Sustainability challenge and related SDGs:
The lack of access to financial services and infrastructure is one of the main obstacles to achieving inclusive growth and prosperity across communities across the globe. The World Bank reports in its Global Financial Index Review 2021 that 24% of the adult population worldwide do not have a basic bank account.
Access to capital is a crucial ingredient for economic success. Unequal access to capital divides societies unnecessarily.
Unsurprisingly, in developing countries, poor adults and women are more likely to experience financial stress and report that they need help using financial services. Therefore, #AccessToFinance is a necessary requirement for the achievement of SDG 1 “No Poverty”. Finance also helps building SDG 11 “Sustainable Cities and Communities” while fostering SDG 10 “Reduced Inequalities”. Microfinance empowers women, as two thirds of recipients are women. It supports SDG 5 “Gender Equality”.
Possible solutions and their contribution to achieving the SDGs
#AccessToFinance is the collective term for all solutions that drive the crucial distribution of financial services to underserved communities forward. It comprises a wide array of financial services:
- Microloans and financing of cash-starved communities can help kickstart a sustainable livelihood.
- Mobile money is a low-barrier opportunity to transfer and save money without a traditional bank relationship.
- Credit to Small and Medium Sized Enterprises (SME) supports the development of economies and middle classes from the bottom up.
- Smallholder mortgages allow real estate ownership for the cash-poor.
- Microinsurance can foster human development as the lack of basic health and invalidity coverage is a driver for extreme poverty, especially among people in emerging markets.
Finally, the related banking software can give liquidity to people in remote areas, helping to develop local markets, communities and businesses.
Primarily related SDG Targets: 1.3, 1.4, 1.5, 5.a, 10.1, 10.2, 10.c, 11.1, 11.c
Investment Rationale and Growth Potential
#AccessToFinance has great potential to support achieving the Agenda 2030 and thus, solving many of the world’s problems. But it also represents a huge investment opportunity.
As billions of people still lack access to finance, there is vast potential for financial service companies to grow in emerging markets. Microcredit and microfinance enable sustainable and inclusive growth for SMEs, but also for the investing banks.
Mobile and software-based banking services allow emerging economies to leapfrog into the digital age and reach people in rural areas easier than ever before. Additionally, also developed countries have underfinanced and underinsured communities whose precarious conditions can be improved.