On 25 September 2015, the United Nations General Assembly adopted the 2030 Agenda for Sustainable Development, along with a new set of development goals that are collectively called the Sustainable Development Goals (SDGs). The Agenda is a culmination of many years of negotiation and was endorsed by all 193 member nations of the General Assembly, both developed and developing—and applies to all countries. UN Secretary General Ban Ki-Moon noted that “the new agenda is a promise by leaders to all people everywhere. It is an agenda for people, to end poverty in all of its forms—an agenda for the planet, our common home.”
The SDGs comprise an ambitious 17 goals. While the SDGs do not explicitly target financial inclusion, greater access to financial services is a key enabler for many of them. By reviewing the research on the link between financial inclusion and development, this working paper shows where and how financial services can help achieve the SDGs. It concludes by outlining opportunities for businesses and governments to expand financial inclusion in emerging countries by digitizing cash payments of wages and transfers.
Financial inclusion means that formal financial services—such as deposit and savings accounts, payment services, loans, and insurance—are readily available to consumers and that they are actively and effectively using these services to meet their specific needs (CGAP 2011). A related but distinct concept is financial development. While financial inclusion is typically measured by gauging how many people own and use formal financial products, financial development is concerned with macro-level indicators, such as the size of the stock market and a country’s ratio of credit to gross domestic product (GDP). Many factors influence both a country’s level of financial inclusion and financial development, including income per capita, good governance, the quality of institutions, availability of information, and the regulatory environment (Allen et al. 2016; Rojas-Suarez 2010; Karlan et al. 2014; Park and Mercado 2015).