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Digital Finance Sources in Developing Countries

digital finance sourcesIt is no secret that cash is becoming more and more obsolete in developed nations. Venmo, Cash App, Square, PayPal, Zelle and Google Pay — none of these popular money transfer services require a physical transfer of cash. The onslaught of a global pandemic has only accelerated the shift to cashless transactions amid efforts to minimize physical contact. China is rapidly moving forward with central bank digital currency (CBDC) trial rollouts while the United States Federal Reserve is conducting ongoing research to potentially develop its own CBDC, a “Digital Dollar.” In lower-income nations, digital finance sources have the potential to transform economies.

Digital Finance in Developing Countries

In developed countries, the notion of an entirely cashless society is not far out of reach. However, the story is very different in developing nations. Many individuals are excluded from participating in even the most basic financial systems and instead rely primarily on physical cash. As of 2017, about 1.7 million adults globally were “unbanked.” This means they lacked any account with a financial institution or mobile money provider. This is nearly one-fourth of the world’s population.

Some of the most commonly cited barriers to account ownership include insufficient funds and inaccessible banking services. Virtually all unbanked adults live in developing economies, with women over-represented among this cohort. Digital finance services delivered via mobile phones, the internet or cards, function as a means of including these unbanked populations. The benefits of digital financial inclusion are prolific.

Digitizing Financial Inclusion

The strong link between financial inclusion and a wide array of global development goals is becoming increasingly clear. Significantly, seven of the 17 U.N. Sustainable Development Goals for 2030 explicitly mention financial inclusion as central to achieving these objectives.

Digital technologies offer financial services at lower costs, fostering opportunities for large-scale inclusion by enabling institutions to serve lower-income customers profitably. Such broadened financial access can sustainably transform emerging economies. A 2016 report by the McKinsey Global Institute estimated that digital finance alone could boost the annual GDP of all emerging economies by $3.7 trillion by 2025 due to productivity gains of businesses and governments.

Digital services include those such as M-PESA, a mobile phone-based transfer, payment and micro-financing service. Mobile money has lifted an estimated 196,000 Kenyan households out of extreme poverty from 2008 to 2016.

The Benefits of Digital Finance Sources

  • Increased Security: Digital footprints provide greater transparency and hold individuals and institutions accountable, reducing vulnerability to fraud and corruption.
  • Time and Cost Savings: Digital services are quicker and more efficient, lowering costs for both providers and consumers.
  • Financial Inclusion: The lower costs and convenience of mobile services make them accessible to more people, including those living in remote or rural areas.
  • Women’s Empowerment: Women with access to financial services like loans, savings accounts and mobile payments can achieve independence. It has been found that women with digital savings accounts also spend more on development endeavors like education.
  • Higher Tax Revenues: Digital finance has been proven to increase tax-paying compliance, and in turn, government revenues.

Given the wide-ranging benefits of digital finance sources, it is clear why many organizations are attempting to accelerate the transition from cash-based to digitized economies in the developing world. A growing number of groups such as the U.N.-based Better Than Cash Alliance are working to extend the reach of financial services by using digital technologies to go where physical banks cannot, bringing access to mobile money, savings accounts, credit and insurance to the under and unbanked. Digital finance is more than a trend of modern societies. It is a vital tool for achieving inclusive and sustainable development in emerging economies that are still far from being cashless.

– Margot Seidel
Photo: Flickr

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How Financial Inclusion Can Fight Poverty

Financial inclusion can fight povertyRoughly 1.7 billion adults around the world are unbanked and most unbanked adults live in developing countries. Unbanked people have limited political, economic and social power and influence. For roughly half of the world’s unbanked who come from the most impoverished 40% of households in their economies, inaccessible financial services compound problems of poverty. Financial inclusion can fight poverty as it opens doors for people to improve their lives. The pace of technological advancement around the world is bringing universal access to financial services closer to fruition.

The Global Unbanked

Unbanked people are not connected to any type of financial institution. The most commonly cited reasons for being unbanked are not having enough money, account expenses, the distance of financial services and insufficient documentation. Nearly half of the unbanked population falls into just seven economies. The highest numbers of unbanked people are in China and India. It can be clearly noted that banking and poverty are closely related.

