Identifying how banks can bring many more people and enterprises into the formal financial system…
2015 will see the publication of a joint report by CARE International UK and Accenture on how capable (and motivated) mainstream commercial banks are to reach much further down the pyramid in developing countries and bring into the formal system a substantial proportion of the financially excluded. We have now conducted research in seven countries and will complete another five or six in January. Our report will include the impact of mobile phones and other technology, the rapid growth in SME lending which is allowing ‘insurgent’ banks to grab market share, and the role of regulators in encouraging and allowing greater access.
…and how they will do it responsibly
Last year we announced the creation of the Linking for Change Savings Charter – a set of international principles to encourage banks to responsibly link savings groups to their services. One year on – where have we got to?
It remains a sad fact that 2.5 billion people still lack access to formal services and that bridging this gap requires multiple efforts across the financial ‘ecosystem’. That’s why we feel the Savings Charter adds value and supports the other initiatives out there like The Better Than Cash Alliance. The Charter is about raising the profile of savings-led (rather than credit-led) approaches, it’s about convincing banks that banking the poorest is possible and it’s about ensuring this emerging market is tapped responsibly.
While we’re excited at recent sign-ups to the Charter including Post Bank Uganda, The Mastercard Foundation and Airtel Money Africa, we don’t just want to create a long list of supporters, we want to work with signatories to pilot, innovate or expand their existing linkage efforts. Our research with Accenture mentioned above is a result of their commitment to the Charter. After explaining the Charter to various global organisations and institutions in 2014 (Davos, WB/IMF meetings, etc), 2015 will see us targeting those institutions that are really leading the roll-out of linking informal savers to banks at national levels.
Achieving positive corporate impact at scale
Beyond banking, we will be continuing our work at influencing companies’ core business practices. While we welcome Corporate Social Responsibility (CSR) projects, their impact is usually limited to a few thousand people with no significant change to the company’s core business practices. Therefore, what we would like to see for 2015 is:
• Companies understanding and improving their overall impact at macro level in host countries through a more responsible approach to payment of tax, building the capacity of local government to effectively use taxes and royalties for local development in a way that reduces poverty, inequality and social exclusion.
• More community development linked to company core business – for instance, working along the company’s supply chain in order to increase local content, smallholders’ incomes, SME development, workers’ wellbeing and the overall business conditions for the most vulnerable groups of suppliers, particularly women.
• Companies becoming better at listening to, and respecting, the voices of the communities they work with. This means Free Prior Informed Consent in the case of the Extractive Industries – and not only for indigenous people. Better access to remediation when abuses occur is also key – the remedy pillar is arguably the weakest pillar in the implementation of the United Nations Guiding Principles on Business and Human Rights.
Private sector impacts in middle income countries
While CARE International’s mission has always had us working in the poorest countries, as the world has changed over recent decades many of the people we work with are living in poverty in developing economies which already are, or at least are well on their way to being, middle income countries. Here in Asia this is particularly striking – see for instance my recent blog on the Philippines, Exposing ‘middle-income’ country realities. In rapidly growing middle income countries, patterns of development still leave many people in poverty, particularly women, the young, and marginalised communities. This is within an environment where the local private sector and multinational corporations are engaging with local growers and developing jobs in local value chains. Within these, CARE this year in Asia will have a strong focus on women’s economic empowerment, access to markets and dignified work.
