September 25, 2024

The term "financial inclusion" has been shaping development programs in countries of the global South for some time now. The agenda, which has been promoted by influential development organizations such as the World Bank and the International Monetary Fund (IMF) since the early 2000s, sees the solution to the problem of poverty primarily in the financial markets. People affected by poverty are to become part of the "formal" (i.e. Western) economic system through improved access to affordable and secure financial services such as loans, savings accounts or insurance, which in turn promises its participants economic development, prosperity and emancipation. At the same time, new players have also come onto the scene. Not only conventional development organizations are supposed to bring "progress" to people, but also financial institutions or private companies that use innovative business models to successfully integrate neglected sections of the population into entrepreneurial value creation. Poverty reduction has thus been established as an attractive new asset class and given a profit motive.

In this edition of "Sharing knowledge", we would like to present two examples of variants of these approaches to financial inclusion in more detail: Microfinance (microcredit and microinsurance) and mobile payment systems (so-called "mobile money"). Both are examples of instruments that are promoted by large Western companies, development organizations and NGOs in countries of the global South and are aimed at integrating people affected by poverty into the global financial system.

This paper focuses on the following research questions:

• Where do such ideas and approaches come from?
• What principles are they based on?
• How should they be assessed from a social sustainability perspective? 

Depending on how you look at it, these approaches can make an enormous contribution to securing livelihoods, quality of life and empowering people and companies. On the other hand, the problems of a market-oriented approach to development, which is based on the integration of marginalized people into the global financial system and follows a profit logic, must also be highlighted. The discussion of these examples is also important for another reason. As a sustainable asset manager, Forma Futura is committed to constantly reviewing and developing our range of products and services in order to assume social and ecological responsibility in the interests of our clients. Some companies in our investment universe are already pursuing financial inclusion approaches in their sustainability strategies. For this reason alone, we need to ask ourselves the question: How and in what places is the money we invest already having an impact? What impact do we want it to have in the future?

2024 Forma Futura Sharing knowledge Financial inclusion