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LONDON (Thomson Reuters Foundation) – Global spending on financial inclusion increased by an estimated 12 percent in 2012, totaling $29 billion, according to a survey by a World Bank financial inclusion think tank.
The annual Funders Survey by the Consultative Group to Assist the Poor (CGAP), which analyses trends in international funding for financial inclusion, found that over 70 percent of the estimated spending came from public funding.
Financial inclusion, the delivery of financial services at affordable costs to disadvantaged and low-income parts of society, is considered an effective tool to help reduce poverty worldwide.
“Given the challenging economic environment during the past few years, it is encouraging to see that financial inclusion continues to be a priority for donors,” Ralitsa Rizvanolli, director of reporting solutions at The Microfinance Information Exchange (MIX) and co-author of the report, said in a statement.
Public funders increased their commitments by 16 percent between 2011 and 2012, the report said, attributing the growth in funding to an improved economic environment despite continued pressure on public resources.
Contributions from the private sector grew at 2 percent in the same period, the survey found.
Anything from opening a bank account to facilitate access to credit and encourage saving to small grants and micro-credit are ways of providing financial access to the poor.
For the first time in the survey’s history, Sub-Saharan Africa – the region with the highest poverty levels in the world - received more funding commitments than Latin America and the Caribbean in what analysts said is a shift in funders’ priorities. Eastern Europe, central and south Asia remain the most funded regions.
Most funding commitments were focused on building and strengthening the capacity of retail financial services providers, as highlighted by the survey's findings. Debt financing remained the preferred funding instrument with $12 billion committed in 2012.