Financial inclusion should make transferring money, saving money, and taking out small loans more secure and accessible for people in remote communities. But over the years some financial inclusion projects have exploited the very people they were designed to protect.
In South Africa, post-apartheid microcredit schemes were meant to help the disenfranchised but pushed them further into debt. In Bosnia, concerns were also raised about the unintended consequences of increasing access to credit after a substantial increase in child labour was reported in businesses opened through microloans.
Today more programmes than ever are being designed to reach those without a formal bank account, so a discussion about whose responsibility it is to protect these new consumers seems timely.
Firstly, consumers need more information on the risks and what is expected of them so they can make informed choices. Yet, the levels of financial literacy among consumers at the bottom of the pyramid has not caught up with the pace of the services being offered to them. We need to address where, and to who, consumers should go to for information and advice, and how it should be relayed.
Secondly, at an industry level, stronger regulation is needed. According to Hugh Sinclair, chief operational officer of Alliance Microfinance, “independent regulators need to be empowered along with the ongoing expansion of financial inclusion. The current system is not protecting the people it’s designed to empower”.
But when financial products serve customers well, government workers can receive their full salary without a middleman taking a cut; women get increased independence with their own account from which money can’t be swallowed up by their family; and migrant workers can transfer money home quickly and without a high transaction fee.
Is responsible financial inclusion just up to the banks? Or do schools, universities, government, the private sector and NGOs all have a part to play in encouraging responsible money management? If so, how can they collaborate and who foots the bill? And how can we ensure appropriate consumer protection, but also support innovation, competition and sustainability?
Join our expert panel on Thursday 30 October from 2-4pm GMT to discuss how to deliver financial inclusion programmes and products more responsibly.
The live chat is not video or audio-enabled but will take place in the comments section (below). Get in touch via globaldevpros@theguardian.com or @GuardianGDP on Twitter to recommend someone for our expert panel. Follow the discussion using the hashtag #globaldevlive.
Panel
Tanaya Kilara, financial sector specialist, CGap, Washington DC, USA, @tkilara @cgap
Tanaya, on the customer centricity team, leads work translating consumer insights into better delivery and youth financial services.
Katherine Hughes, financial inclusion programmes officer, Care International UK, London, UK, @careintuk @khughes123
Katherine manages the delivery of three of Care’s savings-led financial inclusion projects spanning eight countries.
Erin Taylor, research fellow, Institute for Money, Technology and Financial Inclusion, UC Irvine, Lisbon, Portugal @erinbtaylor_
Erin is an economic anthropologist who researches poverty, mobile money, and consumer finance.
Enea Stocco, financial inclusion specialist, UNCDF, Addis Ababa, Ethiopia
Enea is a financial inclusion expert with management and work experience in Sub-Saharan Africa and Latin America.
Erin Steinhauer, vice president, global financial inclusion, Visa Inc., San Francisco, USA, @erinsteinhauer @GlobalMatters
Erin manages a team of payment experts focused on developing financial inclusion solutions across Africa, Asia, and the Americas.
Manoj Yadav, junior technical expert, GIZ GmbH, New Delhi, India, @ManojK_Yadav @giz_gmbh @GIZIndia1
Manoj is a financial sector development professional, who has previously worked for Ujjivan, an Indian microfinance institution.
Heather Burke, director of corporate social innovation, Peacework, San Diego, USA, @_H_M_B @Peacework_org
Heather leads Project Belize, which aims to foster youth entrepreneurship and economic opportunity in Belize.
Elisabeth Rhyne, managing director, Center for Financial Inclusion at Accion Washington DC, USA @CFI_Accion
Beth brings together microfinance leaders and private sector experts to address challenges facing the microfinance industry.
