Transcript 31 - Alliance for Financial Inclusion

The Role of Financial Inclusion on Economic
Growth: Challenges and Perspectives
May 17, 2015
Bringing smart policies to life
“Financial inclusion can be a
powerful agent for strong and
inclusive growth by empowering
individuals and families to cultivate
economic opportunities.”
Executive Director
Bringing smart policies to life
Executive Director
—Christine Lagarde,
Managing Director, IMF
Bringing smart policies to life
What we mostly know….
Bringing smart policies to life
Composite Access Indicator vs. GDP/capita
Countries’ level of financial inclusion positively correlated (0.55) with GDP/capita
Access
indicator
GDP per capita (USD)
Source: Demirgüç-Kunt, Beck, and Honohan (2008); World Bank “Finance for All” access data; World Bank
World Development Indicators).
Bringing smart policies to life
Financial inclusion has made a difference
A World Bank analysis of Mexico’s drive to increase
financial inclusion shows…
7% increase in
employment
5% increase in
new businesses
leads to
3% increase in
GDP
10% increase in
financial inclusion
Source: World Bank – “The Economic Impact of Banking the Unbanked: Evidence from Mexico”
6
Bringing smart policies to life
Financial inclusion has made a difference
IPA analyses show:
Source: Innovations for Poverty Action: Prina, S. 2013. “”Banking the Poor via Savings Accounts: Evidence from a Field Experiment.” Working Paper ,
Brune, L., J. Goldberg, X. Giné, D. Yang. 2013. “Commitments to Save: A Field Experiment in Rural Malawi.” Working paper
7
Bringing smart policies to life
Improving access to Finance for SMEs
supports job creation and employment
Executive Director
Relieve Access to
Finance
Constraints
Entrepreneurship
Capital
Investments
Risk Management
Indirect Effects
Job Creation
Poverty
Reduction
A sample of 100 MSMEs that had obtained loans from Sri Lanka’s largest
private bank created 2,650 permanent jobs between 2009 and 2012,
showed an annual job growth rate of 12%. It was estimated that they may
have created between 140,000 and 340,000 jobs over three years. The
study estimated that between 10-31 jobs were created for every
$100,000 of loans provided to MSMEs.
Source: International Finance Corporation, IFC Jobs Study: Assessing Private Sector Contributions to Job Creation and Poverty Reduction (2013); Global
Partnership for Financial Inclusion, SME Finance: New Findings, Trends and G20/GPFI Progress (2015)
Bringing smart policies to life
What is less known to us…
Bringing smart policies to life
Financial inclusion and GDP/capita
Countries’ level of financial inclusion is positively correlated (0.6) with GDP/capita
16000
N developing countries = 94
14000
12000
GDP/
capita in
2014 (%)
10000
8000
6000
4000
2000
0
0
20
40
60
80
100
Percentage of adults with formal accounts (ppt) in 2014
Source: Data from World Bank Global Findex, compiled by AFI
Bringing smart policies to life
Financial inclusion and GDP/capita growth
Countries’ level of financial inclusion appear to be negatively correlated (-0.13) with GDP/capita growth
GDP/capita growth in 2014 (yoy, %)
20
10
0
0
10
20
30
y = -0.0364x + 3.5508
R² = 0.0189
-10
40
50
60
70
80
90
100
-20
-30
However, GDP/capita growth is positively correlated with the level of financial
inclusion for countries with level of financial inclusion above 50%.
20
10
0
0
10
20
30
-10
-20
y = -0.0361x + 4.1198
R² = 0.0071
-30
GDP/capita growth in 2014 (yoy, %)
40
50
15
10
5
0
60
70
80
-5 50
-10
y = 0.2172x - 15.219
-15
R² = 0.163
-20
-25
-30
GDP/capita growth in 2014 (yoy, %)
90
100
Financial inclusion and growth
Some correlation exists between financial inclusion and change in GDP
in SADC countries.
Angola
Botswana
DRC
Malawi
Mauritius
Tanzania
Zambia
Zimbabwe
South Africa
FI % Change
-26.6%
62.4%
194.6%
-2.4%
2.6%
9.8%
46.3%
-56.7%
28.4%
GDP % Change
19.3%
-3.8%
26.5%
-34.2%
6.0%
31.0%
13.0%
23.1%
-12.1%
Source: World Bank Global Financial Inclusion Database, 2011 & 2014; World Bank Data Catalogue, 2011 & 2013.
No Findex data available for Lesotho, Mozambique, Namibia, Swaziland, Seychelles.
Bringing smart policies to life
Member engagement and financial inclusion
The increase in financial inclusion is positively correlated (0.35) with members’
level of engagement with AFI
N AFI members = 65
*Cambodia, Mauritius N/A
3.5
AFI Member
engagement
index
2.5
1.5
0.5
-20
-10
0
10
20
30
40
Increase in percentage of adults with formal accounts (ppt)
Source: Data from World Bank Global Findex, compiled by AFI; AFI Member Engagement Index 2014
Bringing smart policies to life
Maya Declaration commitments and financial
inclusion
AFI members that have adopted Maya Declaration increased financial inclusion by
9.5 ppts, compared to 8.4 ppts for AFI members without Maya Declaration
N Maya = 48
N No Maya = 42
Increase in %
of adults with
accounts from
2011-2014
(ppt)
10
9.5
8.9
5
0
Median
Adopted Maya declaration
No Maya Declaration
Source: Data from World Bank Global Findex, compiled by AFI; AFI Maya Declaration Report 2014
Bringing smart policies to life
Measurable targets and financial inclusion
AFI members with measurable targets increased financial inclusion by 13.4 ppts,
compared to 8.5 ppts for those without measurable targets
Increase in % of
adults with
accounts from
2011-2014 (ppt)
N members targets = 13
N members no targets = 16
16
13.4
12
8.5
8
4
0
Median
Measurable targets
No targets
Source: Data from World Bank Global Findex, compiled by AFI; AFI Maya Declaration Report 2014
Bringing smart policies to life
National strategies and financial inclusion
AFI members with national strategies increased financial inclusion by 10.9 ppts,
compared to 10.1 ppts for those without national strategies
Increase in % of
adults with
accounts from
2011-2014 (ppt)
N members with strat. = 8
N members without strat = 20
*Angola N/A
16
12
10.9
10.1
8
4
0
Median
National strat.
