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Gates Foundation lays out its 3 steps to global financial inclusion

The Parliament approval is in line with the government’s larger plan to strengthen the Indian economy with total financial inclusion, and bank recapitalization is a major part of the initiative.
The Parliament approval is in line with the government’s larger plan to strengthen the Indian economy with total financial inclusion, and bank recapitalization is a major part of the initiative.

Microsoft founder Bill Gates has made helping the world’s poorest people get access to financial services a major part of his foundation’s efforts in recent years. The organization is making a major push in conjunction with the World Bank to lead that effort with three points Gates Foundation Executive Director Rodger Voorhies laid out on Friday.

The three-part strategy shows where the foundation plans to anchor its efforts over the next few years in order to advance the World Bank’s goal of universal financial access – or getting banking services to everyone on the planet – by 2020.

Voorhies told a gathering at the IMF/World Bank’s spring meeting that closing the gender gap in financial services, providing access to farmers and prodding governments that have lagged in infrastructure and policy would be the three elements the Bill and Melinda Gates Foundation would target for the next three years.

“In the case of financial inclusion, it’s not about building a parallel system for poor people, but it’s about building inclusive solution for everyone,” Voorhies said.

The World Bank reported Thursday that 515 million adults obtained a financial services account between 2014 and 2017. Many in the developing world are skipping traditional banking options and opting for mobile payment accounts, which has greatly increased the pace of financial inclusion and bank adoption.

World Bank figures show that today 3.8 billion people now have an account at a bank or mobile money provider, translating to 69% of the world’s adults. But that’s still a long way from the Bank’s stated goal of 100%.

When it comes to adding women to the equation – who in developing or emerging countries are 9% less represented in the number of people without access to banking services – Voorhies says there remains some “low-hanging fruit” that can boost the numbers. He estimated that 50 to 100 million women actually receive some kind of government private sector payment and nearly 75-80% of those have a mobile phone, making for a large and attentive group of potential new users who could gain from mobile money services.

“Gender plays a really important role because women suffer disproportionately the effects of poverty,” Voorhies said. “People rise and fall through poverty because of shocks; those shocks last longer, are more severe and they push women deeper into poverty. So we think including women in the economy and to make sure they have access to financial services as a way to buffer them against those shocks is absolutely essentially.”

The Gates Foundation announced in March a $170 million investment to empower women.

On agriculture, Voorhies urged that data has shown moving farmers from accepting only cash payments to using bank accounts would increase their household income by 15-20%, through greater savings, accessing better products and reduced costs associated with cash.

Getting governments onboard to remove restrictions – such as some that require a woman to have her husband sign off on an attempt to open an account – could prove the biggest challenge, as regulations and old-world attitudes can be tough to change. But the foundation says it is working with banks, insurance companies, and other providers to increase the range of financial services that people can access in digital form, something that will likely be popular with local leaders.

More from the IMF/World Bank meetings:

Dion Rabouin is a markets reporter for Yahoo Finance. Follow him on Twitter: @DionRabouin.

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