RESTRICTED  
  
S/FIN/W/88/Add.1  
 
13 June 2016  
(16-3234)  Page: 1/18  
Committee on Trade in Financial Services   
 
 FINANCIAL INCLUSION AND THE GATS 
- BARRIERS TO FINANCIAL INCLUS ION AND TRADE IN SERVICES - 
 
NOTE BY THE SECRETARIAT1 
Addendum 
This Note has been prepared at the request of the Committee on Trade in Financial Services, to 
serve as background information for discussions on the trade-related aspects of financial inclusion. 
 
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1  INTRODUCTION 
1.1.  This Addendum has been prepared at the request of Members, in order to further discuss 
barriers to financial inclusion (an issue referred to in paragraph 4.1 of the previous Note 
(S/FIN/W/88)). In keeping with the Committee's fo cus, and in light of Members' comments, the 
Note discusses the barriers to financial inclusion from a trade perspective, exploring not only the 
nature of those barriers but also the role that tr ade – and trade policy – in financial services plays 
in overcoming such barriers. Before discussing the barriers to financial inclusion, it is worth recalling that, as explained in Section 2 of the previous Note, financial inclusion is a complex and multi-dimensional issue, and as such it has acquired a multitude of meanings. A distinction is 
usually drawn between access to and use of financ ial services, the former being primarily about 
the supply of services, whereas the latter is basi cally determined by demand (World Bank, 2014). 
However, although it is possible to distinguish between access to and use of financial services, 
both concepts are closely related and policy makers  tend to adopt a broad definition of financial 
inclusion that focuses on its various dimensions, notably access to financial services, use of financial services, and quality of financial services. In keeping with the rest of the Note, a broad 
approach to financial inclusion is adopted, looking into both the access to and use of formal 
financial services. 
1.2.  Financial inclusion is not only about access to credit, but involves the availability and use of a 
wide range of financial services, including deposit-taking services, payment and money 
transmission services, insurance services, advisory services, and other auxiliary and intermediary 
services. Our understanding of financial inclusion is also broad in terms of the channels used to supply those services. We consider that banks' branches, banks' agents (e.g. retailers), automated 
teller machines (ATMs), point-of-sale (POS) terminals, mobile phones, as well as the Internet, are 
only different ways to access financia l services, and not different products per se . 
2  THE NATURE OF BARRIER S TO FINANCIAL INCLUSION 
2.1.  Ideally, inclusive financial markets allow the poor to access and make use of a full range of 
financial services. In such markets, consumers know their financial needs, have information on and understand the financial services and products  being offered, and may access financial service 
suppliers in a reasonable, timely and cost-effective manner. At the same time, financial service 
                                               
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice 
to the positions of Members or to thei r rights and obligations under the WTO. S/FIN/W/88/Add.1 
 