“Financial tools for savings, insurance, payments and credit are a vital need for poor people, especially women, and can help families and whole communities lift themselves out of poverty,” says Melinda Gates. Without a bank account, people cannot sufficiently save and the cash is not well protected. The digital economy also has the benefit of keeping a clear record of financial activities, which banks can use when underwriting loans. Loans are among the financial tools that are essential to financial growth and stability.

The Gender Gap

Women make up the majority of the unbanked population in most developing countries. Women may face deepened or additional gender-based barriers to account ownership, rooted in financial institutions, governments or society.

Financial institutions often lack products and policies that are gender-inclusive. For instance, women may find it difficult to obtain the identification or the assets needed to open and maintain an account, sometimes due to government-enforced barriers. Additionally, banking-related expenses are also a burden for women looking to enter the formal economy. Finally, the responsibility of unpaid household labor, along with barriers to education, keep many women from earning enough money to access financial services.

The Societal Roles of Women

Women may earn sufficient money but could be part of society that does not allow for them to connect to a financial institution.

For instance, the tradition of men being the head of household and in control of the finances leaves some women with little to no influence in matters of money. Approximately one in 10 women in developing countries are not involved in spending decisions involving their own earnings.

Women’s Empowerment for Poverty Reduction

Women must be part of financial inclusion efforts as they are integral to fighting poverty. Bill Gates explains that women are most likely to be behind the decisions that benefit the family. More women-led businesses and reduced inequalities are ways that an emphasis on financial inclusion for women can further a nation’s development.

Financial Inclusion Using Fintech

An emerging industry is making strides in financial inclusion. Financial technology (fintech) can be described as technological innovations in the processes and products of financial services. Fintech offers solutions to many of the problems at the root of financial exclusion. A fundamental problem is the lack of time or money to travel to distant financial institutions. Fintech has given users the convenience of accessing their accounts and financial services on a mobile device.

Fintech development has been gaining momentum since the COVID-19 pandemic began. Touchless transactions and banking reduce the risk of transmitting COVID-19 and have led many to embrace digital payment, in business and in personal practice. Fintech leaders are proving that underserved communities can be reached through financial technologies. Significantly, this helps foster financial stability for the formerly excluded.

Female-led fintech, Oraan, is working toward financial equality in Pakistan because women make up 48% of the population but only 6.3% of the formal economy. Oraan developed a platform that allows for digital savings groups. Savings groups can help empower women and ensure financial equity as they are well-established financial tools.

The Road to Universal Access

Because financial inclusion can fight poverty, digitized financial services are an effective way to improve access and inclusion. Online banking communities are empowering individuals and opening up opportunities for economic growth. By facilitating conversations about finances, informing underserved groups on the best financial practices and ensuring digital finance infrastructure is accessible, the world can make greater strides toward financial inclusion.

– Payton Unger
Photo: Flickr

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5 Canadian Organizations for Indigenous Prosperity

Indigenous communities in Canada

The Canadian Constitution recognizes three Indigenous communities — First Nations, Métis, and Inuit. Here are five of the many Indigenous-led organizations in Canada, collectively working to create success and prosperity for Indigenous communities.

5 Canadian Organizations for Indigenous Prosperity

  1. First Nations Information Governance Centre – The First Nations Information Governance Centre (FNIGC) is working to achieve data sovereignty. With support from regional partners and a special mandate from the Assembly of First Nations’ Chiefs in Assembly (Resolution #48, December 2009), the FNIGC collects and uses data to “build culturally relevant portraits of the lives of First Nations people and the communities they live in.” Their motto, “our data, our stories, our future” reflects their vision of Indigenous stories being told by Indigenous people, for Indigenous people.
  2. Indspire – Indspire is using the gift of learning to help provide academic success and long-term prosperity with support through financial aid, scholarships/bursaries, awards, mentoring and physical resources.
  3. Aboriginal Financial Officers Association of Canada – Aboriginal Financial Officers Association of Canada (AFOA) is creating a community of Indigenous professionals by supporting successful self-determination through “improving the management skills of those responsible for the stewardship of Indigenous resources.” This includes aid in management, finance and governance.
  4. Reconciliation Canada – Reconciliation Canada facilitates the engagement of Indigenous and non-Indigenous people with meaningful conversations on reconciliation and the lived experiences of Indigenous people. They aim to inspire positive change and understanding. At present, the programs and initiatives offered by the charity are Reconciliation in Action: A National Engagement Strategy, Reconciliation Dialogue Workshops, interactive community outreach activities and Reconciliation Canada.
  5. First Nations Child and Family Caring Society – The Caring Society supports First Nations children, youth and families. The organization has been able to provide 250,000 services and products to Indigenous children by putting Indigenous children and families first.

