The Elephant in the Room: Financial Inclusion for the Missing Middle

Abstract

Donor agencies, philanthropists, and social innovators are much enamored of financial inclusion these days. Their enthusiasm is matched by their expenditures: the Consultative Group to Assist the Poor (CGAP), in its 2013 Funders Survey, estimated that donors committed at least $29 billion to advance financial inclusion in 2012 alone.1 The Bill & Melinda Gates Foundation’s Financial Services for the Poor program spent nearly $90 million in 2013, almost exclusively to support digital payments, savings, and credit products for the poor in developing countries. Partly as a result of this largesse, electronic payment platforms and other technological innovations have sprung up across the landscape of the Global South. Virtually no discussion on digital financial inclusion can avoid mentioning Safaricom’s M-PESA, a mobile payments service that leveraged initial funding from the UK’s Department for International Development to achieve phenomenal success in Kenya and, to a lesser extent, a few neighboring countries. Many other less famous initiatives have also sought to expand financial inclusion using mobile technology, including payment platforms like Zoona in Zambia and products aimed at expanding access to microcredit, like InVenture and the SIMLab Credit Project. Giving poor people direct access to basic financial services is a laudable goal in itself, one that can generate important benefits. Evaluations of microfinance programs