers, insurance providers, private banks, NGOs). This is a new step for the GPFI, which has traditionally focused on government stakeholders. We agree with the new orientation. The promotion of public-private partnerships will be vital to increase financial capability building and create on-ramps to financial inclusion.
We encourage you to review our recommendations and comment if you would like to suggest other priorities for the G20 Development Working Group.
Image credit: G20
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