21st June 2024

Better business. Better community

Business Industry and Financial

The need to prioritize financial inclusion at G20 Summit

The G20 Summit, starting this week in India, has an opportunity to address one of the most pressing global challenges: financial inclusion. 

With millions of people around the world still excluded from formal financial services, the leaders of the Group of Twenty must place this issue high on the agenda. 

Financial inclusion refers to the availability and equality of opportunities to access and use financial services. These services include banking, credit, insurance, and savings facilities. 

While we live in an increasingly interconnected world, it’s astonishing that a significant portion of the global population remains unbanked or underbanked. 

According to the World Bank, about 1.7 billion adults worldwide do not have access to basic financial services, and the majority of them live in low- and middle-income countries.

Why financial inclusion matters

Financial inclusion is a potent tool for reducing poverty. When people have access to financial services, they can save, invest, and protect themselves against economic shocks. This, in turn, empowers them to escape the cycle of poverty and improve their overall well-being.

Financial inclusion stimulates economic growth by promoting entrepreneurship and small-business development. When individuals and small enterprises can access credit and other financial resources, they can invest in their businesses, create jobs, and contribute to economic development.

What is already high on the agenda at the G20 is achieving gender equality globally – and financial inclusion can play a crucial role in this endeavor. 

Women, particularly in developing countries, often face more significant barriers to accessing financial services than men. Prioritizing financial inclusion can help bridge this gender gap and empower women, and others, economically.

What needs to be done

The G20 countries should coordinate their efforts to create a conducive policy environment for financial inclusion. This includes regulations that enable innovation, protect consumers, and promote competition among financial service providers.

Embracing fintech solutions and digital financial services could significantly expand financial inclusion. Governments and institutions should support the development and adoption of innovative technologies that lower the cost of delivering financial services and reach remote areas.

To maximize the benefits of financial inclusion, of course, people need financial literacy. As such, the G20 should promote financial education initiatives to ensure that people are equipped with the knowledge and skills to make informed financial decisions.

Ensuring that everyone has access to a basic bank account is a fundamental step in financial inclusion. Governments should work with financial institutions to expand banking infrastructure, particularly in rural and underserved areas.

By addressing the critical issue of financial inclusion, the G20 can help lift millions out of poverty, encourage economic growth, and promote gender equality. 

India, as the host country, can play a leadership role in advancing these goals and inspiring other nations to do the same. The time to act is now, and the benefits of prioritizing financial inclusion are immeasurable.

Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.