Financial Inclusion is More than Just Credit

The CFI blog recently published a compelling narrative by Alex Counts about how microfinance institutions, savings groups and other informal organizations play a critical and very necessary role towards the goal of full financial inclusion. One of the really positive steps that the microfinance industry has taken in the past several years is beginning to understand that financial inclusion is much more than just opening accounts and offering credit products. Our team at Grassroots Capital thinks that non-financial, ‘microfinance plus’ services are an integral, essential piece of this equation. Counts discusses the gap between account openings and account usage and we think that non-financial services can play a large role in bridging this gap. Connections to services such as financial literacy classes, health services and healthcare provider linkages can provide incentives for clients to become active at an institution. Additionally, Counts stated that “Grameen Foundation is working hard to set up leading MFIs,” in other words, those institutions that are pursuing a more meaningful financial inclusion landscape. Grassroots is working through its “Impact First Initiative” to support such institutions that are pursuing this broader and more substantive version of financial inclusion, institutions which often – paradoxically — are overlooked for funding.

More thoughts on this topic were discussed in one of our previous blog posts that addressed regulatory threats in Latin America.