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Financial Inclusion, FinTech and Sustainable Development Goals

Financial Inclusion

The Open Working Group proposal for Sustainable Development Goals (SDGs) established that the main issue that the United Nations (UN) aims to tackle is poverty reduction (Goal 1). As outlined in the proposal ‘poverty eradication is the greatest global challenge facing the world today and an indispensable requirement for sustainable development. The commitment to freeing humanity from poverty and hunger as a matter of urgency’. Individuals as the main focus of sustainable development was stated in the proposal and the Rio + 20 outcome document. Both documents emphasized the need for a world that is just, equitable and inclusive and the commitment was made to work together to promote sustained and inclusive economic growth, social development and environmental protect as a benefit to all.

Some of the underlying issues for financial inclusion is poverty reduction and improving the standard of living. Part of its target groups are marginalized and unbankable groups such as women, low-income earners and people who have been remotely removed from urban cities where you have most of the upscale businesses and financial institutions. These ones have been excluded from financial services due to poverty, financial literacy, low-income wages, lack of accessibility and geographical location. Financial inclusion provides substantive support to these groups. Financial inclusion strives to improve the standard of living for such vulnerable groups through innovation and infrastructure. Fintech provides the technological innovation to facilitate economic growth and wealth creation by by-passing formal financial institutions. This is the aim of Sdgs Goal 9 that is, to build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. Innovation advances technological capabilities, fosters wealth creation and prompts the development of new skills.

Financial inclusion and Fintech innovation are like two peas in a pod. Financial inclusions is closing the exclusion gap and Fintech is introducing innovation into financial services through the use of modern technologies which has prompted partnerships with banks to supply them with these services. Fintech is improving financial services world through innovative services. Such as providing customers with more financial options and thereby reducing costs of transaction and increasing the speed of financial process. For example, the WEMA Bank ALAT App helps a customer to open a new account without having to go to the bank. This is considered the first digital banking process in Nigeria. This is one of the ways by which technology has helped to advance the banking industrial sector by reducing costs, speeding up financial services and encouraging inclusion of otherwise marginalized groups. There is an ongoing campaign in Nigeria tagged #RampUpNigeria. The campaign is targeted towards banks and other institutions in Nigeria to work at creating a more accessible environment for over 20 million people living with disabilities (PWD). Banking innovations such as WEMA ALAT creates accessibility, costs reduction and inclusion for people living with disabilities (PWD) to be included in mainstream financial services and to participate in technological advancement.

The UN Secretary-General high-level panel on digital cooperation considers that digital technologies make a significant contribution to the realization of the 2030 Agenda for Sustainable Development. As part of its own support for Fintech programs, the UN the Capital Development Fund for Shaping Inclusive Financial Transformations (SHIFT) targeted at the least developed countries (LDCs). The project is currently operating in the ASEAN and SAAR region and it aims to improve the standard of living for vulnerable groups through digital financial inclusion, expanding the potential for enterprise development (Goal 9), employment (Goal 8), and increased economic participation (Goal 10). SHIFT recognizes that women in this region are marginalized due to lack of accessibility to the use of formal financial institutions. SHIFT is working to change the gender narrative by empowering these women in having access services such as credit facilities, savings accounts and insurance opportunities as a way to counter poverty (Goals 5 and 1). Projects such as SHIFT and ALAT App aligns with Goal 17, ‘Partnerships for the Goals’, to strengthen the means of implementation and revitalize the global partnership for sustainable development.

Based on the concept of financial inclusion and the innovation of Fintech companies to offer products and services in a simpler form with speedy delivery helps to bridge the gap between the financially vulnerable and the financial institutions. The aim is to make financial transactions easy for clients and enabling online transactions at their fingertips. This is laudable. For financial inclusion empowering consumers promotes capacity-building and ensures that more people have access to savings and credit facilities. Also by investing in consumers or clients, one empowers them to invest in their financial future. According to the McKinsey report on ‘How digital finance could boost growth in emerging economies’, delivering financial services by mobile phone could benefit billions of people by spurring inclusive growth that adds $3.7 trillion to the GDP of emerging economies. This means that the economic prospects of trillions of people could be transformed. Digital finance cold provide access to 1.6 billion unbanked people, more than half of them women. Digital financial services could unlock economic opportunity and accelerate social development. Digital financial services and incentives such as microfinance programs which doesn’t require elaborate and complex paperwork can help low-level workers gain access to jobs and open bank accounts. This improves access to financial services and increase employment opportunities (Goal 8). Goal 10 advocates for reducing inequalities in income within and among countries.

Sustainable Development in ensuring poverty reduction, economic growth and technological advancement needs the global partnerships of governments, public agencies as well as corporate and private businesses. Sdgs can be incorporated into community projects, capacity-building programs, government policies and Fintech operations. The partnership between banks, fintech companies and consumers can promote and contribute to social development and economic growth. Sustainability seeks to improve lives and general well-being. Financial inclusions and Fintech provides for innovation and prosperity all in favor of sustainable development for the global entity. Innovation and prosperity creates a good platform for progress and development which yields to financial revenue.

Jumoke Adegbonmire

Principal Partner, WillFran Consulting

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