These five organizations are just some of many who are working to support success and prosperity for Indigenous communities in Canada. Their work helps blaze a path for a brighter future for Indigenous people and the country alike.

– Jasmeen Bassi
Photo: Flickr

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Microfinancing Partners in Africa Shows Success

Microfinancing Partners in Africa
Microfinancing Partners in Africa is a nonprofit that provides microfinance opportunities to people in Sub-Saharan Africa. Its current programs vary in nature. Some examples include giving loans to subsistence farmers to purchase a cow, providing water filtration systems and educating students on microfinance.

Microfinance is an innovative approach to growing the economies of impoverished nations by giving its citizens access to small loans, usually under $200. It is a way for those in poverty to develop a stable income because they do not have access to traditional loans.

Historically, companies have used high-interest rates to take advantage of impoverished people seeking loans. However, agencies like Microfinancing Partners in Africa counter that practice. It offers options that often require recipients to take financial literacy courses and give them loans without requiring collateral. In this way, Microfinancing Partners in Africa works to actively combat poverty within Sub-Saharan Africa. Here are some of its success stories:

Jane Nalwadda

Jane Nalwadda is a woman from Uganda born with an obstetric fistula. Her condition left her unable to have a child with her husband who consequently left her after three years of marriage. The abandonment left Nalwadda without a reliable source of income. She fell into utter despair until a friend recommended the Kitovu hospital to her. There she would be eligible for a free fistula repair surgery program. Here is where Microfinancing Partners in Africa stepped in.

The nonprofit established the microfinance program The Piglet Project. The program helps women make money post-fistula repair by helping them raise and breed pigs, eventually creating a sustainable business. Jane was able to raise $29 with her first litter of pigs, which enabled her to build a better pen. She now has a steady means of making a living and can build a promising future.

Bujugo Village

Bujugo is a tiny village in Tunisia that has clean water accessibility problems. The village received seven water filters from Microfinancing Partners in Africa in 2019. Villagers then received training to use the filters and developed a time table to maximize the amount of village usage. Now, 49 families receive clean drinking water because of this microfinancing program.

Florence Mbaziira and Joseph Mbaziira

Florence and Joseph Mbaziira are an older couple from Uganda who works on a farm with mostly unproductive land. They tirelessly worked on their farm to support themselves and their four grandchildren. By 2014, the family was still living off a small income that came from selling the produce that they grew. Afterward, they turned to the Cow Project.

Microfinancing Partners in Africa created the Cow Project to support farmers through a “living loan.” The Mbaziiras took full advantage of the program and bought a cow for their land. Microfinancing Partners in Africa trained them to use the cow’s manure to increase crop yields. The couple now grows coffee, bananas and seasonal foods. Thanks to microfinancing, the Mbaziiras are able to support their family through their own farming business.

Saida Juma

Saida Juma is a divorced woman with two children living in Tanzania. Previously, she worked as a maid for $5 a month. However, her passions were elsewhere. She had the desire to start selling fish. Juma worked with Microfinancing Partners in Africa to obtain a microloan of $50. With the money, she was able to go into business for a local fisherman by selling fish. Her earnings are enough to support her children as well as send them to school. Her goal is for her children to be well-educated and take over her business when she retires. She also plans to take out another $100 loan soon to buy a fridge to store unsold fish.

All of these people were struggling to survive. Microfinancing Partners in Africa’s varied programs were able to help inspire and empower them to gain a livable income. Microfinancing Partners in Africa helped increase the quality of life for these people and many others, proving that microfinancing is an effective way of fighting poverty.

