Access to finance provides stability and progress to families, businesses, and the economy as a whole. Families and business need affordable access to a safe, secure and reliable financial infrastructure, the same way that they need access to the physical infrastructure of transport, power, utilities, and telecommunications. At the height of the financial crisis the G20 Leaders recognized this need for financial infrastructure by setting in motion the G20’s commitment to financial inclusion at the Pittsburgh Summit.
Financial inclusion supports balanced economic growth, as well as giving the poor and small businesses better tools to manage their financial needs. Read about the progress that has been made since the G20 Piitsburgh Summit in 2009.
Pittsburgh Summit (November 2009): G20 Leaders commit to improving access to financial services for the poor. The Financial Inclusion Experts Group (FIEG) is launched with two subgroups: Access through Innovation (ATI) – to develop principles for promoting financial inclusion (in particular through promising innovations) - and SME Finance. The SME Finance Challenge, an effort to elicit proposals from the private sector for the use of public resources to catalyze private sector capital for SMEs, is also announced.
Toronto Summit (June 2010): The SME Finance Challenge is launched and G20 Leaders, along with the Multilateral Development Banks, commit to mobilize the resources to implement the Challenge winners. Canada publicly commits $20 million for the Challenge. The Principles for Innovative Financial Inclusion, developed by the ATI subgroup, are endorsed.
SME Finance Challenge (September 2010): The Challenge, run by Ashoka’s Changemakers with funding from the Rockefeller Foundation, receives 356 entries by its close in early September 2010. Fourteen winners are chosen by a panel of 5 independent and 3 G20 judges. Canada leads the coordination of the SME Finance Innovation Trust Fund to mobilize the resources to implement the winning proposals.
Seoul Summit (November 2010): The SME Finance Challenge winners are announced along with commitments to the SME Finance Framework of $528m (additional pledges were made subsequently). G20 Leaders endorsed a Financial Inclusion Action Plan and called for the creation of the Global Partnership for Financial Inclusion (GPFI) as the mechanism to execute it. An SME finance stocktaking report was delivered to the Leaders. G20 Leaders made development one of their priorities and adopted financial inclusion as one of the nine pillars of the Development Working Group’s overall agenda. They endorse a Financial inclusion Action Plan and call for the creation of the Global Partnership for Financial Inclusion (GPFI) as the enlarged working group to execute it. An SME Finance Stock Taking Report is delivered as well.
Global Partnership for Financial Inclusion (December 2010): The first meeting of the GPFI is held in Seoul in December 2010 and three subgroups are created. The co-chairs are the G20 troika (host of the last, the current and the next Summit), as well as the co-chairs of the three subgroups. The subgroups are: Principles for Innovative Financial Inclusion and Standard Setting Bodies (SSBs) Engagement (Korea and Indonesia co-chairs), SME Finance (U.S., Germany, UK, and Turkey co-chairs), and Financial Inclusion Data and Measurement (Mexico, France, and South Africa co-chairs). The GPFI issued its initial consolidated 2-year work plan for (a living document, updated periodically) in March.
Cannes Summit (November 2011): The GPFI delivered its planned outputs for 2011 to the G20 Leaders. Outputs included a consolidated report of the three subgroups, a policy framework for SME Finance, a financial inclusion data framework, launch of an SME Finance knowledge sharing platform, and announcement of the SME Finance Compact – a partnership with LDCs committed to implementing the SME finance policy framework. The Sub-Group on SME Finance provided research reports on Agriculture SME Finance and Women Entrepreneurs Access to Finance. The Sub-Group on Principles and SSB Engagement provided a progress report on its work, including a white paper and country case studies on the SSBs and financial inclusion prepared on the GPFI’s behalf by CGAP and AFI respectively. The Sub-Group on Data and Measurement produced a progress report with consolidated findings and recommendations based on the financial inclusion data and stocktaking analysis, the key performance indicators and the initial approaches to country-level target setting and framed the piloting program with a subset of countries to test the initial target setting framework in coordination with the other relevant GPFI work streams.
January 2012: The World Bank joins GPFI as an implementing partner.
SME Finance Forum (April 2012): As part of the GPFI framework, the SME Finance Forum is officially launched. The Forum is a collaborative knowledge sharing platform for data, research and best practices for small and medium enterprise (SME) finance. It offers tools for policy makers and funders to share knowledge and build networks to encourage innovation and promote scaling-up of successful SME finance models. The Forum is managed by International Finance Corporation (IFC).
Los Cabos Summit (June 2012): In their Summit Declaration, the G20 Leaders welcomed the progress made by GPFI on implementing the recommendations set out in its 2011 report and called on the GPFI to continue working towards their full implementation. The G20 Leaders endorsed the Basic Set of Financial Inclusion Indicators developed by the GPFI, designed to improve the quantity and quality of measurement and data on financial inclusion. The G20 Leaders welcomed the GPFI conference on standard setting bodies and financial inclusion to be held on October 29 and 30 in Basel, Switzerland, as a means of helping to create an enabling regulatory environment and called on the GPFI to report progress on this conference to the G20 Finance Ministers and Central Bank Governors in November. Recognizing the key role that SMEs play in economic development, and poverty reduction, the G20 Leaders also welcomed the launch of the SME Finance Compact. The “G20 Financial Inclusion Peer Learning Program” was formalized in Los Cabos: under the program, likeminded G20 and non-G20 countries commit to create national programs mandating actions to promote financial inclusion. The GPFI will guide these efforts of sharing knowledge, experiences, challenges and solutions. In addition, the G20 Leaders supported ongoing efforts to create an additional GPFI subgroup with a focus on consumer protection and financial literacy issues to complement the already existing three subgroups.