Questioning Three Fundamental Assumptions in Financial Inclusion

Financial inclusion has rapidly ascended global development policy agendas. Between 2 billion and 2.5 billion adults worldwide do not use formal financial services (World Bank 2015: v), which a multifaceted coalition of actors is committed to changing. For the World Bank (2014: xi), ‘financial inclusion represents a core topic, given its implications for reducing poverty and boosting shared prosperity’. Such views are widely echoed by other international bodies such as the United Nations organisations, Organisation for Economic Co-operation and Development (OECD) and the G20, and numerous governments around the world are implementing or developing financial inclusion strategies. This report investigates a number of assumptions which are commonly held by proponents of financial inclusion, and discusses the consequences of these assumptions. Its purpose is not to argue that the expansion of financial services is harmful or beneficial to poor and low-income households – although both possibilities should be taken into account – but rather to engage decision-makers and academic experts in a deeper reflection of the unquestioned suppositions or conjectures which might underlie the drive to extend financial services universally in developing countries.