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MICROFINANCE AND FINANCIAL INCLUSION
 
Aruba, December 23, 2014 - At a Glance
 
There are an estimated 2.5 billion financially excluded adults today, with almost 80 percent of those living under $2 per day having no accounts at formal financial institutions.[1]  This holds back the fulfillment of the World Bank Group’s goals of eradicating extreme poverty by 2030 and increasing the share of income held by the bottom 40 percent of the population. 
 
The World Bank’s Global Financial Inclusion Database (Global Findex) reports that three-quarters of the world’s poor lack a bank account because of poverty, costs, travel distances and the often burdensome requirements involved in opening an account. Only 25 percent of adults earning less than $2 a day have saved money at a formal financial institution. Being “unbanked” is linked to income inequality: The richest 20 percent of adults in developing countries are more than twice as likely to have a formal account.
 
Improving access to responsible finance has a positive impact on:
 
•         Household access, which helps families build assets, manage risks, and smooth consumption. An increasing body of evidence shows that when the appropriate service is matched with the needs of poor clients, financial services can lead to increased income and improved health and education, allowing children to have more days in school and allowing families to have more regular meals.
•         Micro, small and medium-sized enterprises (MSMEs), which are, collectively, the largest employers in many low-income countries. Yet their growth is often stifled by a lack of access to credit and savings services that would enable them to invest in fixed capital, increase their turnover and employ more people. Savings, insurance and payments services are also needed for firms to better manage risks and make new investments. About 200 million formal and informal businesses in developing countries lack the financing they need to grow, with a financing gap of $2.1 trillion to $2.6 trillion for MSMEs in developing economies. That sum is about one-third of the current outstanding MSME credit.
•         Spurring growth and reducing inequality, which is aided by integrated and universal financial systems. The G-20 has made financial inclusion a permanent policy priority by establishing the Global Partnership for Financial Inclusion (GPFI), which includes the World Bank (WB), International Finance Corporation (IFC), and the Consultative Group to Assist the Poor (CGAP). The Alliance for Financial Inclusion and the Organisation for Economic Co-operation and Development (OECD) have been designated as implementing partners.
 
 
 
 
 
 
 
 
 
 

By orbitalnets.com