No national strat.
Source: Data from World Bank Global Findex, compiled by AFI; AFI Maya Declaration Report 2014
Bringing smart policies to life
Financial Inclusion in Mozambique
Executive Director
2012
Commitment to
develop national
financial
inclusion
strategy
2013
Strategy
published by
Council of
Ministers
2014
Update strategy
to include
quantifiable
targets
On track to
increase
financial
inclusion to
25% by 2019
Bringing smart policies to life
Policy interventions and financial inclusion
AFI members with e-money increased financial inclusion by
12.8 ppts, compared to 8.1 ppts for those without e-money
Increase in % of adults with
formal accounts 2011-2014
Increase in % of adults with
accounts 2011-2014
16
AFI members with agent banking increased financial
inclusion by 10.6 ppts, compared to 8.1 ppts for those
without agent banking
12.8
12
12
8.1
8
8.1
8
4
4
0
0
Median
No E-money
E-money
AFI members with tiered KYC increased financial
inclusion by 8.5, compared to 14.0 for those without
tiered KYC
Agent banking
Median
No Agent banking
AFI members with financial literacy increased financial
inclusion by 10.6 ppts, compared to 4.4 ppts for those
without financial literacy
Increase in percentage of adults with
formal accounts from 2011-2014
Increase in % of adults with
formal accounts 2011-2014
16
12
8
4
0
10.6
14.0
8.5
12
10.6
8
4.4
4
0
Median
Tiered KYC
No Tiered KYC
Financial literacy
Median
No financial literacy
Financial inclusion growth
Of the five countries with the largest financial inclusion
increase in percentage of population included, four of
them are AFI members:
Kenya:
Uganda:
El Salvador:
Tanzania:
32.3%
24%
23%
22.5%
Source: World Bank Global Financial Inclusion Database, 2011 & 2014; World Bank Data Catalogue, 2011 & 2013.
No Findex data available for Lesotho, Mozambique, Namibia, Swaziland, Seychelles.
Bringing smart policies to life
Digital delivery channels making savings
products more accessible: M-Shwari/Kenya
20
Bringing smart policies to life
Dramatic Mobile Money growth: Tanzania
Mid-2014:
12.3 million active mobile money accounts….
reaching 55% of the population
…..via 138,000 agents….
Source: Bank of Tanzania
Bringing smart policies to life
Financial inclusion becoming part of
regulators’ mandate
•
Financial inclusion is no longer only a development concern but a
cornerstone of economic development framework and model
•
Financial inclusion is a policy goal complementary to stability, integrity
and consumer protection
•
Financial inclusion is understood in a broad framework including access,
usage and quality of a range of financial services.
No. of
Countries
Have dedicated financial inclusion strategy
31
Created a dedicated financial inclusion unit
22
22
Bringing smart policies to life
Is financial inclusion a
mandated objective for your institution?
1%
5%
Mandated objective
30%
A mandated objective, but
secondary to others
Not a mandated objective,
but recognized as important
46%
Not recognized as an
objective
18%
Other
Source: GPF 2013 electronic voting results for the session, Driving Policies for Optimal Impact
Bringing smart policies to life
SADC and financial inclusion
“Financial inclusion is no longer something
nice to do, but is now an essential part of
the global economic development agenda.
It is a public policy issue that regulators
cannot shy away from”
Professor Njuguna Ndung’u,
Former Governor CB Kenya and AFI Chair,
September 2011
Bringing smart policies to life
Financial inclusion becoming part of
regulators’ mandate
“We recognize the critical importance of
financial inclusion for inclusive growth and
development that places shared prosperity at
the center of development in developing and
emerging economies. We concur policy and
regulatory bodies must include financial
inclusion in their mandate.”
Executive Director
—Dili Consensus on Financial
Inclusion in the Pacific Islands,
8 May 2015
Bringing smart policies to life
AFI Services
Effective financial inclusion policy reforms
National & Global
Policy Coordination
Global Advocacy
G20 GPFI
SSBs Peer Learning
on Global Standards
Global Policy Forum
High-level
Commitment
National
Progress
Maya
Declaration
Improved Knowledge
& Institutional Capacity
Capacity Building
Grants
Working Groups
Knowledge Exchanges
Peer Advisory
Trainings & Workshops
Joint Learning Programs
Knowledge Products
Community &
Partnership Building
Regional Initiatives
Public Private Dialogue
Global Policy Forum
Online Member Zone
Bringing smart policies to life
“Financial inclusion is important to the
economy, it improves the welfare of the
poor and contributes to financial
stability”
Executive Director
—Professor Benno Ndulu,
Governor, Bank of Tanzania, AFI Vice-Chair
December 2013
Bringing smart policies to life
[email protected]
www.afi-global.org
Bringing smart policies to life