Financial Inclusion

On 24 May 2010, after only a few weeks in office, the Conservative–Liberal Democrat Coalition government announced that, as part of a package of measures designed to cut public spending by £6.2 billion, the Child Trust Fund (CTF) would be abolished, saving the government just over £500 million a year. As a result, children born in the UK in 2011 will no longer receive £250 at birth and a further £250 when they reach the age of seven (£500 for poorer families and disabled children).

To highlight the value of savings on economic well-being, and in honor of World Savings Day, the Consultative Group to Assist the Poor (CGAP) recently released a paper entitled, “Advancing Savings Services: Resource Guide for Funders.” The intent of the report is to encourage funders to incorporate savings into their strategies for alleviating poverty, and to introduce them to the issues that must be considered when doing so. The paper covers:

By Tanaya Kilara, CGAP

Originally posted on www.youthsave.org

I’m not really equipped to interpret the communiques released by the Vatican. But it seems there was a pronouncement this week that has the Pope weighing in on financial reform.  Specifically, the Pontifical Council for Justice and Peace supports the idea of a Financial Transaction Tax (FTT) as a means to better promote social justice and solidarity.This undoubtedly has the Pope’s blessing, so to speak, and is significant in its recognition that social justice is a priority, revenue has to come from some place, and high finance should increase its contributions to the public coffers worldwide.

A small tax on financial trading could raise significant revenue to fund for many cash strapped governments. It is an idea that has been discussed in the US context, but for some reasons Wall Street and the big banks have not come around. But perhaps it is indicative of a growing sea change that the idea is gaining prominent and diverse supporters. Not only has it been spotted on Occupy Wall Street protest signs but German Chancellor Angela Merkel and former British prime minister Gordon Brown have also endorsed the idea. And this weekend, Bill Gates is on his way to the G20 summit to argue that it is one way that governments can generate new resources to support international development efforts.

There’s certainly an upside to having this policy implemented internationally, because if it’s implemented everywhere no one will be disadvantaged. While Gates may see this policy as a means to fund specific initiatives (see his Washington Post op-ed), what makes this idea attractive to me is not the earmark for specific activities but the new revenue that could be generated relatively painlessly. In the context of rising inequality and a widening racial wealth gap, calling it the “Robin Hood” tax does not hurt either; its redistributive potential is an added bonus.

While most of our work at New America focuses on policy solutions to improve financial inclusion in the US, the actual legwork of connecting unbanked and underbanked households to the financial mainstream is done in communities rather than in Congress.  City leaders in San Francisco, with the help of Senior Policy Fellow Anne Stuhldreher, recognized this back in 2005 and launched a partnership where government agencies, financial institutions and non-profit community organizations worked together to link unbanked households with consumer-friendly banking services.  The initiative

“It’s always important to save. You never know when you’re going to need something and not have money (…) for when your children get sick or something like that (…) it’s a good way to buy things, or to start a business.”

Yaneth Flores Vargas is just one of the success stories to emerge from the pilot savings program of Familia JUNTOS, the focus of a recent workshop – “Conditional Cash Transfer Programs and Financial Inclusion: An Encounter in Progress” – that the New America Foundation’s Global Savings and Social Protection initiative attended in Peru.

By Corrinne Ngurukie, Save the Children

Originally posted on www.youthsave.org

This post originally appeared on the SPINNAKER Network.

Two weeks ago, President Obama announced Congress’s approval of three long-awaited trade deals with Colombia, Panama, and South Korea. They have been both hailed and rejected by the usual suspects, but the debate has centered largely on employment and labor issues. However, there’s also something to say about what these deals mean for financial inclusion, specifically with regards to mobilizing savings for the poor.

USAID and the Assets and Market Access Collaborative Research Support Program (AMA CRSP) recently invited the New America Foundation’s Global Assets Project to present its research on how to improve the impact and reach of social protection programs around the world. The event, entitled “Building Resilience and Assets for Food Security: Evidence and Implications for Feed the Future,” was attended by experts from the World Bank, United Nations and Oxfam, in addition to leading universities across the country.

After two decades, the asset building field has grown up and learned some really important lessons along the way.  The field started with a focus on promoting access to long-term assets for major investments like housing and post-secondary education.  Since then, we’ve come to recognize that short-term, discretionary, liquid savings – aka emergency and precautionary savings -- is just as, if not even more important, for lower-income families.  As Ray Boshara describes in “7 Surprising Findin