According to data from the World Bank, about 1.4 billion adults globally remain unbanked. Many of these are low-income people in rural areas, especially women and youth and those with little or no financial literacy support.
Financial exclusion exacerbates rural poverty and erodes the capacity of individuals and households to withstand shocks.
Indeed, regions in Africa have been impacted by major climate, political and health-related shocks which not only restrain efforts for wider financial inclusion but also threaten the economic and social development gains achieved in reducing poverty among rural communities.
However, there is a silver lining. Over the last decade, financial inclusion has continued to gain traction and supports many of the United Nations’ Sustainable Development Goals (SDGs).
It is a critical component in reducing poverty and improving the standard of living of millions of people left out of financial systems.
Account ownership in developing economies, for example, grew from 63 percent to 71 percent between 2017 and 2021, driven by services like mobile money.
In addition, a renewed focus on leveraging innovation in the private sector such as those using digital technology to deliver financial products and services, or credit risk models for smallholder farmers has led to more for-profit businesses supporting the provision of relevant financial products and services for low-income people.
In the last eight years, the Mastercard Foundation Fund for Rural Prosperity has been working with 38 such businesses (referred to as Fund participants) and through their work, has reached over 5.3 million people in 15 Sub-Saharan countries in Africa, who now use innovative credit, savings and transaction-based products and services.
This has contributed towards the growth in the number of people actively participating in the continent’s financial system, and ultimately changing livelihoods.
The $50 million Challenge Fund focusing on financial inclusion was established in 2015 by the Mastercard Foundation and has supported businesses working across a wide range of sectors such as agriculture, renewable energy, finance, technology and logistics.
