For a decade, financial inclusion levels around the world steadily rose as interest rates were low and economies grew, driving private capital to many emerging markets. This created a virtuous cycle which spurred wealth and job creation, and allowed people to plan for the future.
Now, the situation has reversed, with benchmark interest rates set by central banks at highs not seen in decades. Investors are backing off riskier investments, including in low-income countries. This means capital is drying up for a slew of projects, including financial inclusion.
International financial institutions now need to step in to fill in the gap left by the private sector — and work to draw investors back, according to John Fischer, the chief investment officer of Accion, a nonprofit that works on impact investing and microfinance lending, helping to promote financial inclusion and draw in private capital to promote development.