What is Financial Inclusion?
As explained above, microfinance
was an initial, PRIVATE effort pioneered by Muhammad Yunus
to reduce poverty by giving impoverished entrepreneurs access to microcredits and other financial products and services.
In 1976 Yunus started the Grameen Bank
in Bangladesh. In 2006 the Grameen Bank and its founder Yunus were awarded the Nobel Peace Prize.
However, according to the United Nations
(UN), three billion people around the world still do not have access to formal financial services like savings accounts, credit, insurance, and payment services. More than half the population in developing countries and more than 80 percent of households in most of Africa are financially excluded.
On 29 December 2003, Former UN Secretary-General Kofi Annan
said: ”The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance.
Financial Inclusion (FI) (from ±2004)
is an economic POLICY of various governments and NGOs that (also) aims at giving disadvantaged or low income households and enterprises access to a COMPLETE RANGE of financial / banking services at affordable costs through building an entire INCLUSIVE FINANCIAL SYSTEM.
Financial inclusion includes many products and services like: savings facilities (microsavings), short and long-term credit, micro credits, loans, leasing and factoring, mortgages, insurance (microinsurance), pensions, payments, micropayments, credit and debit cards, overdrafts, cheques, local money transfers, electronic fund transfer (EFT), international remittances, pensions, and last but not least financial advice, coaching and education.
Compared to microfinance, financial inclusion is more comprehensive, more systemic and more public.
Compared to financial inclusion, microfinance was initially more focused on microcredits, more practical, and more private.
Financial inclusion is also referred to as: Inclusive Finance