Today 2 billion adults - more than half of the world’s working adults - are excluded from formal financial services. This is most acute among low-income populations in emerging and developing economies, where approximately 80% of poor people do not have access. Including them in the formal economy is a critical contribution to poverty reduction, reduction of inequality, and inclusive growth.
For UNCDF, Financial Inclusion is achieved when all individuals and businesses have access to and can effectively use a broad range of financial services that are provided responsibly, and at reasonable cost, by sustainable institutions in a well-regulated environment. There is a strong consensus that increased levels of financial inclusion – through the extension of savings, credit, insurance, and payment services – contributes significantly to sustainable economic growth.
UNCDF is supporting 31 LDCs (20 in sub-Saharan Africa and 11 in Asia), and serving 8 million active clients through the Financial Service Providers (FSPs) in which it invests. UNCDF has focused on supporting savings-led FSPs, given the dual benefit of FSPs using local sources to fund growth and positive findings from client impact studies on the benefits of savings. Sixty-five per cent of clients are women.
UNCDF provides seed capital and technical support through Inclusive Finance programmes to ensure that more households and small business gain access to financial services that expand opportunities and reduce vulnerabilities. Its ability to provide risk capital directly to the private sector is helping bring new financial products to underserved and hard to reach markets and spurring innovations. Through flexible grant and loan instruments, UNCDF supports a wide range of providers (e.g. FSPs, banks, cooperatives, money transfer companies, and mobile networks operators) and financial products and services (e.g. savings, credit, insurance, payment services, remittances).
UNCDF has strengthened and continues to improve its systems to support financial inclusion; it is ranked in the top two of all agencies scored by CGAP’s SmartAid reviews since its inception: “Over the years, UNCDF has established a solid base of good practice, whose oversight and execution lie with seasoned and competent professionals. Many of its strengths are reference points for peer institutions.” (CGAP SmartAid Report 2013).
To learn more about UNCDF’s approach in Inclusive Finance and its investment instruments, please download our Inclusive Finance Brochure.