BLOG SERIES: Inclusive or Exclusive Global Development? Scrutinizing Financial Inclusion


“Financial inclusion is a key enabler to reducing poverty and boosting prosperity.”

The World Bank (2018)

“[Policies of financial inclusion] serve to legitimize, normalize, and consolidate the claims of powerful, transnational capital interests that benefit from finance-led capitalism.”

–  Susanne Soederberg (2013).

Financial inclusion has been high on the agenda for policy-makers over the past decade, including the G20, international financial institutions, national governments and philanthropic foundations. According to Bateman and Chang (2013), it’s the international development community’s most generously funded poverty reduction policy. But what lies behind the buzzword? How can the two quotes above portray such starkly opposing views?

Why is Financial Inclusion Controversial?

Financial inclusion — or access to credit and financial services for non-banked communities — appears benign and straightforward at first sight, but there is much that needs to be unpacked. While the World Bank’s information page on financial inclusion presents the promotion of financial services for the poor as a technical and efficient solution to poverty, sceptics have pointed to a growing body of evidence that financial inclusion initiatives have, at best, failed to live up to their promises and diverted attention from more effective and comprehensive poverty reduction strategies, and at worst, resulted in dramatic explosions in predatory lending to low-income households, and in significant reductions in the welfare of borrowers and their communities (see here for a summary of the debate). Susanne Soederberg (2013) has gone so far as to argue that there are “exploitative relations and speculative tendencies involved in financial inclusion strategies”.

In an overview piece, Phil Mader (2017) has found that the case for financial inclusion as a pro-poor private-sector led development intervention lacks sufficient evidence and justification – and that the concept should be recognized as a contested and contestable enterprise. In that spirit, this blog series aims to unpack what policies lie behind the concept, what effects such policies have had on the ground, and how the concept relates to other socio-economic issues such as inequality, poverty, financial citizenship, financial education, and other income flows such as remittances. The series includes cases from Ethiopia, Ghana, India, Kenya, Malaysia, Senegal and and the US. It also includes wider perspectives on the context in which financial inclusion initiatives take place, such as an examination of the international financial architecture and Islamic finance.

These next couple of months, we’ll publish a new perspective on financial inclusion as part of our #FinanceFriday series. As a whole, the series will approach the concept from a variety of angles and disciplines.

Overview of the series:

    1. Inclusive Finance, Shadow Banking, and the Need for Financial Citizenship (Juvaria Jafri, Department of International Politics, City University, London) 
    2. Financial Education in Malaysia: A Driver of Nation-Building or Inequality? (Syahirah Abdul Rahman, Alliance Manchester Business School, University of Manchester).
    3. Demonetisation in India – From Financial Inclusion to Digital Financialisation (Sudeep Jain, Bristol Business School, University of the West of England, Bristol) 
    4. To Be Poor in Times of the Current Financial Architecture (Anne Löscher, Department of Economics, University of Siegen) 
    5. Does one size fit all when it comes to financial inclusion? Scrutinising effects of race and gender (Hanna Szymborska, Department of Economics, Open University) 
    6. Financialising migration? Remittances, algorithms and digital finance (Vincent Guermond, School of Geography, Queen Mary, University of London) 
    7. Harvesting data: Who benefits from platformization of agricultural finance in Kenya? (Gianluca Iazzolino and Laura Mann, Department of International Development, London School of Economics and Political Science)
    8. Islamic Finance and Financial Inclusion (Lena Rethel, Politics and International Studies, University of Warwick) 
    9. The Curious Case of M-Pesa’s Miraculous Poverty Reduction Powers (Milford Bateman, Juraj Dobrila University of Pula, Maren Duvendack, Centre for Development Impact, and Nicholas Loubere, Lund University).

The idea for this blog series came at a recent event at the Interdisciplinary Global Development Centre (IGDC) at the University of York, where scholars gathered from many institutions and disciplines to discuss various aspects of financial inclusion. The event was co-funded by the ESRC’s Impact Acceleration Account and the Young Scholars Initiative.

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