News

Global economic divides revealed by Maplecroft’s Financial Inclusion Index

09/09/2009

The populations of Guyana, Sierra Leone, Yemen, Sudan and Malawi have the least accessible banking services, credit systems and insurance according to the Financial Inclusion Index (FII) released by the global risks intelligence firm, Maplecroft.

The index rates the lack of financial inclusion in 119 economies, measuring the extent to which households and firms have access to financial services by analysing use of formal financial intermediaries, eligibility for and affordability of financial services.

While in most developed economies it is relatively easy for individuals and business to acquire credit or use affordable banking services, for developing economies this is not yet the case. The performance of financial sectors is considerably lower in many African countries and low use of formal financial intermediaries, undeveloped credit systems and lack of competition among banks curtails development.

Financial Inclusion Index

Legend
Extreme risk
High risk
Medium risk
Low risk
No Data

Rank	Country	Rating
1	Guyana	Extreme
2	Sierra Leonne	Extreme
3	Yemen	Extreme
4	Sudan	Extreme
5	Malawi	Extreme

Rank	Country	Rating
6	Madagascar	Extreme
7	Cambodia	Extreme
8	Gambia	Extreme
9	Haiti	Extreme
10	Tanzania	High

© Maplecroft™

Africa hosts 17 of the 25 countries rated as extreme risk by the FII, whilst South Africa (76) and Mauritius (80) rank highest in the Sub- Saharan region and are considered medium risk.

Much of Central and South America achieve good levels of inclusion, but Mexico (57), El Salvador (56) and Peru (50) all rate high risk.

Economies with lack of financial inclusion may experience reduced economic growth, social mobility and persistent poverty. This is because the lack of access to financial services (from credit to banking and insurance services) may prevent the poor from taking advantage of lucrative investment opportunities. Microfinance – a long-envisaged solution that relieves poverty by fostering self-sufficiency – is whetting the appetite of private sector financial institutions, which are starting to compete to provide finance to the less well-off.

“Through the adoption of the Millennium Development Goals, the UN member states have committed to reduce by half the proportion of people living on less than US$1 a day. They have also committed to empower women, to combat HIV/AIDS and to develop a global partnership for development. A strategy of developing inclusive financial sectors offers potential on all these fronts.”

-Antonio Savoia, Economic Analyst at Maplecroft.

The world’s highest achievers on financial inclusion include four Western economies. Despite their vast territories, the USA (119) and Canada (118) lead the group of most inclusive economies, followed by Austria (117) and United Kingdom (116) from within the European Union. Italy (115), Germany (114), Ireland (113), France (111), the Netherlands (110) and Spain (109) all host inclusive financial sectors. Russia (112) is low risk and leads the emerging economies of India (81), Brazil (73) and China (67) who all rate medium risk.