– Olivia Welsh
Photo: Flickr

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3 Countries Where Mobile Banking Fostered Financial Inclusion

Mobile BankingMobile banking is a clear step toward financial literacy and freedom. It allows users to access and manage accounts without needing physical access to a bank. It is a huge asset and accepted norm in countries like the United States, where it is used by over three-quarters of the population. By 2021, there will be an estimated 7 billion mobile banking users. But in countries where much of the population doesn’t have access to financial institutions, mobile banks presents an option that allows users to gain the financial freedom they wouldn’t otherwise have. Traditionally, without access to banks, there is no access to bank accounts. This makes it not only difficult to save and protect money but also nearly impossible to access loans. Below are three countries where going mobile improves financial inclusion.

Kenya

In 2011, around 80% of the Kenyan population didn’t have a bank account. This was revolutionized by the introduction of mobile banking, resulting in an incredible increase in financial accounts up to 75% in 2014. The percentage of Kenyan’s with a mobile account has since jumped to around 80% in 2019, with that number still growing. Though mobile banking is taking hold in many African countries, Kenya leads the charge of mobile adaption. This success is evident through the country’s recent economic growth, averaging 5.7% in 2019, one of the fastest-growing economies in Sub-Saharan Africa. Mobile banking has been succeeded so rapidly and fruitfully in Kenya due to its incredibly low cost and user ease. After the infrastructure is created, all that’s needed is an old flip phone and a banking SIM card. These products are relatively easy and inexpensive to get, even in countries with fewer resources. Mobile banking has allowed Kenyan’s to save money, send and receive it with ease, apply for loans, and has led to financial inclusion. Kenya acts as a clear leader in developmental growth through mobile banking.

India

In 2017, India had the second largest unbanked population, second only to China, with 190 million of its citizens left without access. In the same year, around 48% of India’s banks were inactive, only adding to the inaccessibility. Despite such a large number of citizens left without a bank account, over 50% of these individuals do have a mobile phone. With the proper infrastructure, mobile banking could revolutionize the way Indians send, receive and save their money. For low-income populations in India, most financial transactions occur in cash, a method that is not conducive to economic growth for poor families. With more universal access to banking, low-income populations could receive their income through direct deposit and pay their bills directly from their account, using their phone. This system promotes saving and also allows tracking of financial habits, producing an easier system for low-income individuals to amass credit and become eligible for loans. As the internet becomes increasingly accessible in India, mobile banking is expected to rise, and with it, financial inclusion.

Indonesia

In opposition to the other nations discussed, Indonesia has a much lower prevalence of mobile banking, but just as it has in Kenya and India, going mobile could revolutionize financial inclusion in Indonesia. Only about 20% of Indonesian’s currently have a bank account, but almost 40% of the population have mobile subscriptions, suggesting mobile banking has huge potential in the country. In 2020, an unexpected source has begun to jumpstart the exponential growth of mobile banking in Indonesia. In the wake of COVID-19, many physical banks are closed, and even those who previously had access are unable to interact with their finances. One bank, namely Bank Rayat Indonesia has even seen a 10% month to month increase in mobile banking, an unprecedented growth. Indonesia presents as a nearly perfect candidate for a “mobile revolution” given its high mobile penetration, low banking rate, and the recent inability of traditional banks to function. Despite the many challenges and tragedies COVID-19 has caused, it could be the driving force for a mobile revolution in Indonesia

— Jazmin Johnson

Photo: Flickr

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UPI in India: Changing Banking for Millions

UPI in India
In 2016, the Unified Payments Interface (UPI) system launched in India. Its goal was ambitious: a level playing field for small businesses and impoverished communities through re-imagined banking. In the midst of a global pandemic that has forced a socially distant lifestyle, UPI has never been more important nor more successful.

UPI’s Humble Beginnings

UPI’s primary purpose was to become an online platform that would eliminate bureaucratic and socioeconomic barriers to financial transactions. The goal was to allow anybody, from small Kickstarter businesses to multinational banks, to have the same access to banking capabilities.

