Only 32pc of country’s adults have access to financial services

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FE Report
Only 32 per cent of the country's adult population have access to the financial services which is inadequate compared to the situation in some other developing countries, a World Bank policy research report showed.
In the South-Asian region, the report showed, 59 per cent of the adult population in Sri Lanka, 48 per cent in India and 20 per cent in Nepal have access to the financial services.
The Washington-based global lender recently released the policy research report titled "Finance for All: Policies and Pitfalls in Expanding Access". The report presents case-study analyses of policies and interventions and draws analyses from extensive data.
The WB report said that 50 to 80 per cent of adults in many developing countries have inadequate access to financial services.
"Failure to provide more households and small and medium enterprises with the financial services they need acts as a brake on development," it stated.
While noting the microfinance industry's progress in delivering credit to the poor people, the report calls for a broader financial strategy that delivers services to all excluded people and firms.
Inclusive financial systems ultimately benefit the poorest people and the smallest firms the most, by creating more jobs, raising incomes, and generating more opportunities for small businesses, the report noted.
"Poor people and small firms, especially those in rural areas or in the informal sector, face many barriers to financial access - distance from services, the inability to produce formal documents when needed, and prohibitive costs," the report said citing the example of Cameroon where $700 is required, more than GDP per capita, to open a checking account.
According to the report, among small firms in developing countries, only 15 per cent of new investments are financed externally, compared with 30 per cent among larger firms. Without financial access, small and new firms face obstacles to both entry and prospective growth.
The policy report of the global lender suggested that governments in the developing countries should strengthen institutions and adopt new technologies to bring down transaction costs and they should also encourage competition, including the entry of foreign banks and provide the right regulatory incentives.
In contrast, direct interventions by governments, such as through credit subsidies or government-owned financial institutions, can be counter-productive, reducing incentives for the private sector to deliver services to the poor, the report stated.
According to the report, the government policies in the financial sector should focus on prioritising institutional reforms, promoting cost-effective technologies, facilitating competition and stability and reaching the poorest.
Drawing some other barriers to getting the financial services, the report opined, requirement of various documents is another key obstacle of access to the financial services by the adult people.