According to a new report from CGAP (Consultative Group to Assist the Poor) and the U.K.’s Department for International Development (DFID) entitled, ‘Banking the Poor via G2P Payments,’ existing government payment programs could bring many more poor people into the formal financial services system. The report indicates that governments worldwide currently make regular payments to at least 170 million poor people. Taking advantage of these existing payment programs would provide people with a safe way to save money, make electronic person-to-person payments and obtain microcredit.
In addition to being more convenient and affordable for the recipients, governments could also benefit by delivering a grant payment electronically instead of in cash. “In the case of a hypothetical social transfer program paying monthly USD 40 grants to 1 million recipients, the report finds that such a switch would save a government USD 12.6 million over five years.”
“Although it won’t be appropriate for all government payment programs to incorporate access to financial services, in many countries there is a good case for governments to experiment with this concept,” says co-author Ms Sarah Rotman.
By: Stefanie Rubin, Research Assistant
About CGAP (Consultative Group to Assist the Poor):
Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center dedicated to providing financial access for the world’s poor. CGAP is supported by over thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.
Additional Resources:
Source Article: CGAP Media Center: “Financial Inclusion: Using Existing Payment Programs to Reach Scale,” http://www.cgap.org/p/site/c/template.rc/1.26.12633/
MicroCapital Universe: CGAP (Consultative Group to Assist the Poor): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29
CGAP (Consultative Group to Assist the Poor): http://www.cgap.org/
UK Department for International Development (DFID): http://www.dfid.gov.uk/
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