UPI creates a standard set of rules for everybody on the platform—all Indian banks have access. Thus, smaller banks have equal opportunities to reach people as big ones. This goal is feasible due to UPI’s innovative techniques. With UPI, the party collecting money from an individual is decoupled from that individual’s bank account. This allows third-party apps such as Google Pay, PhonePe and Amazon Pay to collect and administer transactions without excess burden to the customer.

UPI makes things even more consumer-friendly by eliminating the need to enter long bank account and routing numbers for transfers. A virtual payment address, a simple username akin to an email address, replaces detailed information.

Finally, it is important to note that UPI serves a myriad of functions in the financial world. Simple peer-to-peer monetary transactions are carried out seamlessly. Advanced maneuvers are also handled with ease, including merging banking features from different banks, micro pensions and digital insurance.

UPI’s Growth

Since its launch, UPI has seen tremendous growth in both users and the number of transactions. Its user base is strong—recent numbers indicate over 100 million users. Its goal is to reach 500 million users by 2022. While this seems ambitious, early critics of the program did not expect UPI to gain the traction it has already.

The novel coronavirus impacted UPI both positively and negatively. During the worst of the lockdown, UPI’s transaction count decreased. People staying at home lowered demand for the platform’s services. However, since May 2020, UPI has boomed in both the number of transactions and the amount of money transferred. The number of transactions grew by 12% in July 2020, with 1.49 billion in the month of July 2020. UPI saw 822 million transactions in July 2019, indicating exponential growth during the last year. Similarly, the amount of money transferred in July 2020 was up to 2.9 trillion Indian Rupees, while July 2019 saw only 1.46 trillion Rupees.

As of July 2020, UPI reports services at 164 banks across India. With service 24 hours a day, seven days a week, UPI is lengthening its reach and its impact on the financial marketplace of India.

Looking to the Future

Looking forward, COVID-19 has provided a new opportunity for UPI and digital banking in general. India wants to decrease the amount of physical currency in circulation, and the pandemic has shown many people the virtues of online banking. For example, young adults wary of infecting their older parents have helped an older generation get on UPI and utilize everything it has to offer.

UPI’s recent boom focuses back to the platform’s original goal: creating an even playing field for all people, regardless of background or socioeconomic status. In 10 or 20 years, it would not be surprising to see all banking conducted virtually. Therefore, it is crucial to create a solid infrastructure that eliminates a system of preferential treatment based on wealth. UPI is helping to fight that fight.

– Evan Kuo
Photo: Flickr

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Mobile Money Reduces Poverty in Kenya

Kenyan mobile money system M-Pesa Reduces Poverty in Kenya
Experts argue that expanding access to financial systems and services are an indispensable component of reducing poverty. However, Kenya offers only limited access to banking services outside of central cities. Fixed-line telephones are largely unavailable, and minimum fees for banking services pose an impediment to the rural poor and can deter use. Due to these facts, many rural and poor Kenyan households traditionally lacked access to proper finance-management resources. However, mobile money transfer service, M-Pesa, now provides Kenyans with an alternative to traditional banking. Mobile money reduces poverty in Kenya by creating a simple and accessible resource for individuals and families to manage their finances. In under a decade, the expansion of M-Pesa’s simple SMS-based system changed household finance so drastically that nearly 200,000 Kenyans—around 2% of the population—were able to break out of poverty.

Establishing Financial Resilience

M-Pesa allows individuals to send and receive payments via text, as well as deposit and withdraw cash from M-Pesa agents stationed in villages. With 110,000 agents located throughout the country, M-Pesa helps Keynan households overcome the country’s lack of accessible financial services. Now, there are 40 times more M-Pesa agents stationed throughout Kenya than ATMs. Users can easily and inexpensively store savings by depositing cash into their mobile phones via M-Pesa agents. Increased access to savings helps Kenyan households weather unexpected economic hurdles. One study found that following a financial shock, the per-capita spending of households using M-Pesa was 12% higher than households that didn’t use M-Pesa. The discrepancy is likely due to the increased saving capabilities of M-Pesa users.

Long-Term Implications for Poverty in Kenya

An MIT study in 2016 examined the long-term effects of using M-Pesa’s service. They found that between the years 2008-2016, per capita consumption of goods increased by approximately 18.5%. The mean of the households in the study spent $2.50 per day, which is well above the $1.25 or even the $2.00 per day that constitutes extreme and general poverty. According to the study, M-Pesa directly helped as many as 194,000 Kenyan households escape poverty between 2008 and 2016.

