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UN group seeks to increase access to financial services for poor

UN group seeks to increase access to financial services for poor

A United Nations group has issued a series of key messages targeted at encouraging different audiences to boost access to financial services – from opening bank accounts to taking out loans to buying insurance – to the poor.

These messages, aimed at governments, regulators, development partners and the private sector, were formed by the UN Advisors Group on Inclusive Financial Sectors, which was created to promote financial inclusion in poorer countries.

“Access to a broad range of financial services is a significant development issue everywhere outside of developed countries,” Richard Weingarten, Executive Director of the UN Capital Development Fund (UNCDF), told reporters at UN Headquarters in New York today.

He noted that there are nearly three billion people worldwide who lack access to basic financial services. For example, only 30 million of sub-Saharan Africa’s population of 744 million people have access to such services.

“Access to financial services is also very important in terms of achieving the Millennium Development Goals (MDGs),” he said, referring to the set of eight targets for slashing social and economic ills by 2015.

Improved access will enable poor people to increase their incomes, he said, adding that empirical evidence shows that those participating in microfinance programmes can improve their welfare more than those who do not.

“In India,” Mr. Weingarten said, “half of the clients of a well-respected microfinance institution graduated out of poverty.”

The Group, in its messages, reminded governments that although increasing access to financial services is crucial, it alone will not eliminate poverty. It also called on governments to lower interest rates to ensure that prices are transparent and that the market remains open and competitive.

Regulators must ensure that laws relating to money laundering do not hinder access to financial transfers critical to the poor, the Group said, while the private sector must remember that providing services to the poor presents a considerable business opportunity.

In its messages to development partners, the Group said that the paucity of strong institutions and managers obstructs efforts towards inclusive finance.

The Group was established with a two-year term following the 2005 International Year of Microcredit, and its members represent governments, central banks, regulatory agencies, microfinance institutions, private sector financial institutions, civil society, development agencies and academia from all over the world.