14 September 2015: A policy brief by the UN Conference on Trade and Development (UNCTAD) explains how financial inclusion can contribute to poverty reduction and economic and social development, and act as a driver for the post-2015 development agenda. Financial inclusion – defined as the effective access and use by individuals and firms of available, affordable, convenient, quality, and sustainable financial services from formal providers – are a component of several Sustainable Development Goals’ (SDGs) targets (1.4, 2.3, 5.a, 8.3, 8.10, 9.3), UNCTAD notes.

The four-page policy brief argues that lack of access to financial services can impede income opportunities and economic welfare, in particular for the poor, women and youth, rural populations, migrants and those engaged in the informal economy, as well as for firms, particularly small and medium enterprises (SMEs) and microenterprises. Barriers to financial services, UNCTAD says, include: lack of money; irregular income; unemployment; costs, including high interest rates; ownership of an account by a family member; distance and low connectivity; documentation constraints; lack of trust; lower education or financial literacy, and low availability of financial providers.

The brief highlights new technologies for reducing physical and economic barriers to financial services, through: improving enabling infrastructure readiness such as interconnection platforms; improving identification and authentication systems; reducing infrastructural costs; increasing coverage; or allowing for new payment systems, including mobile money schemes that capitalize on mobile telephony uptake to offer a variety of financial services that are more gender-neutral and youth-friendly – such as M-PESA in Kenya.

It says governments can develop comprehensive policy responses for financial inclusion, such as: building robust institutional environments and ensuring adequate infrastructure, both for communications and energy; promoting technological innovation and the collection and analysis of data towards evidence-based policies; promoting competition and consumer protection; promoting demand through financial literacy and availability of information, including the use of standards for disclosure and transparency; and, when adequate, increasing the use of financial services by the government. At the global level, UNCTAD suggests regulatory frameworks to aim toward higher value-added economic activities.

The document also discusses the role of financial inclusion in making the transfer of remittances faster, safer and less costly, and proposes, to that end: regulations promoting interoperability, shared infrastructure, the combined use of banking, postal and telecommunication networks, competition policies, financial infrastructure as payment systems, transparency on transfer costs, or financial education and tax and credit incentives to promote channeling remittances in productive activities, social services and infrastructure. [Publication: Policy Brief No. 35, September 2015: Access to Financial Services as a Driver for the Post-2015 Development Agenda]