Definition of financial inclusion
Financial inclusion is defined as the set of mechanisms implemented to fight against financial exclusion. These mechanisms make up what some now call “inclusive finance”. The role of financial institutions is fundamental to this process. Indeed, financial inclusion is not limited to access to an account, but to a more global mastery of financial tools.
The impact of financial inclusion on social exclusion
Financial inclusion is said to have an important social role that needs to be taken into account in financial policies. In order to know what the real role of financial inclusion is in Africa, it is necessary to relate it to the phenomenon of social exclusion, so that financial institutions understand that they can have a positive or negative impact on the society in which they find themselves, depending on the actions they carry out or undertake on a daily basis.
The focus is on how financial exclusion could be a factor in social exclusion in Africa.
We can define social exclusion as the social relegation of individuals who do not or no longer fit into the dominant model of a society. It is generally neither truly deliberate nor socially accepted, but constitutes a more or less brutal process of sometimes progressive rupture of social links.
In this study, we refer to financial exclusion for people who do not meet the eligibility criteria of financial institutions, in particular poor people and people with low income potential, as well as to the various barriers that hinder a part of the population from entering the financial system. Its link to social exclusion refocuses our discussion on a human rights-based financial system in Africa.
The harsh reality is that most of the world’s poorest people still lack access to sustainable financial services, whether it is savings, credit or insurance. The challenge is to remove the constraints that exclude the poorest from full participation in the financial sector. It becomes imperative to build inclusive financial sectors that help people improve their lives.
Financial inclusion as a development challenge for Africa
The reason for this global concern, in the face of widespread financial exclusion in developing countries, is simple: access to fully functioning financial systems can enable poor and low-income people, as well as micro and small enterprises, to significantly increase their economic and social power and better integrate into the economies of their respective countries.
The discussions focus exclusively on the issues and challenges of building inclusive financial sectors in Africa, a continent where more than half of the population lives in extreme poverty.
In general, microfinance institutions (MFIs) in Africa have not developed sustainably as fast as those in other parts of the world, and the number and scope of MFIs in Africa are still far below what is needed to provide an adequate supply of financial services to all.
Conclusion
The Financial Inclusion Project has reported some progress, although in some areas inclusion has been slow to take off. Many countries are on track to meet some of the inclusion targets, notably in Asian countries where rates have risen from 5% in 1990 to around 50% in 2010, but large areas are still far from achieving this, notably in Sub-Saharan Africa where almost 90% of the population is still excluded from the financial system.
Our voice is raised to express our key concern: do the financial inclusion strategies developed by African financial institutions pay sufficient attention to vulnerable populations such as women, youth, the poor and marginalized groups?