Financial Independence for Women

Additionally, the MIT study found that M-Pesa helps Kenyan households run by women in particular. Between 2008 and 2016, the savings of women-headed households using M-Pesa grew by 22% compared to those who did not. Furthermore, nearly 185,000 Kenyan women using M-Pesa could switch from subsistence farming to more economically productive activities, such as sales or business. This economic freedom came regardless of whether their home had a female or male head. For households with two incomes, M-Pesa gives women the ability to store savings, allowing Kenyan women to gain newfound financial independence and opportunity for their own economic pursuits.

More Resources from M-Pesa

Since MIT’s 2016 study, M-Pesa has increased the number of Kenyans with access to formal financial services from 75% to 83% in 2019. Along with personal banking, M-Pesa helps Kenyan households with a wide array of financial services. These include taking out loans, actively managing savings and collaborating with local banks. With the introduction of M-Pesa, the number of bank accounts held by Kenyans grew from 14% in 2007 to 41% by 2019. Largely due to this mobile money service, Kenya is now ranked third in the continent in citizen access to financial service, behind only South Africa and Seychelles. Researchers hope that M-Pesa’s success in Kenya will encourage further study of how mobile money reduces poverty in other countries.

 – Alexandra Black
Photo: Flickr

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State of Income Inequality in South Korea

Income Inequality in South Korea
As South Korean film “Parasite” celebrates an Oscar win, the conversation about income inequality in the nation is appearing in public discourse again. The film’s portrayal of the income gap between South Korea’s poor and rich portrayed a bleak picture. Income inequality in South Korea is most apparent in the nation’s education system and affordable housing. South Korea recently elected President Moon Jae-in in 2017, whose platform promised to reduce the income gap in South Korea. As a result, citizens are more conscious about income inequality than they have ever been. What is the reality of income inequality in South Korea? What are some of the solutions experts suggest will alleviate this issue?

The Economy

The society and economy in South Korea function on a winner-takes-all mentality. Some studies indicate that South Korea has one of the fastest-growing income gaps. The nation’s P90/P10 ratio, which compares the income of those in the top 10 percent to the income of the remaining 90 percent, indicates an interesting trend. While the overall P90/P10 ratio shows that income inequality in South Korea has improved since 2011, the curve rose between 2015 and 2017. Further, in 2017 the Organisation for Economic Co-operation and Development (OECD) ranked South Korea 32nd based on the P90/P10 ratio.

The Education System

One can see an aspect of income inequality in South Korea in its education system. According to the OECD, nearly 70 percent of South Koreans, aged 25 to 34, completed some form of tertiary education. Comparatively, the United States’ tertiary education attainment rate of 49.4 percent makes it clear that South Korean culture puts a tremendous emphasis on college education. Ironically, this demand for higher education has significantly lessened the value of the degree. This decline of value in college degrees has resulted in students competing aggressively to gain acceptance to the three most prestigious universities in Seoul.

Subsequently, to assure children’s competence in the ever more competitive academic scene, many parents send students to “Hagwon,” or private after-school education institutions. In 2017, for example, reports suggested that 83 percent of 5-year-olds in South Korea were studying in these private institutions.

In addition, estimates determine that South Korean parents spend over $15 billion on private education annually. In only a single year, from 2016 to 2017, South Korean spending on private education rose 5.9 percent. Education in South Korea is becoming more burdensome for Korean parents who are not as financially well-off because, in the case of illegal private tutoring, one institution charged up to $8,000.

The Housing Market

Individuals who live in semi-basement homes also reflect income inequality in South Korea. As of 2015, over 360,000 households have a semi-basement floor-plan. The conditions in these semi-basement homes include lack of sunlight, the prevalence of critters and moldy smell due to homes’ high humidity. As a result, these residences became the stock image of housing for the poor. In Seoul, the country’s capital, the rising housing costs in South Korea are impacting these semi-basement homes.

