Urban equity, informality, and financial inclusion

December 2014 — Urban equity, financial inclusion, and the alleviation or elimination of urban poverty all demand that the gaps between formal and informal communities and economies be bridged. To address these needs, initiatives have sprung up in cities throughout the developing world that aim to put financial power and momentum into the hands of poor and disenfranchised residents of informal urban communities, while strengthening the power of cities to put inclusive principles into practice. Some target financial literacy and the ability to navigate the formal economy; some use micro-finance loans and other financial instruments to empower those outside the conventional definition of creditworthiness; others use mobile money and other technologies to bridge access gaps.

For the month of December, URB.im will explore initiatives in all of these areas in cities and communities across the Global South. Follow the conversation and contribute in the comments below.

Jozi@Work: Co-production between citizen and city

Johannesburg, 24 December 2014 — There is a strong and enduring correlation in Johannesburg between un/under-employment and a wide range of sobering poverty indicators. Opening up opportunities for the former is therefore crucial to alleviating the latter. In a context of increasing returns to larger firms, narrow labor absorption into larger industries, low structural skills levels, and shrinking micro sector employment, the City of Johannesburg has introduced an innovative job support and creation initiative called Jozi@Work, designed to incorporate citizens into the service delivery process of the state. See more.

چگونه سیاست مالی غلط یک طرح را به ضد خودش تبدیل می¬کند.

Tehran, 23 December 2014 — مالکیت مسکن در ایران یک دهه پس از انقلاب سال 1357 به تدریج از دسترس اقشار پایین جامعه خارج شد. در سالهای اخیر این محرومیت در حال افزایش است. مسکن مهر یکی از ایده های دولت برای کم کردن اثرات بدمسکنی در میان این اقشار است. اما سیاست های مالی غلط مربوط به مسکن مهر، تنها 5 سال پس از آغاز این طرح، مسئله مسکن را بدتر کرد. ادامه مطلب.

Empoderando a las PyMES informales a través de educación financiera

Mexico D.F., 22 diciembre 2014 — Pequeñas y medianas empresas formales e informales en la Ciudad de México crean miles de nuevos puestos de trabajo cada año. Sin embargo, el 90% de las empresas informales mueren dentro de los primeros dos años, debido principalmente a la exclusión financiera. Ante esta situación, BBVA Bancomer lanzó en 2011 una estrategia con el fin de capacitar a los líderes empresariales con el objetivo de hacer que se inserten a los servicios financieros. Leer más.

Menuju keuangan inklusif melalui pendidikan keuangan

Surabaya, 19 Desember 2014 — Survey Bank Indonesia menunjukkan bahwa hanya sekitar 20 persen masyarakat memiliki akses ke lembaga keuangan formal. Jumlah yang sangat rendah dibanding dengan Negara tetangga seperti Thailand dan Malaysia (77 persen dan 65 persen). Untuk itu kebijakan keuangan inklusif diterapkan Bank Indonesia melalui salah satu pilarnya: Pendidikan keuangan yang menyasar masyarakat miskin dan generasi muda untuk lebih mengenal jasa layanan perbankan. Baca lebih lanjut.

Expanding skills-training access through microloans

Mumbai, 18 December 2014 — India has the largest youth population in the world — a hundred million more young people than China. To harness the energy and potential of this up-and-coming workforce, India has invested heavily in skills training. However, in order to truly make these trainings available to a highly socio-economically diverse population, better access to educational-style loans for skills training is essential. See more.

Combatiendo la pobreza y la desigualdad de género mediante la inclusión financiera

Cali, 17 diciembre 2014 — Las mujeres sin recursos se ven afectadas de forma desproporcionada por el problema de la exclusión financiera. Por esta razón, si combatimos este problema combatimos de forma simultánea la pobreza y la desigualdad de género. En 1980 un grupo de mujeres de Cali creo una fundación que hoy se ha transformado en banco pero que retiene su función de ayuda a las mujeres emprendedoras. Leer más.

Linking social protection for financial equity in Tanzania

Dar es Salaam, 16 December 2014 — Financial equity is not simply access. Financial equity means that individuals are presented with a security net enabling the protection of financial assets through family, structural, or environmental events. Focusing on national programmes in Dar es Salaam, which provide financial safety as a solution, this article argues that financial equity requires reducing risk for assets. See more.

