Expanding Financial Inclusion

Sound, inclusive, and sustainable financial markets are essential to building shared prosperity and eradicating poverty. Yet, as many as 2.5 billion adults lack access to financial services such as payments, credit and savings accounts. Although the small-scale business sector is the engine of growth in many economies, it is estimated that over 200 million micro, small and medium enterprises have no access to the credit necessary to grow and prosper. 

In Sub-Saharan Africa, financial inclusion has increased rapidly in recent years due mainly to the development of digital financial services and innovative business models such as agent banking. More than 30 percent of adults had a bank account in 2014, up from 24 percent in 2011. While just 2 percent of adults worldwide have a mobile account, 12 percent in Sub-Saharan Africa have one. 

IFC helps advance financial inclusion through investments in the financial sector, advisory services to investment clients and other private sector clients, and through advisory services to stakeholders in financial infrastructure. 

Supply Chain Finance
IFC plays an active role promoting supply chain finance in Africa to close the funding gap for MSMEs in African value chains and drive sustainable economic development. There is an estimated financing gap of over $300 billion on the continent, of which about 20 percent is locked in value chains. IFC’s supply chain finance program integrates advisory, investment and knowledge. IFC offers risk sharing facilities for partner financial institutions, and technical advice to strengthen their supply chain finance capacity and grow portfolios. To support broader industry development, IFC also creates new knowledge and disseminates best practices on supply chain finance.

For financial institutions, supply chain finance can accelerate the growth of lending to corporate and MSME clients and improve the overall risk profile of portfolios. Automated structured supply chain finance programs enable financial institutions to better assess, measure, and manage the risks of lending to MSMEs, leveraging technology to provide transparency throughout the full value chain and visibility on the commercial and financial relationships of each party. In addition, credit and payment risk is decreased by leveraging the trade and payment relationship between larger anchors and their MSME suppliers and distributors.

Financial Institutions Group
IFC’s Financial Institutions Group invests in financial institutions and financial services providers across Sub-Saharan Africa to advance financial inclusion and increase access to finance for underserved markets. It also provides advisory services to clients to strengthen institutions and increase capacity to provide the relevant products and services to new markets. We work with approximately 160 financial intermediaries on the continent enabling them to play a constructive role in economic growth, reinforcing responsible finance, and introducing environmental and social standards in many clients for the first time.

Financial Infrastructure
The Finance & Markets Global Practice works with a range of public and private stakeholders to build and enhance the necessary financial infrastructure to advance financial inclusion, with programs focused on e.g. collateral registries, credit reporting frameworks, leasing, and index insurance. Solid financial infrastructure provides the necessary rails for the expansion of financial inclusion and inclusive economic growth. It makes it possible for low-income individuals and micro-entrepreneurs to access finance through the use of movable and reputational collateral, whilst ensuring a sound regulatory environment.