Definition of financial inclusion

Definition of financial inclusion

Financial inclusion is the entirety of the schemes put in place to combat banking and financial exclusion. It encompasses a whole range of products or services that are either financial or non-financial made accessible to poor populations.

Among the financial services, we can cite:

  • Micro-insurance along with all possible variants linked to insurances (climate risk, deaths etc.)
  • Different credit products
  • Pension
  • Savings products
  • Money transfer

Non-financial services cover a broader field. It can indeed include:

  • Trainings (in business management, in risks, in governance etc.)
  • Software to aid decision making (SIMFI, Microfact etc.)
  • Consulting and technical expertise
  • Financial education and raising awareness

Likewise as Microfinance (read the definition of microfinance), financial inclusion aims at broadening access to (non) banking and (non) financial products & services that are affordable and responsible for the populations excluded from the classical banking circuit. In order to succeed in including the largest number in the financial system and enabling them to benefit of adapted banking services, a whole range of products and services have been developed, the most known one is Micro-Credit. But today there exists financial services that respond to needs that go way beyond Micro-Credit: money transfers, Micro-Savings, Micro-insurance, Micro-pension. Well-made and utilised by strong & responsible actors, those products have an enormous potential in terms of development.

Financial inclusion enables poor populations to finance their activities, to save, to meet the needs of their family and protect themselves against the risks of everyday life. Their distribution on the market is ensured by various financial bodies: Micro-finance institutions (MFIs), cooperatives, Micro-insurance providers, banks etc. It is essential that those distributors align their activities along a responsible and social approach in order to fulfil the first objective of inclusive finance: combatting poverty. There remain however numerous challenges to overcome by distributors: what is at stake is to serve the interests of poor populations whilst ensuring their own economic viability.


 

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