সামাজিক শ্রেণীর মধ্যকার যোগসূত্রঃ বিকাশ ওয়ালেট

Dhaka, 15 December 2014 — ব্যাংকিং এ সামাজিক ব্যবধান মুছে ফেলার একটি যুগান্তকারী উপায় উদ্ভাবন করেছে মোবাইল ব্যাংকিং। বিকাশ লিমিটেড নগরবাসীকে সস্তা ও সুবিধাজনক উপায়ে অর্থ সঞ্চয়, স্থানান্তর এবং ক্রয় সেবা দিয়ে থাকে। ঢাকাসহ বাংলাদেশের অন্য সব গ্রাম, শহর, ও নগর এই ক্রমবর্ধমান আর্থিক সেবা থেকে উপকৃত হচ্ছে। See more.

Multiple financial solutions for multidimensional poverty

Ho Chi Minh City, 12 December 2014 — In 2013, Vietnam considered changing its metrics and policies for poverty reduction from a one-dimensional approach to a multidimensional approach, and Ho Chi Minh City was chosen to experiment with this new approach. Besides drawing a clearer picture of urban poverty for HCMC, the multidimensional poverty index has become a guidebook for the city's multiple financial organizations. See more.

Microfinance and architecture for the poor?

Cape Town, 11 December 2014 — Set against the controversies of the global microfinance industry, the South African context of high household debt, rising cost of living, and high unemployment suggests that South Africans need better ways to build and maximize savings more than they need a global microfinance model leading them to incur further debt. As microfinance in South Africa looks set to continue its growth, it must consider how it might grow differently, with success defined not by high loan repayment rates but by whether loans actually transform lives. See more.

Menjadi operator telepon untuk menambah modal

Jakarta, 10 Desember 2014 — Masih sedikit jumlah non-lembaga keuangan di Indonesia yang memiliki perhatian terhadap perkembangan usaha mikro perkotaan dan kebanyakan hanya menyediakan modal. Namun PT Ruma hadir dengan bukan hanya modal tapi juga memberikan pelatihan bagi agen-agennya. Dapatkah perusahaan sosial seperti PT Ruma menjadi jawaban bagi pedagang kecil yang tidak tergapai oleh lembaga keuangan formal? Baca lebih lanjut.

Mobile money for financial inclusion?

Lilongwe, 9 December 2014 — Recently-launched mobile money services promote themselves as offering secure and affordable financial transactions for Malawians, of whom only around a quarter are formally banked. Yet among Lilongwe's unbanked poor, uptake has been limited due shortcomings in the services offered. See more.

Reaching India's poorest five percent

Bangalore, 8 December 2014 — Microfinance has seen great success across the developing world, but urban India's poorest continually remain forgotten. Bangalore-based Parinaam is one of the few organizations helping the ultra-poor gain access to financial services. Their model is an unusual break from the standard female-head-focused lending. See more.

Banking the unbanked and the underbanked

Lagos, 5 December 2014 — Lagos' residents become unbanked due to lack of information or access and onerous time requirements. Inclusion efforts have led to the launch of various initiatives; this month, we focus on a groundbreaking one in Lagos: a banking system using nontraditional tools and methods to extend services to the urban poor in slums and inaccessible areas of the city. See more.

Innovation in financial services and financial literacy training for Nairobi residents

Nairobi, 4 December 2014 — An individual's propensity to save is directly linked to their ability to begin the ascent out of poverty. Increased savings and micro-credit opportunities, alongside financial literacy training, are key potential growth opportunities for Kenya. In Nairobi a number of groups are developing innovative capacity development approaches to increase effective utilization of available financial products. See more.

تسهيلات التمويل الإسكاني: تجربة بنك ناصر الاجتماعي في مصر

Cairo, 3 December 2014 — أدوات تمويل المساكن، والتي تعرف بقروض الإسكان، طالما شكلت ضغوطا ومثلت مشكلة كبيرة بالنسبة للمستفيدين والمؤسسات الائتمانية على حد سواء. لكن بنك ناصر الاجتماعي في مصر سهل تلك العملية بينما وضع "العملاء الفقراء" نصب عينيه. اقرأ المزيد هنا

Financial Inclusion = Participation + Access

Delhi, 2 December 2014 — There are many pieces to the financial inclusion puzzle. This article discusses financial education and relevant awareness as one of the critical pieces. Case studies from Delhi including Sanchayan and SEWA pinpoint enabling participation through literacy as the roadmap that goes beyond access to ensure optimized use of financial tools. See more.

