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How do we put an end to extreme poverty? Lets provide financial access for everyone
By: Summit Financial
Daniel Levy, Director, Summit Finance International.
After attending an investor conference in the United States recently I was asked to make a key note speech at an industry charity event in New York and after racking my brains in regards to what I should speak about a question popped into my head. What if I had no safe, accessible and affordable way to save money, facilitate my bills or secure credit?
During my sabbatical working in South Africa for four months, this question did not even cross my mind. I was concerned more about helping the community getting treatment for diseases such as HIV and multi-drug resistant tuberculosis. Although we also assisted patients by providing access to meaningful education, vocational training and securing employment, with many actually starting to work alongside us I never really thought how affordable access to financial services could serve as bridge out of living under the bread line. In hindsight I now know that we should have paid more attention to this crucial factor in the war against poverty.
On return to our global headquarters in Switzerland, our experts informed me that there is approximately 2.5 billion individuals that do not have any access to these types of financial services which includes 80 percent of those that live on less than $14 per week and almost 200 million small businesses. These are phenomenal numbers, which speak to lost opportunities on a massive scale.
Individuals that are “Unbanked”
By reducing the financial access deficit requires the adoption of new technologies allowing us to work in innovative ways; building the infrastructure of electronic payment systems versus the continuation of the use of paper money as an example.
Electronic payments decrease the cost and increase the security of payments, transfers and receipts. In South America Summit helped in developing a strategy which makes life easier for people on low incomes and/or those that live in rural areas making payments. During 2013, Brazil made in excess of 24.7 billion electronic payments, more than India and China combined and today there is around 343,000 electronic financial access points with a minimum of one in each of the nation’s municipalities.
ATM's and Banks are rare in rural areas of developing countries, which hinder the financial access of the people that live in these areas. Bangladesh based KBash is a mobile financial firm that has addressed this challenge by adapting mobile phones into devices that can send and receive money. Two years after it was launched in 2011 it had in excess of 11 million accounts in a country where 22 percent of the adult populace uses mobile financial facilities and from our analysts estimates we believe that Kbash was the world’s fastest-growing mobile financial services company during 2013.
Governments also play a key role in driving financial access through the distribution of public benefits electronically. By doing so enables people to get their social security’s more effectively and also reduces administrative expense allowing the savings to spend elsewhere.
Outside the box steps play a critical role in unlocking financial access throughout the developing world by providing the foundation that individuals and businesses require to take full control of their economic well-being. Inherently this promotes saving, the creation of employment, investment and ultimately growth. It also empowers women by making it easier for them to create wealth and form small businesses.
By ensuring that everyone has access to affordable financial services will prove to be crucial in meeting Summit's target of help ending extreme poverty by 2030. This is why we have been working alongside our peers, charitable organizations and experts in the field . At a recent event that we hosted to address government leaders and the private sectors we announced proposed steps in our push to gain universal financial access within the next 5 years.
In summary in excess of a third of people on the earth is without access to basic banking facilities or any form of meaningful credit a fact that in my opinion is wholly unacceptable. Summit's goal is to assist in bringing that figure to zero by 2020 and by doing so sets an incredible task ahead however the reward will lay the path to the end of extreme poverty by 2030.