Promising Opportunities for ...

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Created on Wednesday, 08 February 2012 01:47

Promising Opportunities for Governments to Promote Financial Inclusion

Governments are becoming more interested and invested in the financial inclusion agenda. As "microfinance," once associated almost exclusively with small-value loans to the poor, increasingly refers to a more holistic approach to financial inclusion that encompasses more products responsibly delivered by more providers, many are asking what role governments can play in developing more financially inclusive systems. CGAP proposes appropriate roles for governments in their approach to financial inclusion with its newest Focus Note.

Governments have contributed numerous initiatives, such as the creation of unique IDs, enabling the development of new branchless banking models, and channeling government to person (G2P) payments via financially inclusive means. The goal is still safe and efficient product delivery to the poor, but how this gets accomplished is evolving.

“The key is to identify which initiatives work best under what conditions,” notes Tilman Ehrbeck, lead author of the paper and CGAP CEO. “Local factors help determine the impact of these initiatives, so more evidence is needed to help apply the right programs to the appropriate situations.”

Translating government interest into strategies for financial inclusion is challenging, and defining appropriate roles for government bodies has become more important. In the Focus Note, Financially Inclusive Ecosystems: The Roles of Government Today, CGAP proposes three promising roles for government.