Financial inclusion is a means to an end – the end being improved household and individual welfare and a positive impact on those activities that contribute to production and economic growth. The latter in turn can have a positive impact on further financial sector development.
Access to financial services is highlighted in many of the United Nations Sustainable Development Goals (SDGs). For example, ensuring that all men and women, particularly the poor and vulnerable, have equal rights to financial services has been set as one of the targets for the goal to end poverty in all its forms. This recognises that people’s financial lives are an important aspect of their broader lives. Financial services impact on people’s ability to grow, smooth and protect their income, to transact, and to build and protect their assets. By improving people’s financial lives, financial inclusion can contribute towards the achievement of broader public policy objectives and their livelihoods. Financial inclusion makes a strong contribution to the growth of the real economy by triggering higher productivity in agriculture and MSMEs, especially those owned and managed by women, and by mobilising household savings among smallholders and low income families. Improved financial services and products contribute towards eliminating the ‘missing middle’ and thus help reduce inequality.