Kim Wilson, of the Fletcher School of Law and Diplomacy, is a consummate educator who knows that drama leads to learning. That’s why she staged a competitive debate to kick off her Extreme Inclusion conference.
The Proposition: Financial inclusion means formal inclusion.
On the Pro side were myself and my esteemed colleagues Marguerite Robinson, emerita extraordinaire, Lauren Hendricks, of Care’s Access Africa conference, with coaching from Ahmed Dermish of Bankable Frontier Associates.
Taking the Con side were Ahmed’s colleague from BFA, Daryl Collins, together with Ignacio Mas, unaffiliated innovative thinker, and Jenny Aker of Fletcher, coached by Nick Sullivan, author of Money Real Quick: The Story of M-PESA.
Peter Walker of Tufts wielded the gavel with wit and a tiny hint of malice. He symbolized the Pro side with a green spike heeled shoe, and the Con side with a pink flip flop.
Unaccustomed as I am to public speaking, I took up the last position on the Pro side, with three minutes to make my points. Here’s what I said:
1. Development is about building societies that offer opportunity and connection to everyone. The important word is building. Let’s look where we are going. While many low income people today use and possibly even prefer informal financial services, one cannot consider this the path to the future. If we want to see the bottom 20 percent of the population become economically successful, there must be a path to success. We need only look to the accomplishments of microfinance in bringing microcredit to hundreds of millions in the past two decades to be confident about the prospects for major change in the future.
2. Formal financial services have the power to do what financial services are designed to do at a level that accomplishes more for the people who use them: they pool and diversify more risks; bridge longer distances and time spans. Now, with technology helping, they can do this faster, safer, cheaper, and more conveniently. And for millions of people. As more people have higher incomes, they will need the extended capabilities of formal services. Informal services might be good for meeting small emergencies, but formal services will be needed for building a business, buying a home, or preparing for old age.
3. Informal services have their place as precursors, for those who cannot be reached formally, and they will continue to be used throughout a person’s transition from informal to formal. But ultimately, informal services will become marginal or supplemental. How many of us here today would want to turn back the clock in our own lives and revert only to informal services? (The room grew deathly still and not a hand was raised.)
4. Many of us are tempted to portray the best of informal (so friendly and social) versus the worst of formal. The best qualities of informal services stand as a challenge to formal providers – a bar providers must clear if people are going to use their services. On the other hand, informal services can be harsh and harmful, and people may choose formal services to avoid some of these problems. But in truth, all financial services have light and dark sides. That’s why it’s the duty of everyone working in financial inclusion to bring the power of formal services to people in a safe, prudent, and respectful manner.
5. The hundreds of millions of people around the world, many of whom are seeing their incomes rise and seeking formal services, deserve the chance to benefit from what such services can offer. We are here at a school dedicated to training development professionals who want to work for a better world. If we don’t work for formal financial inclusion, we are relegating today’s financially excluded to stay off the path of development and remain marginal members of their societies forever. (Applause.)
I’m sure after reading these remarks, you will cast your vote with the green high heel team.
Unfortunately, the audience went with pink flip flops.
Stay tuned and we will bring you the words from the winning side.
Image credits: The Fletcher School
Have you read?
In Defense of Formal Financial Services: Moving Beyond the Parking Lot and Onto the Highway
A Holistic Approach to Money Management
Promoting Formal Financial Savings: Know Your Goal, Know Your Competition