According to the Korea Appraisal Board, the average apartment price in Seoul surpassed 500 million won (about $413,541), meaning that buyers need at least 300 million won (about $248,125) in order to even consider a purchase. This seemingly continuing rise in housing prices is making it harder for the average person to maintain responsibility for an apartment.

The Government’s Reaction

The government’s response to income inequality in South Korea takes the form of restructured tax policies. Since the 2017 election of President Moon Jae-in, the Korean government is working to expand the country’s elderly welfare and unemployment benefits. In this pursuit, the current administration imposed stiff tax hikes in 2017 which targeted leading corporate conglomerates, investors and high-income individuals. Estimates determine that this newly imposed tax plan will raise approximately $3.14 billion to support welfare programs. Many Koreans hope that this newly gained revenue will improve the circumstances for the ever-aging population of South Korea. In addition to increasing taxes for high-income South Koreans, the current administration has also increased the minimum wage.

However, there are concerns over how effective these new policies might be. For example, some reports suggest that the administration’s increase in minimum wage throughout the country might backfire. In response to the rising minimum wage, many small and medium-sized businesses simply cut back the hours that workers can to work.

Income inequality in South Korea is a complicated issue. The portrayal of families living in semi-basement homes paints a dismal picture of the middle to lower class. The ever-rising housing and education costs limit the accessibility of these resources for many South Koreans. The government’s effort to close the income gap in South Korea does not seem to be entirely effective either. However, it is significant that the South Korean government is taking active measures against income inequality. While there are plenty of issues to tackle, many South Korean citizens hope that the current administration’s efforts will result in a future with more equal opportunities and financial success.

– YongJin Yi
Photo: Flickr

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8 Facts About Education in the United Arab Emirates

Facts About Education in the United Arab Emirates

The United Arab Emirates started focusing on building a modern, mass-scale education system after its independence from Britain in 1971. In the past 50 years, the country revolutionized its education system aligning itself both with a modern and Western approach. Below are eight facts about education in the United Arab Emirates.

8 Facts About Education in the United Arab Emirates

  1. The UAE achieved universal education which was part of its ‘Education for All’ initiative, thus focusing on a new challenge for its UAE Vision 2021, that is, quality education. Its primary goal is to create a ‘first-rate education system,’ intended to enable students in the UAE to rank among the best in the world in the fields of mathematics, reading and science. To achieve this, the government proposes a transformation of the education system and intends to use Smart systems and devices as a basis for new teaching methods. In doing so, the UAE aligns its own national agenda to the United Nations’ 2030 Sustainable Development Goals, aiming to achieve quality education as its Target 4.
  2. The UAE now focuses on ways to develop the economy outside the hydrocarbons sector and sees education as the key to do so. The core mission of the Ministry of Education’s Strategic Plan 2017-2021 is to develop an education system adapted to generate a high-skilled and knowledge-based competitive economy. The founding father of the UAE, Sheikh Zayed Bin Sultan Al Nahyan, stated that the “greatest use that can be made of wealth is to invest it in creating generations of educated and trained people… [T]he prosperity and success of the people are measured by the standard of their education”.
  3. Literacy is a powerful tool against poverty, and the literacy rate in the UAE has increased from 54 percent among adult men and 31 percent among adult women in 1975 to almost 95 percent for both genders in 2019. Besides this considerable improvement, the government is now working on increasing the inclusivity of the education system to migrant workers too, in order to further close the wealth gap in the UAE.
  4. The education system in the UAE comprises both private and public education. Public education, from primary school through university, is free for all Emirati citizens and is entirely funded by the government. The primary language of instruction is Arabic and English is often taught as a secondary language. Public school enrollment is also accessible to non-UAE citizens, provided they pay a tuition fee, however, only 26 percent of the total enrolled students in the UAE are enrolled in public schools.
  5. Approximately 74 percent of students are enrolled in private schools, representing a huge part of the education system. This is mostly due to the transient nature of the expatriate population that opts for international schools. There is an increasing demand for private-sector education in the UAE, and according to the Boston Consulting Group, there is an expected growth in the education market from $4.4 billion in 2017 to over $7 billion by 2023.
  6. The UAE aims to improve considerably its tertiary education system in order to retain a higher number of Emirati citizens in enrolling in tertiary degrees, as well as attract students from abroad. The UAE has an extremely high outbound student mobility ratio, as 7.1 percent of UAE nationals enrolled in tertiary degrees abroad in 2016. Moreover, its inbound mobility ratio is one of the highest in the world, attaining 48.6 percent in 2016.
  7. The UAE emphasizes the importance of inclusiveness and quality education for all and has signed the Convention on the Rights of Persons with Disabilities and Optional Protocol in 2006. The government strongly supports people with disabilities/special needs and has included federal laws to protect the rights of people with special, guaranteeing equal education opportunities. In addition, the UAE aims to increase the inclusiveness of special needs children in mainstream educational environments, through various initiatives and as a part of its 2020 agenda.
  8. In 2019, the UAE allocated a $2.79 billion budget to Education, representing 17 percent of its total federal budget. A part of it will go towards the establishment of an Education Support Fund to incentivize partnerships and involvement with the private sector, in order to achieve its upcoming goals and priorities.

