Financial Inclusion: opportunity or outcome?

Byline: Dr. Sajid Amin and Amna S. Sandhu

An efficient financial system is an enabling structure critical to sustainable solutions for a more inclusive, equal and peaceful society. This is because financial inclusion is not just an end goal in itself but means to many ends. Recently, the Finance Minister of Pakistan and the Governor of State Bank of Pakistan chaired a meeting to discuss the first formal Financial Inclusion Strategy for Pakistan. Financial access is primarily defined by an adult having a transaction account. This account acts as a gateway to other financial services like credit and insurance that enable employment, entrepreneurial activities, investment in education and health, manage risk and better deal with financial shocks.

Research has also established financial inclusion central for sustainable and inclusive socio-economic growth. It has emerged as an important tool that facilitates families with improved quality of day-to-day living, tackles poverty and inequality promoting overall social inclusion. However, the current debate in Pakistan limits financial inclusion to being an end goal rather than an instrument to achieve other sustainable development goals. This paper explores the relationship specific to financial inclusion and employment only.

State Bank of Pakistan has shown commitment to improve financial inclusion by formulating a strategy and supporting development of digital and mobile infrastructure to improve access and use. Financial sector in Pakistan is experiencing rapid growth and working jointly with telecoms towards the ambitious goal of financial inclusion for 50% of adult population till 2020.

Along with other gains, financial inclusion is influential to transform the structural nature of employment in both the formal and informal sectors of Pakistan. At present the unemployment rate for Pakistan is very high at 5.9%. Research has shown that well-integrated financial sector with access to financial products, services and relevant literacy can play an enabling role in job creation. Evidence-based findings globally have shown that increasing access to financial services especially for youth and women strengthens their ability to use these services to support their transition to employment and better livelihoods. For example, a survey of Afghani households between 2003-2007 found that microfinance created more than 500,000 jobs. Similarly, in Uganda 62% of women who received entrepreneurship training...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT