Finance for All by 2020 in Order to End Extreme Poverty by 2030

> Posted by Larry Reed, Director, Microcredit Summit Campaign

Why does the Microcredit Summit Campaign wholeheartedly support the goal of “Finance for All by 2020?” Because we see it as an important step in reaching the larger goal of ending extreme poverty by 2030.

From October 9 to 11 we held the Microcredit Summit in Manila on the theme “Partnerships against Poverty.” Delegates of the Summit drafted and approved the Partnerships against Poverty Summit Declaration, listing the principles that we will follow to insure that microfinance works as a worthy partner in the movement to end extreme poverty. The opening commitment of the declaration states:

First, we commit to putting the extreme poor first. Their voices must be heard in our movement, and they must be full participants in the process of improving their lives and our services. They are not only our clients, but also our biggest resource.

To better reach and serve the poorest and most vulnerable populations, we will ensure that we include women, children, the elderly, the disabled, refugees, the LGBT communities and members of cultural and religious minorities.   

Achieving “Finance for All” means that we must develop financial products and services that meet the needs of the poorest and most vulnerable populations. The organizations partnering with the Microcredit Summit Campaign have committed themselves to work with governments, mobile network operators, payment providers, and others to help design and test these products.

When we develop products that meet the needs and the aspirations of those in extreme poverty at price points they can afford, then we will have improved the efficiency of the overall financial system and begun to put in place the mechanisms for achieving Finance for All.

Sendhil Mullainathan, professor of economics at Harvard University, clearly explained the need for putting the needs of the extreme poor first when he spoke at the FI2020 Global Forum. Scarcity brings increased focus, but it leads to tunneling, over borrowing, and limited bandwidth. The financial products we provide for those living with extreme scarcity can either help them escape the scarcity trap or ensnare them deeper in it.

We pledge to work with the FI2020 movement to help design, test, and scale up products and services that both reach those living in poverty and facilitate their journey out of poverty.

Image credit: The Center for Financial Inclusion

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