Global Microscope 2014: The Enabling Environment for Financial Inclusion

Revamped 2014 Global Microscope Calls for Comprehensive Strategies for Financial Inclusion

Peru, Colombia and the Philippines have the most conducive environments for financial inclusion; East & South Asia and Sub-Saharan Africa posted the highest scores for electronic payments

The Global Microscope, now in its eighth year, has expanded its framework to measure financial inclusion beyond microfinance. The 2014 Microscope examines the inclusiveness of countries’ financial sectors by considering best practices in the national regulatory environment and institutional support in the safe provision of a wider range of financial products and services to low income populations.

Developed by the EIU in collaboration with the Multilateral Investment Fund (a member of the Inter-American Development Bank Group) and CAF (the development bank of Latin America), and with additional support from the Center for Financial Inclusion at Accion and Citi Microfinance, the Global Microscope scores countries as a way of benchmarking their progress toward a financially inclusive environment for the bottom of the pyramid.

Regionally, Latin America and the Caribbean (LAC) and East and South Asia tie for the highest overall scores in the Global Microscope 2014. LAC countries also captured half the slots in the global top ten. The Middle East and North Africa (MENA) region posted the lowest overall score. East and South Asia and Sub-Saharan Africa tied for the highest regional scores in regulations for electronic payments, one of the new topics in this year’s Microscope. Countries like Bangladesh, Pakistan and Sri Lanka have the electronic payments infrastructure to serve the bottom of the pyramid’s needs for financial services and Kenya and Tanzania have adopted regulations that are conducive to the growth of mobile payments.

Microscope RankingDespite the change in methodology, Peru held the top position in the Global Microscope 2014 for the seventh consecutive year, followed closely by Colombia and the Philippines. Both South American countries showed strength across the board, ranking in the top five in most of the indicators. Colombia and Peru are global leaders in prudential regulation and rules for deposit-taking, and have strong records in micro-loans and provision of savings products to the poor.

The study found that most of the countries that fared well in the previous index also achieved good scores in the new Microscope. In fact, six of the top ten countries from last year’s Microscope are among the best performers this year (Bolivia, Cambodia, Colombia, Peru, Pakistan, and Philippines). The study revealed that countries with enabling environments for microfinance tend to have favourable conditions for financial inclusion.

At the other end of the spectrum, countries at the bottom of the index performed especially poorly on measures of institutional support for financial inclusion. The institutional architecture for financial inclusion is covered through such indicators as government support for financial inclusion, credit reporting systems, market conduct rules, and grievance redress and availability of dispute resolution mechanisms. Countries near the bottom of the index struggle in all of these areas. These results highlight two important needs: first, to make a serious national commitment to financial inclusion and, second, to enact regulations that will build a healthy ecosystem for financial inclusion.



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