Financial inclusion must be viewed in terms of people’s livelihoods, not just access to bank accounts

During the 2024 AFI Global Policy Forum, Brendan Pearce, Chief Executive Officer of FinMark Trust, spoke to us about what the latest data reveals about the state of financial inclusion. 

Why is data so critical for financial inclusion?  Data gives voice to consumers living in poverty and allows us to bring that voice into policymaking. It’s been proven over time that evidence-based policymaking is the most effective, and data and research gather that evidence. In the absence of data, policies and strategies may not reach the intended audience — the people you’re trying to reach. Data helps us measure progress. Our FinScope surveys, for instance, give countries a baseline for the extent of financial inclusion among their populations. Refreshing the data every few years means they can track progress in this regard.

What does the most recent data reveal about the state of financial inclusion?

Several interesting trends are emerging. First, it is clear that there is no alignment between an increased percentage of the population being included in the financial sector and their livelihoods— the extent of poverty and inequality. Those two metrics seem to be going in opposite directions; which means we need to rethink what we mean by financial inclusion and reformulate it to have a more direct impact on people’s livelihoods.

Another trend, certainly within southern Africa, is that mobile money wallets seem to be overtaking bank accounts. Many banks are unhappy about this, but it points to consumers doing what is in their best interest— in this case, voting with their feet.

A third issue is around the usage of financial products. We’ve had a huge increase in bank accounts and mobile money wallets, but usage is still very low. What we see is people effectively using these as a post box— they receive funds every month and then withdraw them entirely to transact in cash.  

What are your main messages to central banks and financial regulators?

Firstly, to look at the data properly and then base policy and regulatory interventions on hard evidence. We need to go beyond measuring only access and look more closely at usage, the quality of financial inclusion, and the contribution it makes to people’s livelihoods, incomes and jobs.

Unless we can solve the gap between people’s livelihoods and financial inclusion, people will lose interest in it as a key intervention, and we risk losing the momentum on financial inclusion that countries, particularly the members of the AFI network, have worked so hard to build.