Global Microscope 2020

The role of financial inclusion in the COVID-19 response

Rebuilding the post-COVID economy will mean more than preserving powerful players in global and national economies; it will mean saving the small businesses and ensuring employment for workers in the informal and formal sectors. The Global Microscope, which assesses the enabling environment for financial inclusion across five categories and 55 countries, explores the role that financial inclusion has played in policymakers’ crisis response, providing data on how the 55 countries have leveraged their financial infrastructures to support vulnerable individuals, small businesses, and the financial providers that serve poor households.

Below are some key takeaways from the 2020 edition:

  • The overall enabling environment for financial inclusion improved as a result of governments’ efforts to reach unbanked populations during the pandemic. Colombia, Peru, Uruguay, Argentina and Mexico lead the global ranking.
  • Investments in digital infrastructure have paid off, with 44 of the 55 countries in scope having used cash transfers to support vulnerable parts of the population
  • Digital IDs can facilitate verification for cash transfers, data integration is needed to target beneficiaries and ensure that marginalized segments of the population are not excluded
  • The pandemic necessitated changes in regulations around remote banking, with several countries relaxing e-KYC rules to facilitate remote account opening, paving the road to the development of a digital, inclusive financial system
  • Financial institutions that serve the poor face liquidity constraints impacting credit availability for the poor, as not all governments were able to address them while rolling out economic stimulus packages
  • Financial authorities should adapt to protect consumers from emerging risks, such as ones posed by the onset of the pandemic and the associated rise in cases of financial fraud

The Global Microscope is produced with support from EIU’s partnerships with CFI, the Bill & Melinda Gates Foundation, IDB LAB and IDB Invest.

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