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Analysis

G20 Policy on Financial Inclusion

Mabruk Kabir, G20 Research Group
June 18, 2012

At their Pittsburgh Summit in September 2009, G20 leaders committed to improving access to financial services for the poor. This included launching the G20 Financial Inclusion Experts Group to “scale up the successful models of small and medium sized enterprise (SME) financing” and identify “lessons learned on innovative approaches to providing financial services..., promote successful regulatory and policy approaches and elaborate standards on financial access, financial literacy, and consumer protection.”

The G20 commitment to financial inclusion recognizes the benefits of universal access to financial services. It acknowledges that more than two billion adults do not have access to formal or semi-formal financial services and that millions of micro-, small- and medium-sized enterprises (MSMEs) face a serious lack of access to finance. Financial inclusion is fundamental for improving the livelihoods of the poor as it enables them to run their businesses, build assets, smooth consumption and manage risks. In this context, the G20 notes the overarching and cross-cutting nature of financial inclusion. It therefore has included financial inclusion as one of the main pillars of its development agenda.

Building on the progress made since its Toronto Summit in June 2010, the G20 has developed an action plan for improving financial inclusion. It sets out six concrete and pragmatic areas to advance financial inclusion for individuals, households and MSMEs and to promote the application of the G20 Principles for Innovative Financial Inclusion. The G20 has also selected the winning proposals of the SME Finance Challenge and developed a financing framework to support their implementation and scale up successful SME financing models.

Progress: Los Cabos Summit

Just before the Los Cabos Summit began on June 18, 2012, G20 host and Mexican president Felipe Calderon oversaw the launch of the Financial Inclusion Challenge: Innovative Solutions to Promote Access to Financial Services competition in partnership with Ashoka Changemakers. Through the exchange of best practices and deeper knowledge sharing, the competition is designed to help countries meet their Maya Declaration commitments through innovation and policy coordination. At the event, the presidents of Indonesia and Chile joined Calderon and endorsed the initiative by signing the Reciprocal Learning Program for Financial Inclusion Commitments. Calderon noted that participants would include both G20 member and non-member governments. The winning models will be announced in November 2012 during the G20 finance ministers’ meeting.

Mexico has been active on the development agenda by pushing financial inclusion into the main G20 agenda priorities. Mexico’s leadership was highlighted by its own actions to promote financial inclusion, including the creation of the National Council of Financial Inclusion, which articulates national policy on the issue. Mexico has also begun implementing cell phone banking and banking correspondents, as well as promoting financial education and protection schemes.

Financial inclusion is particularly important to Mexico’s G20 leadership, as it represents progress on the development agenda since the last summit. By making clear progress on a past political commitment, Calderon set a positive tone before the official start of the summit. In addition, the credibility of the event was bolstered not only by the presence of other leaders, but also by bringing Indonesia onboard, a country that survived the 1997-98 Asian financial crisis on the strength of its SMEs. Financial inclusion reflects an advance for the interests of emerging and developing countries of the G20.

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