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  suppliers understand the characteristics and potential of poor and low-income clients, and offer 
services that meet their needs and are affordable for them. In addition, financial service suppliers 
have viable business models, and dispose of a re asonably extended deliv ery network. However, 
specific constraints prevent an efficient match between demand and supply of financial services, 
limiting the access to and the use of financial services (CGAP, 2015).  
2.2.  Asymmetric information (which leads to adverse selection and moral hazard problems) and 
high transaction costs are pervasive in certain environments, and can generate first-mover 
dilemmas and coordination problems that prevent the expansion of financial services to all 
segments of the population. For ex ample, a bank or mobile network operator (MNO) investing in a 
technology or a business model that would allow it to reach underserved customers has to bear significant risks and the initial costs of introducing new technology and creating an agent network 
from scratch. If the initiative fails, the innovator may have to bear significant sunk costs. Even if 
the project is initially successful, the advantages  from being a first mover into a market may be 
eroded by competitors who take advantage of the former's initial spending (e.g. agent training, 
infrastructure and awareness campaigns) to build their own services offering. Problems of this sort 
can lead to underinvestment in innovations that could potentially mitigate asymmetric information and high transaction costs. (World Bank, 2014).  
2.3.  Barriers to financial inclusion are of a very diverse nature, and may arise from demand 
factors, supply factors, inadequate regulatory frameworks, institutional weaknesses, and deficient 
infrastructure (Staschen and Nelson, 2013). Moreover , although each of these contributors may be 
isolated for the purposes of the analysis, they are usually interconnected and reinforce each other.  
2.1  Demand-side barriers  
2.4.  Demand-side barriers restrict the capacity  or willingness of individuals to access and use 
available services and products. The main factors hindering demand for financial services include 
lack of income, culture, religious beliefs, absence of formal identification systems, low levels of 
financial literacy, distrust of financial institutions, and lack of necessary documentation and/or collateral to support financial transactions.  
2.5.  The World Bank's Global Financial Inclusion (Global Findex)
2 database provides, for example, 
information on self-reported barriers to bank account ownership – a basic indicator of the degree of financial inclusion or exclusion (Demirgüç-Kunt et al, 2015).
3 Globally, the most common reason 
not to own a bank account is lack of enough money to use the account: 59% of adults without an 
account considered this as a reason for being unbanked, though only 16% cited it as the sole 
reason (Figure 1).4 Lack of enough money is the most commonly reported barrier to account 
ownership not only globally but also in almost all developing regions, the only exception being 
Europe and Central Asia, where the lack of need  for an account turned out to be the most 
commonly cited reason, reported by 55 % of those without an account at a financial institution, followed by lack of money, cited by 51 per cent of respondents. It is not only the lack of income 
that hinders financial services demand, but also income volatility. Indeed, many times, an increase 
in interest rates responds to the bank's inability to measure the volatility of repayments, according to the income flows for each type of client. (A BSA, 2012). In addition, lack of regular income 
usually implies lack of necessary documentation (e.g . salary slip) to access basic financial services, 
such as bank accounts and credit.  
2.6.  At the global level, the following most common reasons reported for not having a bank 
account are that the respondent has no need for an account (because all transactions are carried 
out in cash) and that a family member already has one, both cited by 30% of respondents to the 
Global Findex survey. Interestingly, only 4% and 7% of respondents cited having no need for an 
                                               
2 The Global Financial Inclusion (Global Findex) database provides in-depth data showing how people 
save, borrow, make payments, and manage risk. It is the world’s most comprehensive set of data providing 
consistent measures of people's use of financial serv ices across economies and over time. The database was 
launched in 2011, and further updated in 2014. It provid es more than 100 indicators, including by gender, age 
group, and household income. The indicators are based on interviews with about 150,000 nationally 
representative and randomly selected adults age 15 and above in more than 140 economies.  
3 Respondents were allowed to give  multiple reasons for not having an account at a formal financial 
institution, and they cited 2.1 on average (Demirgüç-Kunt et al., 2015). 
4 The following paragraphs draw heavily on the info rmation on self-reported barriers in Demirgüç-Kunt 
et al., 2015). S/FIN/W/88/Add.1 
 
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  account and/or that a family member already owned an account, as the sole reasons for not 
having one. This may suggest that, in fact, voluntary financial exclusion does not exist, and that once other barriers to account ownership are reduced – such as the cost of service and the distance from financial institutions – these respondents might be interested in having an account 
(Demirgüç-Kunt et al., 2015).  
2.7.  Apart from lack of enough money, self-reported reasons for not having an account at a 
financial institution vary widely across economies and regions. In Asia and the Pacific, the second 
most common reason, cited by about 35% of adults without an account, is that a family member 
already has one; while in Sub-Saharan Africa distance to financial institutions is the second most common reason, cited by 27% of those without an account.  
2.8.  In the Middle East, however, 41% of adults without an account said that they cannot obtain 
one, probably due to prohibitive costs and documentation requirements for opening an account. 
However, virtually no one reported this as the only reason for not having an account. This suggests again that if the costs or the documentation requirements were reduced, respondents 
might find it easier to own an account. 
2.9.  In Latin America and the Caribbean the tw o most commonly cited reasons for not having an 
account, after lack of enough money, are that a ccounts are too expensive and that the respondent 
has no need for an account. But almost no one cite d either of these reasons as the only one. This 
again may suggest that as barriers are eliminated, those who are now without an account are likely to be interest ed in having one. 
Figure 1. Self-reported barriers to use of  an account at a financial institution 
 
Source : Demirgüç-Kunt et al (2015) 
 
 2.10.  Una ffordability is also an important barrier to financial inclusion beyond Latin America and 
the Caribbean, as well. Globally, 23% of adults without an account at a financial institution cited 
this as a reason. Fixed transaction costs and annual fees tend to make small transactions 
unaffordable for large portions of the population in developing economies. High costs can not only 
restrict access to a bank account, but may also restrict access to credit. (World Bank, 2014).  
2.11.  Globally, more than 20% of adults without a bank account consider that the long distance to 
the nearest financial institution is an important barrier. Documentation requirements are another 
important barrier to account ownership, cited by 18% of adults without an account across all S/FIN/W/88/Add.1 
 
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  regions. These requirements may, in particular, affe ct persons living in rural areas or employed in 
the informal sector, who are less likely to have formal proof of domicile or salary slips. 
2.12.  Lack of trust in formal financial services and service suppliers also hinders financial 
inclusion. A financial relationship is based on trust, which is difficult to establish. Moreover, while 
trust takes time to build, it may vanish very quickly. Distrust in formal financial services can stem 
from cultural norms, discrimination against certain segments of the population, past episodes of government expropriation (in the large sense, including of financial assets), or economic crises and 
macroeconomic instability. For example, in countries where the real interest rate has been 
historically very volatile, savers have a low confidence in the banking system. The main reason is that high volatility has been often related to economic policy measures that resulted in considerable losses for depositors, such as freezing deposit accounts or converting foreign 
currency deposits into local currency at undervalued exchange rates (ABSA, 2012). While globally 
lack of trust has been cited as a barrier by 13% of adults without an account at a financial institution, in Europe and Central Asia that percentage of respondents focusing on this barrier is 
much higher (30%). Mistrust also results from th e fact that poor and low-income persons are often 
intimidated by banks' formalities, the complexity  of financial products, and poor customer care 
(ABSA, 2012). 
2.13.  Cultural, social, religious, and demographic factors may also hinder demand for financial 
services. The Global Findex database shows that religious reasons (e.g. the prohibition of all forms 
o f  i n t e r e s t )  h a v e  b e e n  c i t e d  a s  a  b a r r i e r  b y  5 %  o f  a d u l t s  w i t h o u t  a n  a c c o u n t  i n  d e v e l o p i n g  economies. Other barriers in this category can arise from formal rules (e.g., minimum age to open 
a bank account, formal guarantees, and national id entification), or even gender discrimination, 
especially towards women.  Indeed, the unfair and unequal distribution of power, resources and 
responsibilities in favour of men often leads to discriminatory practices, which inhibit women's 
access to finance. For example: financial products, like bank accounts, sometimes require the 
husband's signature, or evidence of property ri ghts; or lower wages and income can make bank 
accounts unaffordable for women (Banking on Change Partnership, 2013) .  
2.14.  Finally, in a sector marked by information asymmetry problems, lack of financial literacy 
may severely hinder demand for financial services (Banking on Change Partnership, 2013) . This is 
a problem not only in less developed economies: consumers in developed or advanced economies may also suffer from financial illiteracy. It is generally recognized that lower income individuals 
tend to be less financially literate. In a recent  survey conducted by the Alliance for Financial 
Inclusion (AFI, 2010), lack of financial literacy topped the chart of the main obstacles to financial inclusion (Annex Table 1).
5 Respondents to this survey (financi al service providers, investors, and 
members of support organizations involved in microfinance) viewed financial literacy as an 
enabling factor that unlocks other key dimensions of financial inclusion, such as consumer protection, new product development, and preventi on of over-indebtedness (Gardeva and Rhyne, 
2011). 
2.15.  Specific barriers, apart from some of th ose evoked earlier, may hinder SMEs' demand for 
credit. Surveys of small firms suggest that while some of them are excluded from bank finance 
because of high interest rates, lack of appropri ate collateral and cumbersome paperwork, a large 
proportion simply have no demand for or good projects to finance, or does not have the financial 
and managerial knowledge to successfully invest a loan (Demirgüç-Kunt, et al., 2007, and IPA, 2015). Accessing other sources of funding may not be straightforward either: one reason why 
more SMEs do not list on stock markets is because the fixed costs of an initial public offering 
(IPO), as well as the costs implied by ongoing reporting requirements, can be very high (World Bank, 2014).  
2.2  Supply-side barriers 
2.16.  Supply of financial services to the poor may be hindered also by barriers affecting service 
supply, i.e., factors directly affecting the suppliers of financial services, and which relate largely to the way the financial services industry has traditionally operated. These barriers include the lack of 
                                               
