Almost Three Billion People Seek Access to Basic Financial Services

Contacts:
In Washington: Jeanette Thomas (202)473 8869
jthomas1@worldbank.org

WASHINGTON, January 24, 2006 — Access to financial services can help poor and low-income clients increase and stabilize their incomes, build assets, and invest in their own future. A new book, Access for All: Building Inclusive Financial Systems published by CGAP and the World Bank, offers a fresh vision for the future. Drawing on lessons from 10 years of research, the book describes how microfinance can help poor people to become part of the financial mainstream.

"Building financial systems that work for the poor is the next great frontier of development and finance,” said Mark Malloch Brown, Chief of Staff to the United Nations Secretary-General. “This book gives some thoughtful and provocative ideas on how this can be achieved."

Access for All describes where the microfinance field finds itself in 2006, as well as the opportunities and challenges ahead. The book examines all levels of the financial system and answers key questions about clients of microfinance—Who are they? What financial services do they want? What is the impact of financial services on their lives? It shows what works, what does not work, and where more learning is needed. By focusing on promising models and practices, it offers a vision of how to achieve financial systems that will ultimately offer access for all.

Drawing on experience from Asian, African, and Latin American countries, Access for All demonstrates that when international and domestic providers, governments, and financial service providers commit themselves to the vision of inclusive financial systems, the results are impressive.

For example in Cambodia, less than 15 years ago the environment for microfinance was hostile as a result of long term civil unrest. Today, Cambodia has 17 banks (foreign and domestic, private and government-owned), including a globally recognized microfinance bank, the Association of Cambodian Local Economic Development Agencies (ACLEDA) Bank. What began as small, isolated donor-dependent initiatives has evolved into a financial system of profitable, regulated institutions serving nearly 400,000 poor clients.

In Kenya, Equity Bank is opening 18,000 accounts of poor people each month. K-Rep bank, which began as a small nongovernmental organization, is today a fully converted commercial bank—among the fastest growing in the country. India’s ICICI Bank, through partnerships with microfinance institutions and nongovernmental organizations, has added 1.2 million microfinance clients in the past three years. In Mexico, Compartamos has grown from a donor-supported institution to a licensed financial institution serving more than 400,000 clients and regularly tapping the local bond markets.

“These are exciting times for microfinance,” said CGAP CEO and World Bank Director, Elizabeth Littlefield. “Microfinance institutions are becoming more and more professional. And at the same time commercial banks are reaching out to a much broader clientiele which includes the poor. Today we know a lot about how and why microfinance works. But we are still faced with some big challenges if we are to reach the billions of people who could make use of financial services to improve their lives.”

Access for All addresses the hotly-debated topics in microfinance today – the role of donors and governments; how to reach poorer clients, and those living in more remote rural regions; and the potential for new technology to reduce costs, allowing commercial businesses to serve poor clients. With only about one sixth of those who could use basic financial services currently having access, the book shows how to bridge that gap and reach the majority of the world’s population – the poor.