CGAP working paper reviews research on link between SDGs and financial inclusion

3 May, 2016

A new CGAP working paper reviews the research on the link between financial inclusion and development. While the Sustainable Development Goals (SDGs) do not explicitly target financial inclusion, greater access to financial services is a key enabler for many of them. 

On 25 September 2015, the United Nations General Assembly adopted the 2030 Agenda for Sustainable Development, along with a new set of development goals that are collectively called the Sustainable Development Goals (SDGs). The Agenda is a culmination of many years of negotiation and was endorsed by all 193 membernations of the General Assembly, both developed and developing—and applies to all countries. UN Secretary General Ban Ki-Moon noted that “the new agenda is a promise by leaders to all people everywhere. It is an agenda for people, to end poverty in all of its forms—an agenda for the planet, our common home.”

In the words of Her Majesty Queen Máxima of the Netherlands (United Nations Secretary-General’s Special Advocate (UNSGSA) for Inclusive Finance for Development): "The evidence presented in this paper is powerful: it gathers in one convenient place the increasingly clear link between financial inclusion and development. It identifies where financial inclusion may have a direct impact on outcomes such as health, education, and gender equality."

She continues: "Viewed from the angle of the SDGs, this paper reinforces that financial inclusion is about human development and empowerment. Financial inclusion gives people the means to improve their own lives. It can be clearly observed in the choices that women have as a result of having access to a bank account: they invest in businesses and use proceeds from their businesses to invest in their households."

"But financial inclusion carries benefits even beyond the improvement in individual lives. By moving away from cash and using digital payments to distribute government wages and cash transfers such as pensions, governments can cut costs and reduce leakage. Digitizing social transfers and government wages has the potential to introduce millions of adults in emerging economies into the financial system. This has many positive ripple effects on the broader financial system."

By reviewing the research on the link between financial inclusion and development, this working paper shows where and how financial services can help achieve the SDGs. It concludes by outlining opportunities for businesses and governments to expand financial inclusion in emerging countries by digitizing cash payments of wages and transfers.

To read the full paper, click here.

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