Five Latin American Countries among Top Ten with Best Environment for Financial Inclusion

Revamped Global Microscope 2014 offers an index on the enabling environment for access to finance

GUAYAQUIL, Ecuador – Peru, Colombia, Chile, Mexico and Bolivia have among the world’s ten most conducive conditions for expanding access to financial services for underserved populations, according to the report Global Microscope 2014: The Enabling Environment for Financial Inclusion, released today. In other regions, the Philippines, India, Pakistan, Cambodia, and Tanzania score the highest, completing the list of the top ten best countries for financial inclusion in 2014.

“Working with our partners, we completely revamped the Microscope to create a broader and more complete measure of countries’ enabling conditions for financial inclusion,” said MIF General Manager Nancy Lee. “In Latin America, countries are particularly strong on issues related to prudential regulation, agents and branches, and dispute resolution, but still need to make progress on regulation for both electronic payments and microinsurance.”

Global Microscope 2014: The Enabling Environment for Financial Inclusion was produced by the Economist Intelligence Unit (EIU), in collaboration with the Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group; CAF—Development Bank of Latin America; the Center for Financial Inclusion at Accion; and Citi Microfinance.

For the first time in its eight-year history, the report has expanded its focus beyond the microfinance realm, assessing the conditions and enabling factors that support the provision of a wide and high-quality array of financial services. The 2014 Global Microscope includes indicators such as government support for financial inclusion, regulation for credit and savings, credit reporting systems, and consumer protection measures. The report was launched today during the Inter-American Microenterprise Forum (Foromic), held this year in Guayaquil, Ecuador.

“Microfinance has evolved to expand low-income people’s access to financial services, and the Microscope is evolving as well,” said Senior MIF Specialist Sergio Navajas. “Financial institutions are offering a wider range of financial products and services, policymakers are taking a larger share of responsibility for expanding access to finance, and technological advances have led to new financial channels and platforms.”

Highlights in this year’s Global Microscope related to Latin America and the Caribbean include:

• Peru ranks first; Colombia second; the Philippines third; Chile fourth; Mexico (and India) fifth; and Bolivia seventh (tied with Pakistan). Overall, Latin America and the Caribbean and East and South Asia are tied for the highest overall regional score in financial inclusion, followed by Sub-Saharan Africa, Eastern Europe and Central Asia, and then the Middle East and North Africa.
• The Latin American and Caribbean region leads in three of the twelve Microscope indicators: prudential regulation (tied with Eastern Europe and Central Asia), regulation and supervision of branches and agents, and grievance redress and operation of dispute resolution.
• This year’s top scorer, Peru, and second-highest, Colombia, are both strong across the board in areas beyond microfinance, ranking in the top five in most of the indicators. Colombia and Peru are both global leaders in prudential regulation and rules for deposit-taking, and have good standards on regulation for microcredit.
• Bolivia and Brazil have the highest score globally in ease of agent operation. Both countries have regulations that allow for a wide range of institutions to serve as agents that can, as in the case of Brazil, carry out bill payments, open accounts, and execute cash-in and cash-out transactions, among others.
• Chile and Mexico are in the top ten this year due to efforts to adapt their relatively complex and sophisticated financial sectors to the needs of these countries’ low-income populations.