Reflections on 2011 from the Chair of CGAPs Board
This time last year, I was travelling across India on a “Shodh Yatra,” an inquiry into the lives and livelihoods of the poor. Prompted by events in Andhra Pradesh, my 5,000 Km journey by foot, by car, by rail and occasionally by air, across 12 Indian states allowed me to reflect on 30 years of working in development.
Stepping back from events in India, CGAP asked me to reflect on the last year for financial inclusion globally. And from that vantage point, I want to highlight significant progress, or at least some encouraging signs that reaffirm the importance of the collective effort to advance financial services for the poor, in which CGAP plays an important role as a global public good.
I will highlight four important areas: policy developments; innovations in the delivery of services; renewed focus around clients; and funding sources. CGAP’s 2011 Annual Report describes progress in these areas and CGAP’s contributions in more detail.
Even as the world was reeling from the effects of the global financial crisis, policymakers showed a deepening understanding of the importance of financial inclusion for stability, and the serious negative consequences of inequality. This recognition by policymakers and global standard-setting bodies in the G20 context that financial exclusion is a risk to stability, and that financial inclusion offers an opportunity to improve lives, represents a significant step forward. Progress at this level was in no small part due to CGAP’s work behind the scenes. The work on improving policy and regulatory frameworks has progressed in several countries and CGAP has played the role of a “knowledge crossroads” where experiences are exchanged by policy makers and practitioners across countries in a neutral, learning-oriented setting. CGAPs publications, websites, blogs, are widely read and heeded.
We saw significant innovation in new business models and delivery channels, and a better understanding of the business and policy environment that will encourage such innovations to thrive. (In the video here I introduce Sub-K, a mobile and agent banking service that BASIX launched, just one example of the ways in which new technology is being used as a means to improve access, broaden the scope of services and reduce transaction costs for poor people.)
In the past year we have seen–both within CGAP and emanating far beyond–a renewed commitment and direction behind the fact that understanding poor clients is central to any efforts to improve access to finance. CGAP’s commitment to a deeper understanding of poor clients and to the responsible delivery of high-quality affordable services underpins all of its work and enables it to contribute to work on themes such as transparency, client protection, rigorous impact assessment and social performance measurement. But the addition of a new team wholly dedicated to this work signals an important new level of commitment for the organization, and for the industry as a whole.
The field of financial services for the poor is almost unique in having brought together funders with widely varied perspectives and interests around a shared mission to advance knowledge that will contribute to improving lives of poor people as a public good. CGAP’s members submit themselves to rigorous peer review, and engage in self-examination through the mechanism of SmartAid to improve their practices, in the common understanding that their work is to build self-sustaining markets. As an identifier of gaps and shortcomings in practice, incubator for innovation, creator of new knowledge, and platform for broad knowledge exchange, CGAP is at the hub of all these efforts, and has driven the sector to strive for excellence across the board.
So when I stood back and reflected on a year of great turbulence for the world, and particularly for those of us working to address financial inclusion in India, the picture is actually quite encouraging. With 2.7 billion people across the world still lacking access to formal financial services, the work is by no means done. But the opportunities to achieve full financial inclusion, and the means by which the gap will be closed, are ever more apparent.
Elsewhere on this blog, Tilman has laid out an ambitious set of priorities for the coming year. CGAP’s members remain committed to this agenda and to working alongside partners who share a vision of financial inclusion that will improve the lives of poor people.
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