 

These eight facts about education in the United Arab Emirates illustrate the achievements and progress made in the country’s education system and highlights the ambitious aims and goals the UAE has for the future.

– Andrea Duleux
Photo: Flickr

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Developing Women’s Digital Financial Inclusion

women's digital financial inclusionAcross the globe, digital finance services are empowering vulnerable communities to make responsible investments, save for the future and gain access to credit. Between 2011 and 2014, seven hundred million people in the developing world gained access to these services, allowing them to participate in formal economic decisions for the first time. Although there is a long journey ahead for women’s digital financial inclusion in the developing world, much is being done to help close the gap.

Barriers and Challenges

Despite rapid growth, there is still a significant deficit in women’s digital financial inclusion. According to the World Bank, there is a 9 percent disparity in financial inclusion between men and women in the developing world. This number has remained the same since 2011. The disparity is in large part born out of several social, economic and cultural barriers that hinder women in the developing world from gaining access to these kinds of services. Lower rates of mobile phone ownership and low rates of digital literacy among women are arguably the two most prominent barriers for women in the developing world.

A 2018 report recorded that women in low to middle-income countries are 10 percent less likely to own a mobile phone than their male counterparts. That 10 percent translates to around 184 million women without access to a mobile device and, therefore, digital financing services. Without this crucial link to a formal economy, women are excluded from credit approval and economic and political decision-making. They have little to no control over how their personal funds are spent.

In addition, an overall lack of digital literacy causes an assortment of issues for women’s inclusion in financial matters. According to the Alliance for Financial Inclusion (AFI), 75 percent of survey respondents classified a lack of digital literacy as a major barrier in women’s digital financial inclusion. Without knowledge of these innovative services, women in rural and impoverished regions are forced to resort to less trustworthy forms of investment and informal savings. These often yield large negative returns for participants. This method of financing makes the identification of these women extremely difficult. This leads to low loan approval and higher interest rates for those women who are lucky enough to get approved.

Nonprofits Commit to Closing the Gender Gap

Despite various challenges, much is being done to assist women in developing countries on their path to financial stability and independence. In 2014, AFI signed the Denarau Action Plan, which lays out a commitment to halve the financial gender gap by 2021. AFI isn’t alone in their pursuits either. The Bill and Melinda Gates Foundation recently launched an institutional gender strategy that will commit $170 million to the economic empowerment of women. Consultive Group to Assist the Poor (CGAP) also recently joined forces with 200 different organizations in similar pursuits.

The issue of women’s digital financial inclusion is gaining momentum globally. The world is starting to recognize just how much of a positive impact financial gender-equality will have on the global economy. AFI found that global gender-equality could unlock $12 trillion in incremental GDP by 2025 with a specific focus on digital finance services. Although progress is slow, women in developing nations are beginning to reap the benefits of financial inclusion on a more personal scale.

Digital financial services give these women the opportunity to gain financial independence, create and expand their businesses, plan for their families’ futures and make empowered decisions about how their funds will be spent. The world is recognizing women’s digital financial inclusion as a top priority and it is bursting into action to provide these women with financial independence, stability and empowerment.

– Ashlyn Jensen
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