Financial inclusion has been identified as a priority by many governments around the world, and internationally as the core of the Sustainable Development Goals (SDGs); as appropriate financial services can help improve household welfare and spur small enterprise activity. Financial inclusion is seen as a major contributor to the achievement of a number of SDGs. Macroeconomic evidence shows that economies with deeper financial intermediation tend to grow faster and reduce income inequality. At a national level financial inclusion complements critical national policies, notably on poverty eradication, reducing inequality, job creation and growth, as well as supporting education and health objectives.
UNCDF’s Making Access Possible (MAP) Programme aims to help foster policy environments that enable sustainable financing for development and complementing key public policy initiatives through long-term data and measurement. By empowering poor households to take a long-term view of education and health, financial inclusion further complements government policy, positioning governments to reap the demographic dividend by ensuring healthier and educated young people, raising productivity and attracting further investments in the real economy.
MAP is a multi-country initiative to support financial inclusion through a process of evidence-based country diagnostic and stakeholder dialogue, leading to the development of national financial inclusion roadmaps that identify key drivers of financial inclusion and recommended action. Through its design, MAP seeks to strengthen and focus the domestic development dialogue on financial inclusion. The MAP framework has been developed by UNCDF in partnership with FinMark Trust and Cenfri and is intended to become a public good that can advance the global financial inclusion agenda. The partnership leverages their experience in financial inclusion development, aligning their respective strengths in implementation, primary demand-side research and diagnostic composition.
A key component of the MAP diagnostic is to link financial inclusion to household demand for services. Financial transactions play an integral role in the daily lives of most people, especially those living in poverty.[i] However, they are frequently compelled to use informal and often sub-optimal services. Research has shown that poor households utilize a range of informal methods to manage their daily needs, including “storing savings at home, with others, and with banking institutions; joining savings clubs, savings-and-loan clubs, and insurance clubs; and borrowing from neighbours, relatives, employers, moneylenders, or financial institutions.”[ii] These mechanisms are not ideal, particularly in protecting the poor from short-term and long-term household risks and shocks, but they are useful reference points for governments and the private sector in their efforts to make markets work for the poor. By understanding the needs and demands of poor households, policy, product, and service solutions can be developed that better serve their needs and reduce inequalities of access. With greater access to a range of financial services, poor and low-income households and businesses can generate income, build assets, smooth consumption and manage risks.
Thus, the MAP programme is based on detailed analytics to drive the understanding of implementation at country level in order to enable functioning market systems. A key challenge at country level is the existence of good data and analytics to inform policymaking and market development. The MAP programme aims to address this by making available good data that is nationally representative at country level, high quality analytics to inform decision-making around market development through the development of national roadmaps and sets a strong stakeholder process by expanding beyond the “traditional” government counterparts; by engaging with the private sector to drive investments around financial inclusion and MAP empowers them to “see” un-tapped markets and drive smart investment strategies on their part.
The MAP Global Hub established in Johannesburg, South Africa, provides leading global technical assistance to 16 countries in the programme as well as technical oversight, where necessary. In ensuring that countries can leverage and learn from each other, regional MAP forums have been set up with the key purpose to ensure focus on the implementation of the roadmap and gain feedback from Government and country coordinators on the programme so that it remains relevant and continues to be implemented at the country level. Additionally, a regional monitoring and evaluation framework was developed to ensure effective tracking of progress against a financial inclusion baseline.
It is increasingly recognised that a broader ecosystem of providers is necessary to deliver the diverse set of financial services that the poor require. Strategies that remain focused on only one of these providers – such as microfinance institutions, private sector, cooperatives or a single activity such as institution-building – miss the bigger picture and are also unlikely to enable the systemic change required to drive universal financial inclusion, especially for the poor.
This is based on the view that competitive markets are the key means through which innovation and competition will best occur, resulting in falling transaction costs together with the scale and sustainability required to overcome the significant levels of exclusion that remain[iii]. The MAP programme aims to facilitate this market development agenda.