Financial Inclusion is a Key Enabler to Reducing Unemployment, Poverty and Enhancing Prosperity
Living in a world that is faced with so many, divers and pressing issues, it becomes a challenge for any leader to identify one issues as the most important one. With recently emerging issues such as civil war in Ethiopia which has claimed many lives and forced thousands to seek refuge in neighboring countries such as Sudan, it is difficult to make a judgment as to which is the most urgent challenge. There are many issues that may impact our global community positively for the next decades. Challenges that people in my home country South Africa are facing repeatedly are poverty and unemployment.
It came as sad news just when we started the year 2020, that the 1 Billion electronics factory in East London, my home town in the Eastern Cape, is facing liquidation with about 500 job losses. Also, in the same month Telkom was reported to cut up to 3000 jobs as well as Massmart retrench about 1500 employees within the country. In the second quarter of 2021, South Africa’s unemployment rate hit a new record high of 34.4%, making it the highest in the world, according to Bloomberg.
Global Leaders Need to Rethink Financial Inclusion
Precisely because the unemployment continues to rise, economic growth – coupled together with social inclusion – turns out to be one of the world’s most critical issues that requires attention – not only by G20, G7 and other global governance forums but also by businesses and civil societies around the globe. Our beloved country South Africa is faced with challenges of economic, financial and social inclusion, such as persistent inequality and unemployment. Economic growth and social inclusion are the issues that need to be on top of the agenda at the G20 summit.
Economic and Financial Inclusion
Economic inclusion looks at equality in the sense that all members of society should have the same opportunities to be informed and have access to economic opportunities to participate meaningfully in the economy. Advancing progress towards achieving full and productive employment as well as decent work for all – which includes young people, women, the elderly and persons with disabilities, but also rural communities – should be a key focus of the G20 summit. For the next decade, the G20 summit needs to look at enhancing economic opportunities and labor force participation by taking measures to remove barriers to training and employment, and supporting human capital development. Also promoting the internet and digital economy, entrepreneurship and start-ups, capitalizing on opportunities and overcoming challenges presented by the Fourth Industrial Revolution also known as 4IR, are important topics.
Additionally, financial inclusion implies that individuals and businesses have appropriate access to useful and affordable financial products and services that meet their needs, such as savings, credit and payments delivered in a responsible and sustainable way. This also means strengthening the capacity of financial institutions to expand access to banking, insurance and increase financial literacy.
As a global citizen having seen then need for financial literacy, I started the financial market education initiative to teach kids between the ages of 12-16 years about financial markets with the aim to close the gap on financial literacy as well as unemployment in 2019. Due to the Covid-19 pandemic, contact sessions were not allowed during the last month. I am currently working on getting internet sponsors so that these kids will be able to connect online. In order to promote financial inclusion for the next decade, the focus should be supporting financial education and services appropriate for the unserved and underserved financial consumers, more over those from rural areas and the agriculture sector, as means to promote sustainable development. This includes, accelerating financial infrastructure development, particularly digital infrastructure and legal frameworks to enable e-payment transactions, credit information sharing, secure transactions.
It is by no doubt that the world is going digital with the introduction of digital banking, thus increasing the need for digital infrastructure. There is therefore a great need in developing and implementing financial inclusion strategies, including capacity building, financial education and digital tools to improve financial literacy and human resource development in the financial sector and as a result strengthening social safety nets, improving access to social protection.
Looking at social inclusion, the G20 summit must take into consideration the improvement of participation in society (and political discourses) for people who are at risk of poverty and social exclusion. There should be a discussion on how to empower all members of society to take advantage of economic opportunities. For the next decade, the G20 summit needs to enhance the social empowerment of women, youth, the elderly, persons with disabilities, rural communities and other underrepresented, vulnerable groups. One possibility would be enabling access to digital platforms and quality social services as well as promoting social investment approaches. In my opinion, this is one of the basic requirements for social inclusion to be realized.
Having talked about economic growth, financial growth as well as social inclusion in detail, it can be concluded that for the next decade, G20 summit should focus on this critical issues. Especially as the world is moving towards the fourth industrial revolution (4IR), society is worried about inclusion – be it economically, financially or socially. Most people think they will be left behind because of the speed in which the new technologies are being introduced. Companies are retrenching almost every year, yet we have a growing queue of graduates waiting to be hired. Since this is not only a problem in South Africa, the next G20 summit may focus more on financial literacy as well as the issue of financial inclusion. It is time for economic growth and social inclusion before the technology pushes people further and further to the margins.
An article by Asanda Gebhuza, YGC 2020.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of the Global Solutions Initiative.
Asanda, 2020 Young Global Changer, is currently doing his Masters in Rural Development focusing on Land Administration at Fort Hare University, South Africa. As a global citizen, having seen the need for financial literacy, he started the financial market education initiative to teach kids between the ages of 12-16 years about financial markets, he aimed to close the gap on financial literacy as well as unemployment. He is the founder and a Director of an IT Consulting Company which he started in 2017 whilst he was at university.