5 The AFI survey was conducted in late 2009 and early 2010. It was sent to nearly 80 central banks and 
other policymaking bodies in Africa, As ia and Latin America, and was followed  up with a sample of 20 countries 
through in-depth telephone interviews to gain furthe r insight (AFI, 2010). The survey gauges the views of 301 
industry participants from around the world. Responde nts are financial service providers, investors, and 
members of support organizations involved in microfinance.  S/FIN/W/88/Add.1 
 
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  adequate financial products and services, lack of knowledge about these market segments, 
underdeveloped and inefficient distribution channels, and lack of reliable information on individuals' or firms' credit records (CGAP, 2015). 
2.17.  Inadequate products and services are often cited as a key barrier to financial inclusion. Poor 
and low-income persons have very specific financial needs, which are often not met by standard 
financial services designed for more financially literate clients with higher and more stable income sources. For example, the promotion of financial inclusion has resulted in many cases in the 
introduction of no frills bank accounts, which may be maintained with any minimum balance 
requirement, and which may benefit from certain services free of charge (e.g. free quarterly statements, minimum number of cheques free of char ge), but which may still be subject to various 
fees and charges that may still be too onerous for low-income persons (e.g. ATM withdrawal fees, 
charges for bounced cheques).  As a result, poor persons continue to use informal financial 
services, such as rotating savings and credit groups for savings and credit, as well as cash as their only means of payment. The prevalence of produc ts unsuited to their needs may be partly due to 
another underlying supply-side barrier: limited kn ow-how of mainstream providers about how to 
design, price and market financial services for lo w-income persons, and limited understanding of 
client needs and lifestyles (e.g. cash flow an d asset accumulation) (Gardeva and Rhyne, 2011).  
2.18.  Lack of product diversification is also an important barrier in this context. In practical terms, 
the promotion of financial inclusion often has been left to the microfinance industry, which has traditionally focused exclusively on micro-credit, and has been unable to significantly broaden its product range. As a result, only a narrow market segment among low-income persons is actually 
reached by the microfinance business models. As mentioned above, financial inclusion is about 
more than just credit. Low-income consumers need not only access to credit but also to basic savings mechanisms, payments services, and some forms of insurance (Gardeva and 
Rhyne, 2011).  
2.19.  Underdeveloped and inefficient delivery channels play a significant role in hindering financial 
inclusion. It is estimated that 75% of the world's poor live in rural areas where there are fewer 
access points for financial services and where mobility constraints and weak infrastructure make 
travelling to the closest access point even more costly and difficult (World Bank, 2014). However, high fixed and recurnning costs make establishing bank branches an expensive delivery channel for poor and sparsely populated areas. In turn, high branching costs in rural areas are associated 
with insufficient physical infrastructure (e.g . underdeveloped transportation, communications and 
electricity distribution).  
2.20.  Lack of interest on the part of traditional financial service suppliers also hinders supply 
(Banking on Change Partnership, 2013). Many financial institutions may not try to reach low-
income clients because they do not find viable business cases on serving this market segment, and as a consequence are also reluctant to conduct th eir own market research. Therefore, they also 
rarely invest in training their staff in the supply of s ervices to low-income populations. 
2.21.  Lack of information in a broad sense is also a major cause of financial exclusion. Insufficient 
information about borrowers' credit and repayment history, for example, limits the supplier's ability to assess repayment capacity, discouraging them from serving new, low-income clients. 
Basic information, such as clients' identities, is sometimes difficult to  verify simply because 
identification documentation is missing or ca n be easily faked (Hanning and Jansen, 2010). 
Opacity affects not only households but SMEs as well. In developed countries, financial institutions 
assess loan applicants using information supplied by credit bureaus. In emerging markets, 
however, credit bureaus often do not exist. Inst ead, banks rely on other time-consuming methods 
to obtain credit histories directly from loan applicants, which further increase the cost of assessing 
SME loan applications, making banks reluctan t or unable to lend to SMEs (IPA, 2015). 
2.22.  Financial inclusion may also be hampered by  weak or inefficient indu stry-level coordination 
(CGAP, 2015). With the emergence of new business mo dels for delivering financial services to the 
poor, coordination is needed among a more diverse set of actors, including technology firms, 
mobile network operators, and financial institutions. However, if the different systems and 
networks are not interoperable, the financial servic es offered will be of poorer quality or more 
expensive, or both (Claessens and Rojas-Suarez, 2016). S/FIN/W/88/Add.1 
 
