How financial inclusion uplifts the lives of women and children

Billions of people in the world don’t have access to financial services. At least 1.7 billion people, mostly women, can’t access essential financial services, while 200 million small and medium enterprises lack access to credit.

These are not just statistics – they are huge barriers to progress. When people don’t have access to loans, savings and insurance, it is harder for parents to provide healthy and nutritious food for their children. Businesses, especially those owned by women, can’t grow. Families can’t end the vicious cycle of poverty they are trapped within. Communities can’t thrive.

At the recent Market Systems Symposium in Cape Town, South Africa, experts worldwide gathered to tackle these challenges. For me, one thing that was eye-opening was how access to financial services is critical to achieving an equitable and resilient future. Without it, we can’t build inclusive market systems that serve all.

Why financial services matter

Let’s say you want to start a small business or a farm but do not have savings or access to loans – what would you do? Many people in low- and middle-income countries face this dilemma. Due to a lack of collateral security, most farmers do not qualify for bank loans. As a result, many people turn to informal money lenders who charge unusually high interest rates, which traps borrowers into an endless cycle of debt.

I saw the impact of this cycle when visiting a remote area in Honduras. There, coffee farmers, mostly women, rely on their harvest to survive, but often they are forced to borrow from loan sharks who lend at 5-6% compounding interest a month and demand the coffee harvest as a repayment guarantee.

At the end of the harvest period, these coffee farmers lose everything and return to the cycle of borrowing and indebtedness. One of the farmers told me she felt trapped in a form of slavery. To make the situation worse, each farming season, coffee growers are at the mercy of floods and landslides which threaten both their crops and their lives.

This is where microfinance steps in. In areas that banks cannot reach, VisionFund has created a lifeline for these coffee farmers. To support them, VisionFund Honduras provides affordable loans, which enable coffee farmers to support their businesses and children’s basic needs, such as healthy and nutritious food and education.

Addressing multiple problems

This change isn’t just happening in Honduras. In Africa, Asia and Latin America, VisionFund is combining access to financial services with solutions to address climate vulnerabilities, gender inequality, financial exclusion, child hunger and malnutrition, market exclusion and mindset transformation. It’s called Transforming Household Resilience in Vulnerable Environments, or simply THRIVE 2030. This model doesn’t just address one problem, it tackles the interconnected challenges that make it hard for people to escape poverty.

THRIVE 2030 offers innovative solutions, such as digitised savings groups, in partnership with Dream Start Labs. Through this, savings group members can use their phones to manage their financial records, achieve savings goals and build credit history. Another digital solution provided is the e-THRIVE app, which helps farmers track their income and assets and also makes it easier for microfinance institutions to design people-centred financial products and services.

These digital tools may sound technical, but their impact is profound. They make financial services accessible to people who were once unreachable and invisible to the system.

Financial inclusion is a social justice

Access to finance is about more than money and economic growth. It’s about unlocking the potential of those who have been ‘left behind’, especially women and their children.

When people have the resources to decide and invest in their futures, they create a ripple of change which benefits not just them but the whole community. They help feed and nourish children. They keep children in school. They expand their businesses and invest in better and climate-friendly farming techniques. The possibilities are endless.

This is why we at VisionFund are participating in World Vision’s ENOUGH campaign to end child hunger and malnutrition. We believe that access to financial services is an integral part of this, especially for children.

But to make this a reality, we need non-government organisations, governments and the private sector to work together to break the barriers which keep financial services out of reach for so many.

We need to ensure that everyone, no matter where they live, has the opportunity to take control of their lives and participate in, and benefit from, the economy. There is a need to invest in digital infrastructure, develop policies that promote inclusion and design financial products that meet the needs of the people who are most vulnerable to financial services exclusion.

It’s time to realise that financial inclusion is more than a development goal; it’s a moral imperative, and a social justice.

Angeline Munzara is VisionFund’s Director of Operations, Strategic Integration and Partnerships of the THRIVE 30 programme.