CGAP’s new “impact narrative for financial inclusion”

ACCESS Advisory is re-launching its blog! Join us here for discussions about financial inclusion, organization development, and farm and enterprise development.

We begin by noting that CGAP recently published a new “impact narrative for financial inclusion”. This new vision identifies two sets of outcomes for low-income households who use financial services. The first is “resilience”–– the ability to afford life’s necessities even when income is irregular or when illness, natural disasters, or other shocks occur.

The second is “capturing opportunities that improve their well-being”––including everything from education to home improvement and access to medical services, electricity, water, and sanitation. CGAP even considers migration an opportunity that financial inclusion can support.

What is surprising is that although “investing in a business” is mentioned as one way to capture opportunity, CGAP no longer sees it as the main, or even one of the central, reasons for promoting financial inclusion. This is a significant shift. The original rationale for expanding financial inclusion was that access to formal financial services enables low-income self-employed entrepreneurs and farmers to take advantage of market opportunities. Doing so makes it possible for them to grow their businesses, increasing their own incomes and creating employment for others, thereby contributing to overall economic development.

Why is CGAP downplaying the link between financial inclusion, enterprise development, and increased income? We’ll be sharing our views in subsequent posts.

In general, ACCESS Advisory believes that promoting entrepreneurship should remain at the center of financial inclusion efforts, not pushed to the margin. We have recently conducted research showing why most efforts at promoting entrepreneurship have not been successful and what can be done to change those results.

We agree with CGAP that low income households need resilience and access to services. This is particularly true during the current COVID-19 pandemic. However, these things can only help families get by, not rebuild their lives after the pandemic passes.

Our view is that more effort should be made to better link financial inclusion with successful entrepreneurship and increased income rather than abandoning that goal altogether.

Read CGAP’s original post here:
https://www.cgap.org/research/publication/toward-new-impact-narrative-financial-inclusion

 

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