Gilly Challinor, senior programme officer for financial inclusion at Jersey Overseas Aid, explains why financial inclusion is key to reducing poverty and boosting prosperity
JERSEY Overseas Aid is the Island’s official aid agency, funded by the Government of Jersey. Our mission is to translate the generosity, skills and compassion of Islanders into effective assistance for the world’s most vulnerable people.
JOA has four main funding streams that align with our overarching mission:
- Awarding multi-year development grants to development organisations for projects in six focal countries: Ethiopia, Malawi, Rwanda, Sierra Leone, Zambia and Nepal.
- Providing humanitarian relief to communities affected by natural disasters and conflict.
- Assisting Jersey charities which implement projects in developing countries.
- Offering volunteering opportunities and bursaries, as well as supporting Islanders who wish to pursue a career in the sector.
The first of these funding channels, multi-year development grants, is focused on three key themes which have been selected for their effectiveness in bringing lasting change and because they are areas in which Jersey has skills and knowledge that can be shared. Financial Inclusion is one of these themes, alongside Dairy for Development and Conservation Livelihoods.
Financial inclusion is a key enabler to reducing poverty and boosting prosperity. The Centre for Financial Inclusion defines it as: ‘A state in which all people who can use them have access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients. Financial services are delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, rural and other excluded populations.’
JOA recognises that financial inclusion is a vital enabler for many of the Sustainable Development Goals, including eliminating poverty, creating jobs, improving gender equality or good health, to name just a few. By facilitating access to formal financial services, such as banking, saving, credit and insurance, financial inclusion empowers the most marginalised and vulnerable people to build prosperity and be able to weather sudden losses in income due to unexpected climate disasters, ill health or loss of employment.
Globally, 1.4 billion people do not have access to the financial products and services that can help build businesses, pay for healthcare and education and manage sudden shocks. In JOA’s six target countries, account ownership ranges from 29% in Sierra Leone to 54% in Nepal, compared to 76% globally. Women, young people and those living in rural areas all continue to have lower access to financial services. Through our financial inclusion programming, we seek to respond to the needs and aspirations of the lowest-income, marginalised and vulnerable communities – women, young adults and smallholder farmers.
Through the financial inclusion thematic focus, JOA has the following impact goal:
Low-income, marginalised people are resilient to shocks, have improved financial health and develop sustainable livelihoods that can lead them out of poverty.
As a relatively small donor, we seek to be a force-multiplier and catalyst for sustainable impact at scale. For us, promoting financial inclusion means more than just providing monetary assistance. It means tackling the root causes of poverty, equipping individuals with the tools and knowledge to prosper and facilitating markets to better serve the poor and vulnerable.
This impact succeeds based on four key principles:
- Climate-intentional – We support projects that help people cope with the effects of climate change as an intended consequence of increased financial inclusion. Climate change disproportionally impacts the wellbeing and livelihoods of people living in poverty, primarily due to their minimal margins and limited access to resilience strategies that can help them avoid, absorb and adapt to climate disasters. This is where inclusive financial services play a pivotal role.
- Using local knowledge, voice and leadership – The full and active participation of local people and the recognition of their rights is of principal importance. From the initial needs assessment and project design through to delivery, it is critical that ownership is held within the target communities to ensure impact is felt beyond the life of the project.
- Action research and innovation – We recognise the need for innovation and action-research in financial inclusion programming. Digital, data and technological advances are proven to be enablers for financial inclusion (for example in the use of mobile money and biometric identification), presenting opportunities to reduce the cost and increase the quality and availability of financial services to marginalised groups.
- Systemic change – JOA encourages a market systems approach that tackles the root causes of financial exclusion, focusing on strengthening the overall financial ecosystem, promoting competition and enhancing regulatory frameworks. This approach aims to create an enabling environment where market actors, including financial service providers, can effectively meet the diverse needs of underserved individuals and enterprises, leading to long-term and inclusive economic growth.
Spearheading financial inclusion initiatives
In the ever-evolving landscape of financial services, organisations like CGAP and Toronto Leadership Centre have emerged as pivotal players, dedicated to fostering financial inclusion worldwide. Their collaborative efforts have not only enhanced access to financial services but have also played a crucial role in promoting economic development and poverty reduction. CGAP and Toronto Centre are two of our valued financial inclusion partners.
CGAP was established in 1995 as a global partnership of more than 30 leading development organisations that works to advance the lives of people living in poverty, especially women, through financial inclusion. Housed at the World Bank but with a separate governance and funding structure, CGAP serves as an independent platform to exchange knowledge and coordinate financial inclusion efforts. Using action-orientated research, CGAP works at the frontier of inclusive finance to test solutions, spark innovation, generate evidence and share insights. Its knowledge enables public and private stakeholders to scale solutions that help financial ecosystems contribute to a green, resilient and inclusive world for all.
Toronto Leadership Centre is a multilateral capacity building organisation founded in 1998 by the Government of Canada, World Bank Group, and the Schulich School of Business at York University. The International Monetary Fund became a member shortly after inception. In addition to CGAP, Toronto Centre works closely with standard setters such as International Organization of Securities Commissions, International Association of Insurance Supervisors, ISSB International Sustainability Standards Board and Network for Greening Financial Systems to build the regulatory and supervisory capacity necessary for sustainable and inclusive financial ecosystems globally. Their training programmes and technical assistance have equipped regulators with the knowledge and tools required to create stable, resilient and inclusive financial systems where consumers are safeguarded, can access credit and insurance and can safely make payments. In addition to JOA, Toronto Centre is supported by Global Affairs Canada, Swedish International Development Co-operation Agency and the IMF.
The impact of CGAP and Toronto Centre’s work can be seen across the globe. From East Africa’s mobile money revolution to south-east Asia’s fintech scene, their influence is far-reaching and impactful. Millions of previously unbanked individuals now have access to affordable, sustainable financial services, helping them invest and save for their future.
Sophie Sirtaine, chief executive of CGAP, and Babak Abbaszadeh, chief executive of Toronto Centre, will be in Jersey this week for an important dialogue with industry leaders and government officials. This event represents a seminal opportunity for Jersey to position itself as a conduit of capital into developing countries and a leading light in ESG investment. Their insights will not only inform Jersey’s strategic approach to international development but also enhance its reputation as a centre of excellence in sustainable and responsible finance.
More information on JOA and our work in financial inclusion is available from joa.je.
