Financial inclusion as a key for poverty reduction

December 13, 2021

Photo: UNDP, 2021

UNDP Guinea-Bissau is implementing comprehensive interventions to contribute to reduce poverty in the country through financial inclusion. The programme is aligned with two of the main impact areas of UNDP’s strategic offer in Africa, namely youth and women employment and empowerment and structural economic transformation, and will also address the issues of sustainable and innovative financing through its collaboration with UNCDF.

UNDP’s projects aim to increase equitable access to innovative low-cost financial services and solutions targeted at vulnerable groups in local communities, MSME sector, women, youth, and the informal sector. Financial literacy, mobile banking, hybrid digital and physical saving platforms, and specific Fintech digital solutions are some of the services proposed in the framework of the intervention that can help to reduce transactions costs and increase the inflow of remittances in a country where they represent 8.6% of GDP. This will result in hikes in consumption, savings and investments that will also have a positive impact on local economies and poverty levels.

Enhancing private sector capacity to cope with the crisis will improve resilience in a context marked by a financial system not adjusted to the national economic development priorities and an underdeveloped financial institution environment. Currently only 2.7 % of businesses in Guinea-Bissau have access to bank credit and/or microfinance. In order to improve accessibility to finance and financial services, UNDP has been appointed by the Bissau-Guinean government to support them, the BCEAO and key stakeholders in developing an integral national financial inclusion strategy. It is creating new platforms to enhance accessibility to microfinance, particularly for young and female entrepreneurs, and is also conducting needs and gaps assessment of the financial market as well as the policy and regulatory framework in Guinea-Bissau to pinpoint key challenges and barriers and recommend appropriate interventions and remedies to improve the financial ecosystem. The studies will also guide the development of the national financial inclusion strategy.

Photo: UNDP, 2021

Following the recommendations of the “Building forward better for businesses in Guinea-Bissau” study, a new digital platform dedicated for domestic and international transfer  has been created this year, with 300 kiosks still being installed throughout the country. A guarantee fund and new microfinance institutions will be created in 2022 to broaden access to inclusive finance and promote microfinance. The project “Limiting the impact of COVID-19. A 3x6 approach” is already working in that direction, promoting income-generating activities and sustainable livelihoods in a neighbourhood heavily affected by the pandemic in the capital city Bissau, to support faster recovery through the diversification of livelihoods opportunities and savings investment, especially in the blue economy and green sectors. The rehabilitation of the local school is ongoing with the work of local manpower and 300 people, 180 of which are women, have attended a training and they will receive a grant to start their businesses in the neighbourhood, which will be a reality in 2022.

Photo: UNDP, 2021

The identified key partners for the interventions are UNCDF, Innovations for Poverty Action (IPA), the Japanese government, ENGIM, the Central Bank, the Ministry of Economy and Planning, the Ministry of Finance, the Professional Association of Banks and Financial Institutions (APBEF-GB), the National Committee for Monitoring the Implementation of the National Strategy on Financial Inclusion (CNSMO), the Industrial Association of Guinea-Bissau (AIGB), and women cooperatives all across the country. The programme is scheduled to end in 2022.