World Bank extols phone, internet virtues in expanding financial inclusion
By Jeph Ajobaju, Chief Copy Editor
Cheap and functional mobile phones and affordable internet access have come up for applause from the World Bank for facilitating financial inclusion, and it says they are the key to expanding digital finance in developing economies.
World Bank President David Malpass says the Covid pandemic has influenced a digital revolution that has catalysed increases in access to, and use of, financial services, transforming how people make and receive payments, borrow, and save.
“These changes are strikingly evident in the latest edition of the Global Findex database, compiled from a survey of more than 125,000 adults in 123 economies, covering the use of financial services throughout 2021,” he said in a World Bank blog titled, ‘Aiding the digital revolution in global financial inclusion’.
“The survey found that 71 per cent of adults in developing economies now have a formal financial account – whether with a bank, another regulated institution such as a credit union or microfinance lender, or a mobile money service provider – compared to 42 per cent when the first edition of the database was published a decade ago.
“In addition, the difference in the share of men and women in developing economies who own an account has fallen for the first time, from nine percentage points to six.
“This digital transformation makes it easier, cheaper, and safer for people to receive wages from employers, send remittances to family members, and pay for goods and services.
“Mobile money accounts can better handle high-volume, small-denomination transactions, which help users to access financial services and save in order to cope better with crises. Individual accounts also give women more privacy, security, and control over their money.”
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Growing numbers
Malpass said the share of adults in developing economies who make or receive digital payments grew from 35 per cent in 2014 to 57 per cent in 2021, and 39 per cent of mobile money account holders in Sub-Saharan Africa now use their accounts to save.
In his view, expanding people’s access to finance, reducing the cost of digital transactions, and channeling wage payments and social transfers through financial accounts would be vital to mitigating recent economic setbacks in developing countries, according to reporting by The PUNCH.
“Improving access to finance depends much more on the mobile-phone system than on the physical banking system. Cheap and functional mobile phones and affordable internet access are prerequisites for expanding digital finance.
“Consumer protection and stable regulations are also needed to foster safe and fair practices that bolster trust in the financial system.”
Malpass pressed the need to promote the digitalisation of payments as the Global Findex data for 2021 showed 865 million account owners in developing economies opened their first account at a bank or similar institution in order to receive money from the government.
Nee for more widespread, less costly digital payments
He said as digital payments become more widespread and less costly, many private businesses will be able to pay their workers and suppliers electronically, and the digital revolution will offer a chance to increase formal-sector employment without making compliance excessively burdensome.
“The World Bank is firmly committed to expanding financial inclusion through digitalisation.
“We will continue to support countries as they enhance mobile-phone networks, rework regulations to foster access to finance, adopt e-government platforms, and modernise social-protection systems.
“For the many millions of people who still lack an account, we need to redouble our efforts and find creative ways to connect them to the financial system, build economic resilience, and reap the benefits of inclusion.”
