World Bank Will Help Mexicans Achieve Greater Financial Inclusion

June 24, 2016Mexicoby EW News Desk Team

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In Mexico, less than half the population has a bank account (just 44%). In fact, 2.6% of the billion individuals around the world without bank accounts live in Mexico. Much of the population lacks any meaningful inclusion in the larger economy and is left out of the regulated financial system.

The World Bank fears this may be a huge drag on economic development for this Latin American nation, thus it has urged Mexico to reach for greater economic inclusion for its population.

This week, Mexico began a program called the National Financial Inclusion Strategy (NFIS). The NFIS seeks to improve the population’s access to regulated financial services, and will provide a roadmap to inclusion.

According to the World Bank, the NFIS should allow Mexico to amplify previously existing inclusionary efforts, potentially bringing an additional 29 million people into the regulated financial system.

The NFIS should go hand-in-hand with other programs designed to improve access to the legal system, enhance the effect of the regulatory environment on the economy, and hopefully bring an additional 35 million people into a system where they are no longer saving money or making payments outside of a financial institution.

A third initiative – digitizing government to person cash transfers (also known as G2P) – could affect another 6 million people who receive government payments or wages.

Mexico’s biggest challenge with enacting these programs will be achieving market penetration. In a country where so few people use or trust banks, extending financial access will be particularly difficult.

To assist with this, the World Bank has created several active projects aimed at strengthening the financial sector oversight, improving credit, and expanding inclusion. The first is a $100 million project aimed at improving Mexico’s credit and savings institutions while expanding their range of available services.

Another project, this one for $400 million, will focus on expanding access to credit businesses defined as “rural,” “micro,” or “small to medium.” This project is expected to reach some 41,000 businesses, of which about 60% should be female owned.

According to the World Bank, nations that create national financial inclusion policies, such as those underway and proposed in Mexico, tend to see can see enormous economic benefits.

Money invested in financial institutions can be reinvested by the banks, further stimulating growth, employment, and gross domestic product increases. Moreover, affirmative efforts, such as those taken by Mexico, can increase the rate of adoption several fold over nations that have no such policies, further improving these advances.

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