Creación de nuevas instituciones para fomentar la inclusión financiera

Bogotá, 1 diciembre 2014 — Colombia está rezagada frente a los países con mayor inclusión financiera de la región. Para remediar esta situación se acaba de aprobar una ley que permite la creación de entidades financieras que evitan las principales barreras a la bancarización: costes elevados, dificultades burocráticas para la apertura de cuentas, y desconfianza en las instituciones tradicionales. Leer más.


Join the discussion on urban equity, informality, and financial inclusion in the comments below.

You can also join our November discussion on land policy, planning, and urban inclusion.

Join the discussion for this month's topic!


María Fernanda Carvallo's picture

En México al igual que en las otras ciudades, surgen cada vez más instrumentos de inclusión financiera que están acompañados de estrategias que enseñan a la población a manejar sus finanzas personales. A partir de la aprobación de la reforma fiscal del año pasado, la población tiene mayor posibilidad de obtener créditos a tasas más accesibles. Uno de los grandes retos es la implementación de estrategias de acceso fácil a la población como se hace en otras ciudades a través de numerosas compañías de telefonía móvil que vinculan la banca personal. En este sentido la población tendría mayor acceso y conocimiento de sus finanzas personales.

Shaima Abulhaj's picture

Priyanka, it is a great article. Actually introducing financial sustainability using an educational approach as you mentioned on the experience of some organizations including Sanchayan Society is really very interesting and inspiring. Education has been always proved to be a very effective way and influential method to create a change and an impact for the whole socity. I wonder, how such organizations as Sanchayan Society found the youth's encouragement and join percentage? Is it easy to get such unprivileged youth interested in those educational initiatives to make the awareness and education as one of their priorities? Also, how the government encourages those NGOs who are working to promote financial "awareness"?
Great article!!!

Priyanka Jain's picture

Thanks for your kind comment, Shaima. Sanchayan has active tie ups with private and government schools as well as NGOs. The "FUN" Financial Literacy Program comprises of games, role plays, stories and videos to make the workshop highly interactive and participative. Its subdivided into two programs. Paid workshops for students and teachers of private schools. The focus is to not cover details but ignite young minds to learn and increase their knowledge. The revenue generated from these workshops is used to provide free workshops at government schools. For those who are not part of formal education system, they reach through orphanages, NGOs and institutions across the country. In both cases, the workshops are longer than one for private schools with focus on the basics of savings, budgeting, banking etc. I am not sure of their current status, but they have been supported by the Project Financial Literacy (Reserve Bank of India) and Securities and Exchange Board of India as well as Organization for Economic Cooperation and Development.

We have renamed our verticals and the children & youth program is called MoneySmart. If you would like more info then pls write to us. Thanks for covering our work.

The woes of the poor on the financial inclusion matrix is more than words can describe. In the city space of Accra, the poor is the least considered in the service of banking. Banking services are mostly geared towards the elites of the city with captions such as Royal Banking, Special current account and Premium bankers. All the demands of these services are and will never be met by the poor. Where on earth can the poor get collateral to support loan application to have access to credit to expand business? Who in the bank can escort the poor beyond the counter to be attended to when all he/she has is a little savings which is too insignificant to be noticed. Banks in the city space must come out with strategies to support the growth and productivity of the marginalised poor in the city.

Carlin Carr's picture

It's interesting to read the reasons Nora presents for mobile banking not being taken up as widely as expected in Lilongwe. It's an obvious stretch to link up mobile payments to fast food chains and other formal institutions that are outside the purview of the urban poor. It does seem to me that there is great potential for mobile banking for this demographic, particularly for the urban-rural transactions, but others usages seem like they could be trickier. For example, Hilary mentions a program in Nairobi where quick, small loans can be granted simply through mobiles. The mobile loans, however, skip key steps that Priyanka and others mention about the need for financial literacy and awareness--perhaps more important than efficiency of a mobile loan. Microfinance succeeded in such a big way because there was not only a group commitment but hands-on weekly check-ins from loan officers who would be sure the recipients were on track. For mobile banking to truly realize its potential among the urban poor, there needs to be a balance between the convenience of the technology and the hands-on services required to ensure that the loans are accessed and used with thoughtful planning.

