Inclusive finance | White & Case LLP International Law Firm, Global Law Practice

Inclusive finance

An estimated 2.5 billion people, 90 percent of whom live in developing countries, lack access to formal financial services.

People without access to banking cannot take out a loan, build savings or buy financial products such as pension funds or insurance—all things that the bulk of the developed world's population takes for granted. And while improved financial inclusion has a positive effect on the individuals concerned, it also has a role to play in economic growth and financial stability for local communities and countries.

Many of the most promising approaches for increasing access to formal financial services have been innovations first introduced in developing countries, where the challenges of financial exclusion are played out every day. An excellent example is mobile money services, which allow individuals to load cash onto their mobile phones that they can then use to pay for services and goods or to transfer money to third-party accounts. Mobile money accounts have become extraordinarily popular in many countries, including Kenya and Tanzania. As a result, they are also becoming increasingly sophisticated, offering a variety of additional features, such as interest payments to account holders and cross-border payment capabilities.

Financial inclusion is key to integrating the unbanked into the formal economy, which helps to alleviate poverty, make the poor less vulnerable to financial shocks, raise living standards for all and reduce economic inequality.

New York–based White & Case partner Sylvia Chin has long been interested in the issue, seeing financial inclusion as a way to alleviate poverty by helping the many disenfranchised people around the world. Recruited on almost her first day at White & Case many years ago to work with the Firm's new pro bono client Women's World Banking (WWB), she has advised it ever since. WWB is a global non-governmental organization that works to provide low-income women with access to the financial tools and resources they need to build security and prosperity.

Over time, Sylvia and her WWB colleagues found that women in some countries struggle to access microfinance as a result of their local regulatory environments. As they looked at the issue more closely, they learned that the Alliance for Financial Inclusion (AFI) was engaged in a project to map the regulatory environment for its member countries.

Set up and funded by the Bill and Melinda Gates Foundation in 2008, AFI's members are central banks and other financial regulatory institutions from more than 90 developing countries, representing more than 85 percent of the 2.5 billion unbanked, most of whom live in poverty. AFI was the first, and is now the largest, global knowledge-sharing network designed for financial inclusion policymakers from developing countries and, on January 27, 2016, it became a fully independent and member-supported international organization.

Financial inclusion is key to integrating the unbanked into the formal economy, which helps to alleviate poverty, make the poor less vulnerable to financial shocks, raise living standards for all and reduce economic inequality. Smart policy can also accelerate financial inclusion while promoting the stability and integrity of financial systems. Research has shown that a grassroots approach is necessary to increase financial inclusion in developing countries. This approach ensures that local social, economic and cultural elements are taken into account. However, Sylvia points out that a strong regulatory framework "is needed to create an environment that is conducive to solving the unique problems that each country faces."

Wanting to pool resources and further advance the work being done to support policy inclusion at a regulatory level, Sylvia approached AFI to learn about the nature and scope of AFI's work. Maria Moreno Sanchez, AFI's project manager, then discussed collaborating. Both White & Case and WWB have been working with AFI to assist it in gathering information from each member country about various financial inclusion policies to create a shared learning platform. This fits within AFI's peer learning approach, which aims to work with global standard-setting bodies in order to drive the development and implementation of impactful financial inclusion policies.

The work was suited to the global network and sophisticated financial know-how of White & Case, and the team led by Sylvia signed on to work with AFI on this ambitious project.

The project is ongoing. To start, initial research is undertaken by White & Case lawyers and summer associates using publicly available information under the supervision of an appropriate partner. This research is then reviewed and commented on by Maria, and other AFI experts, before the local regulators are approached for further discussion and to confirm that the information is accurate. White & Case lawyers including senior partners in the Firm's Banking practice conduct these interviews with the local regulators and review and complete the final research document for each country.

As the platform for information is being built each year, supplemental information is added, and research on the country members is updated. In 2016, AFI plans to explore ways to include gender data in the platform. This large-scale and long-term project aims to provide each member country with information on what others have done, with the objective of helping each country take tools or experiences that have worked elsewhere and adapt them for use in its own culture and legal environment.

Sylvia Chin points to consumer privacy policies as an excellent example. "We've seen hard data that shows that 70 percent of income earned by women is ploughed back into the family, while only 30 to 40 percent of men's income does so. Consumer privacy policies mean that if a woman is saving money for herself and her family, her husband is not entitled to any information on what or where her assets are. An effective policy in one country can be used to inform the development of a similar policy in another."

AFI agrees. In a 2015 report titled National Financial Inclusion Strategy: Current State of Practice, authored by Dr. Nimal A. Fernando in collaboration with Robin Newnham and published by AFI, Dr. Fernando highlights the many countries that have actively aimed to learn from others before implementing their own policies, as well as those who have used the G20 Principles for Innovative Financial Inclusion to inform their process. He says, "This is important because it suggests that peer learning and knowledge-exchange visits can contribute to the improvement of the strategy process."


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