Title:Emphasizing the Crucial Role of Financial Inclusion and How Businesses Can Assist
In the annals of human history, a vast majority of individuals have grappled with severe poverty. As per Our World in Data, an astounding 79.6% of the global population languished in extreme poverty back in 1820. Defined as surviving on less than $1.90 a day, this condition was a harsh reality for many, with regions like Sub-Saharan Africa witnessing an alarming 90% or more of its populace living in such dire circumstances.
The basic needs, such as food, clean water, and shelter, often remained unmet for these individuals, leading to widespread malnutrition and high infant mortality rates, as well as lower life expectancies.
Fortunately, humanity has made remarkable strides since then. According to the World Bank, the number of people living in extreme poverty fell drastically from 1.9 billion to 689 million, spanning the period between 1993 and 2017, even as the global population swelled from 5.3 billion to 7.5 billion. The incorporation of advanced technologies in low-resource settings has undoubtedly contributed to bridging this gap. However, eradicating extreme poverty remains an onerous task that demands our continued attention.
Businesses have a vital role to play in this regard, particularly when it comes to fostering financial inclusion in frontier and emerging economies. Financial inclusion—the ability to access affordable financial services like banking, credit, insurance, and digital payments—is a fundamental enabler for achieving sustainable development goals (SDGs). These are a set of 17 interconnected objectives established by the United Nations in 2015, aimed at addressing global challenges and ensuring a better and more sustainable future for all.
Although approximately 1.4 billion individuals worldwide remain excluded from formal financial services, breaking down these barriers is essential for lifting people out of extreme poverty. Financial inclusion can help address basic needs and enable global economic growth and resilience.
This issue is of particular concern in developing regions, where up to 70% of the populace remains unbanked or underbanked, as exemplified by Southeast Asia's 660 million inhabitants. The potential for transformative and sustainable change is immense, fueled by greater financial access propelled by technology and innovation.
At Chemonics, our company has amassed nearly five decades of experience in supporting financial inclusion globally. Our projects have included helping small and medium-sized enterprises in Pakistan bring innovative ideas to life, scaling an agricultural app in Uganda to support farmers, and developing a mobile phone-based system in Colombia that connects rural clients to formal financial services.
In the Philippines, we collaborated with an instant payment system to reach millions of unbanked citizens, demonstrating our commitment to affordable, real-time transactions accessible to all. In doing so, we managed to connect rural banks with the existing instant digital payment system, which lowered transaction costs, enabling these institutions to serve a broader underbanked population while mitigating the risk of digital infrastructure failure.
From these experiences, I've learned that local communities and innovators hold the key to solving global challenges. It often becomes apparent that the required infrastructure for transformative change already exists within these regions, just waiting for private sector partners, governments, and beyond to fill in the gaps.
Business leaders can contribute to financial inclusion by engaging with unbanked or underbanked individuals, understanding their needs, and bridging the gaps with innovative solutions. Prioritizing customer needs, adopting inclusive banking models, and fostering partnerships with local NGOs and community organizations can help make financial services accessible and impactful at the community level while driving scalable solutions.
In conclusion, businesses can play a vital role in advancing financial inclusion and promoting sustainable growth in developing regions with high unbanked populations. By following these strategies and leveraging digital innovation, affordable services, and inclusive banking models, business leaders can help eradicate extreme poverty and create a more equitable and sustainable future for all.
Jamey Butcher, a Chemonics employee, has played a significant role in promoting financial inclusion in the Philippines. He collaborated with an instant payment system to reach millions of unbanked citizens, demonstrating Chemonics' commitment to making financial services accessible to all.
Furthermore, Jamey Butcher's work in the Philippines included connecting rural banks with the instant digital payment system. This collaboration lowered transaction costs, enabling these institutions to serve a broader underbanked population while mitigating the risk of digital infrastructure failure.