Olatawura Ladipo-Ajayi's picture

I couldn't agree more Carlin, financial and technology literacy needs to be an important aspect of programs targeting financial inclusion especially as most efforts often involve some technological innovation/breakthrough. I found it really interesting that majority of the articles touched on mobile money, and some will argue that by the very virtue of technology being involved, the programs are exclusive as know-how, access and affordability of that technology is required. These programs cannot go on without proper education.

Education about financial and technology literacy is also important as it seems it would be key in solving access to credit issues, mobile technology is not leaping in the south, and as service providers are now required to register users (at least in Nigeria), I imagine a form of database linked to cellular registration will inform mobile loan applications in the future. Programs like the mobile investment in Nairobi give hope to effective use of mobile technology, provided all other aspects such as access and know-how are considered.

Hilaryzainab's picture

Hey Carlin, I agree with you completely that increased financial literacy training is critical to individuals seeking micro-credit loans and access to non-traditional credit markets. I think that for some however, access to cooperative credit schemes have declined in importance due to a number of factors. In Kenya for example, the difficulty for highly impoverished urban households may be that such schemes, where they do exist, still crowd out members for numerous reason and/or may not be readily accessible within an individuals economic geography. In such cases, the micro lending mobile scheme developed, such as the one I covered in my article developed by M-Pesa, is one mechanism for short-term emergency lending that still has built in protocol for repayment and savings. Though the threshold appears low, 20Ksh/day, for many individuals this is still a significant saving investment/decision. It is important that the real need for education not be overshadowed by the realities of lack of access due to increased demand for these trainings and realities faced by individuals living and operating across informal settlements. Understanding that opportunity and access continue to be constrained for many provides a justification for innovative mobile lending, especially when built on years of successful experiences with mobile money platforms that the Kenyan market has truly been at the forefront of developing. For some as well the economic cost of attending regular meetings may not be realistic, which opens up the possibility for eLearning opportunities which might be better suited towards a highly mobile market such as Kenya while not as ideal for another setting. Critical to obtaining sustainable human development is adequate accounting for the realities of local context and unique barriers faced by different population segments.

Nora Lindstrom's picture

The articles this month highlight how complex the issue of finance is. In my article I mention how, at a minimum, mobile money in Malawi can give the poor an opportunity to store money safely (on their mobile money account vs under their mattress), Tariq talks about the importance to promote savings over loans in South Africa, Hilary discusses new ways of accessing loans on your phone in Kenya, Priyanka talks about financial literacy skills, and Wura describes an expansion of formal financial services to the poor. What seems to be missing to me are examples of instutitions/organisations doing all of the above. Sure, piecemeal and step-by-step approaches may bring us closer to financial inclusion of the urban poor, but there is a need for all aspects of finance to be a reached in order for the poor to truly benefit from financial inclusion. After all, that’s what financial inclusion really means, to be able to save, borrow, invest, keep your funds securely and make secure transactions. So far, it seems we're achieving either one or the other.

Hilaryzainab's picture

Jorge, I really enjoyed your article this week on the importance of considering and including gender in financial institutions development of targeted poverty alleviation programming. It is especially encouraging to read of organizations such as the Banco WWB that began as relatively radical approaches over three decades ago, to address development and economic security for low-income women and have not only sustained over the years but continued to achieve impactful programming and outcomes for women. As the link between gender and development continues to be highlighted by multi-lateral institutions, development agencies and community-based organizations it is important that successful initiatives continue to be highlighted in forums like this one. Thanks for this article!

widya anggraini's picture

Hi Carlin, i have similar question as aura has raised and i think you presented an interesting case where the government acknowledged the youth and decided to capacitate them. I am also wondering the political process behind this policy and maybe further question is about what to do with youth that have been provided with skills? are they directly working or what kind of policy follows? because indonesia has similar problem in demographic surplus and there has been little effort to empower youth

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