The COVID-19 Pandemic and the Importance of Financial Inclusion
Accounting & Finance / 15 September 2020
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Ricardo has been the tutor for the Certified Expert in Financial Inclusion Policy course at Frankfurt School for a number of years. He also works with the financial regulation institution in his home country Guatemala, where his responsibilities relate to international standards, prudential regulations and financial inclusion projects, among other regulatory topics. In such a capacity, he led the development and implementation of the country’s first National Financial Inclusion Strategy.

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According to official sources, the statistics show that as of mid-September 2020, there have been almost 30 million reported cases of COVID-19 worldwide, and it has taken the lives of approximately 950,000. The worst part is that the upward trend of those figures doesn’t seem to indicate signs of weakening. Along with health devastation globally, the social and daily life containment measures and constraints instituted by governments have also caused critical economic downturns by limiting businesses’ operations in an effort to mitigate the spread of the virus. Bottom line, all poverty indicators are peaking at a quite unprecedented pace and hence, besides human life itself, the main victim of this pandemic has been human welfare.

Financial Inclusion in the Wake of the Pandemic

Never in modern history has financial inclusion been more relevant. Never in the past have all means of granting access and fostering usage to quality financial services and all-around financial solutions for the people have had more meaning. Among such much-needed solutions there is a special mention to digital financial services, which in fact are quite compatible with the social distancing measures in place globally. Digital financial inclusion then is becoming increasingly important for every conscious financial regulator and policymaker in the world. For instance, regulatory responses to promote mobile money uptake in developing and emerging countries have tried to preserve financial inclusion for the base of the pyramid of the society by trying to keep afloat everyday mobile financial services transactions. Some of those measures include the introduction of fee waivers, flexibilisation of KYC and on-boarding requirements and increasing transaction & balance limits.

It is clear that with the ongoing pandemic threatening financial inclusion gains made over the past decade, not only financial regulators and policymakers but also industry players must develop and implement specific policy solutions to enhance financial stability and resilience through financial inclusion policies, and also to boost economic growth and to alleviate poverty. Addressing vulnerabilities unveiled by COVID-19 must include policy responses to prevent and mitigate as much as possible severe medium- and long-term damage.

Moving Forward through Education

The Certified Expert in Financial Inclusion Policy (CEFI) is structured in a deductive approach, starting with the discussion of the policymakers’ challenge to strike the right balance among three undeniable interrelated objectives: financial inclusion, financial integrity and financial stability. The program then moves on to review the topic of financial inclusion measurement which is critical not only to assess but also to fully understand all financial inclusion dimensions. The following unit goes into digital financial services, a topic that is considered as the most promising way to advance financial inclusion since technological innovations provide digital tools that allow for disruptive financial solutions which greatly benefit providers and users altogether, particularly making the provision of financial services more convenient and affordable. Consumer Empowerment and Market Conduct, a financial inclusion cornerstone, is discussed next since effective financial inclusion approaches can’t leave out the importance of taking care of consumers. MSMEs are critical for the economy and especially for the creation of jobs everywhere in the world, and therefore the program also includes two units that explore subjects closely related to financial inclusion for MSMEs, which are MSME Finance, and Microcredit, Microsavings and Microinsurance. Last, but definitely not least, the final unit wraps up all CEFI knowledge elements by studying National Financial Inclusion Strategies (NFIS), which are systematic roadmaps of actions that pursue the effective coordination between private and public sectors, among other stakeholders like international bodies, in order to achieve a positive impact on financial inclusion to a national level.

The COVID-19 pandemic has exacerbated poverty and financial exclusion levels for low-income households and small firms worldwide, so now is the time to respond with the proper tools. As a world-class professional online certification, CEFI can provide many of the answers needed to work steering a path towards a true inclusive and sustainable recovery.