Over the last two centuries, free markets and globalization have had a positive effect on aggregate economic growth, contributing to better living conditions and the reduction of extreme poverty across the world. Yet this is far from the only important socioeconomic change and moreover, the last two centuries have not been all about ‘free-market capitalism’.
Based on current projections, the world will not end poverty by 2030. Poverty will likely be lower by about 200 million people, but 438 million people, or 5 percent of the world’s population, will still live in extreme poverty. This is because there is a high likelihood that the pace of poverty reduction will slow down markedly in the coming years.
Financial inclusion is on the rise globally, accelerated by mobile phones and the internet, but gains have been uneven across countries. A new World Bank report on the use of financial services also finds that men remain more likely than women to have an account.
Globally, 69 percent of adults — 3.8 billion people — now have an account at a bank or mobile money provider, a crucial step in escaping poverty. This is up from 62 percent in 2014 and just 51 percent in 2011. From 2014 to 2017, 515 million adults obtained an account, and 1.2 billion have done so since 2011, according to the Global Findex database.
To ensure that people benefit from digital financial services requires a well-developed payments system, good physical infrastructure, appropriate regulations, and vigorous consumer protection safeguards. And whether digital or analog, financial services need to be tailored to the needs of disadvantaged groups such as women, less fortunate people, and first-time users of financial services, who may have low literacy and numeracy skills.
Financial inclusion allows people to save for family needs, borrow to support a business, or build a cushion against an emergency. Having access to financial services is a critical step towards reducing both poverty and inequality.
The microfinance movement is vital to the development agenda. The success of the movement in a country like Bangladesh, where there are a staggering 20 million micro-borrowers, has shown that microfinance can lift millions out of abject poverty.
In the context of financial inclusion, fintech holds boundless potential. Fintech players, who use software and digital platforms to deliver financial services to consumers, are helping in making financial products and services more attainable than ever.
Microcredit is an effective catalyst in alleviating poverty. People need access to capital to grow their informal and formal businesses that offer them a regular income and enable them to lead decent lives.
A platform that can help and deliver financial services to people is Pocket Money which is the world’s first global online marketplace to connect borrowers with lenders. Pocket Money Company based in Singapore http://pocketmoney.finance/ helps borrowers to connect with leading companies around the world, breaking the barriers that prevented them from borrowing money from a competitive global marketplace.
With loans of just hundreds or even tens of dollars, Pocket Money Company has been able to jump-start small businesses of their own and achieve a certain level of economic success. As such, more lenders — both public and private — have been willing to accept the risks of working with this stratum of borrowers.