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Financial Inclusion

Discover how humanitarian cash and voucher assistance can promote financial inclusion. What does financial inclusion mean and what are the benefits?

21 February 2024

The image depicts an illustrated concept of financial inclusion. On the left side, there is a symbolic representation of a hand with wings, holding a cash bill with a dollar sign on it. This cash bill is being transferred, as indicated by a red arrow, to a person in a wheelchair who is using an ATM on the right side. The person at the ATM appears focused on the transaction, suggesting the idea of empowerment and accessibility in financial services for individuals with disabilities.

What does financial inclusion mean?

Financial inclusion is when everyone has access to financial products and services to meet their needs. This might include banking services, savings accounts, credit and insurance.

Financial inclusion is important for people affected by crisis. By having access to, and knowledge about, financial products and services people can better prepare for and recover from crises. Humanitarian Cash and Voucher Assistance (CVA), or more specifically, cash transfers delivered as part of CVA, can be a springboard to financial inclusion by bringing people who might have been excluded from financial services into the system.

How does CVA contribute to financial inclusion?

When CVA is designed to contribute to financial inclusion, it can:

  • Help people set up bank accounts, show people how to use mobile money for the first time, and save for the future.
  • Be effective at strengthening economic and social outcomes when paired with financial health and literacy training,
  • Benefit local financial structures and systems. Collaboration between humanitarian actors and financial service providers can lead to improved financial infrastructure, including establishing agent networks and increasing access points (e.g. mobile money).
  • Build resilience to shocks or protracted crises by helping people set up savings accounts or provide links to [savings and investment groups], as well as providing the means to start saving.

However, CVA does not necessarily help overcome systemic barriers that prevent access of certain groups, such as women or refugees, from attaining financial inclusion. For example, a study in Iraq found that people in conflict-affected areas were excluded from formal financial services because of a lack of trust in the available services, and the ID documentation required by financial institutions meant many people, including most women, were unable to open bank accounts.

CVA, and particularly the way it is delivered, can play one part of a holistic approach to improving financial inclusion. Positive changes to a country’s regulatory framework, financial infrastructure, and recipients’ trust in digital payments have been identified as the key areas through which to drive improved connections between CVA and financial inclusion.

The CALP Library includes guidance and resources on how financial inclusion might complement CVA programming, such as this useful guide from GSMA and Mercy Corps.

Examples of CVA improving financial inclusion

Here are some examples of how CVA has helped improve financial inclusion.

  • The Cash Consortium of Iraq’s delivered multipurpose cash assistance to people displaced by conflict in Iraq and found that by the addition of financial health and literacy training resulted in greater impacts in terms of food security, employment, intercommunity relationships, and perceptions of their economic and physical security.
  • A Kenya Red Cross cash transfer programme in Tana Delta provided cash via M-Pesa mobile money service to households affected by ethnic violence. The most vulnerable and affected were given a larger grant on the condition of developing business plans, undergoing training and participation in [village savings and loans institutions (VSLAs)].The project increased the recipients’ use of M-Pesa for savings (from 23% to 39%) and participation in VSLAs (from 13% to 45%). Recipients also felt the project had contributed to stronger savings and better household cash management. This was partly enabled by the established financial services sector and the high penetration of mobile money services even into remote areas with high levels of poverty.

CVA programmes can be designed to include a financial inclusion plans, especially where assessments show that there is a demand from recipients, and where there is capacity to support it.

Find out more about the Benefits of CVA and the Types of CVA on the Cash 101.