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  2.23.  Payment systems are the backbone of the financ ial system, enabling the transfer of funds. 
However, electronic retail payment systems in less developed economies are usually inefficient and not widely available to low-income populations, especially those in remote areas. This is a problem that affects all types of payments and money transfers, including international remittances 
(CGAP, 2015).  
2.3  Inadequate regulatory frameworks, institutional weakness, and underdeveloped 
financial infrastructure 
2.24.  Many barriers that appear to be either demand- or supply-side in nature have their roots, or 
are largely determined, by inadequate regulatory frameworks, institutional weaknesses, or underdeveloped financial infrastructure (CGAP, 2015) . For example, lack of consumer protection, 
poor contract enforcement, regulatory impediment s to bank branch establishment and expansion, 
and even uncoordinated approaches to regulation of the financial inclusion "ecosystem", just to 
name a few, constitute factors that may perpetuate financial exclusion. 
2.25.  Experience has shown that governments have an important role to play in building an 
inclusive financial sector (Claessens et al., 2009) . However, direct policy interventions, even if 
well-intended and inspired by successful experien ces elsewhere, may end up having the opposite 
effect of what was desired or expected (Unite d Nations, 2006). For example, depending on the 
context, interest rate caps, usually thought as the only recipe against the high interest rates 
applicable in the market segment that serves poor and low income persons, can make it impossible for financial institutions to cover costs, undermining their long term sustainability in those market segments. State-owned institutions lending at subsidized rates, as well as directed 
lending policies, can distort markets or create disincentives for private service suppliers to offer 
financial services to low-income persons (Claessens and Rojas-Suarez, 2016).  
2.26.  Lack of consumer protection may also hinder financial inclusion. In particular, information 
asymmetry between consumers and banks regarding fi nancial products and services puts potential 
new customers at a disadvantage. This imbalance is greatest when customers are less experienced, as is likely the case with unbank ed populations (Hanning and Jansen, 2010). Another 
important aspect of consumer protection is competition policy, insofar as healthy competition 
among providers rewards better performers and in creases the power that consumers can exert in 
the market (Claessens and Rojas-Suarez, 2016).  
2.27.  Lack of adequate information is a key factor hindering financial inclusion. Many countries 
still lack modern  national identification systems, collate ral registries and credit bureaus, and 
standards for product information disclosure. Without access to accurate information, clients find it 
difficult to assess the quality, risks, costs, and benefits of financial products and the trustworthi-
ness of financial institutions, limiting effective de mand and uptake for financial services. Likewise, 
providers find it costly to evaluate clients’ risk profiles and the potential of new market segments without more accurate information on client financial use, habits, and preferences and their real 
risk profile, providers lack the incentive to adap t and innovate. Even for those providers that do 
introduce innovative business models, such as DFS,  client uptake may be low, as the clients may 
lack sufficient information as to how these services benefit them (CGAP, 2015).  
2.28.  Evidence points to a function for governments in dealing with these shortcomings. 
Governments can help by creating the associated legal and regulatory framework (for example, by 
protecting creditor rights, regulating business cond uct, ensuring the enforcement of contracts, and 
protecting consumers), supporting the informatio n environment (for instance, by establishing 
national identification systems, promoting the es tablishment of collateral registries and credit 
bureaus, and setting standards for product inform ation disclosure), and educating and protecting 
consumers.  
2.29.  Restrictive, outdated, and unresponsive regulatory frameworks have also adverse effect on 
financial inclusion (CGAP, 2015). The emergence of new services and new business models for delivering financial services to the poor require regulatory frameworks that allow for innovation, while ensuring financial integrity and stability, as well as the protection of consumers. However, 
regulatory frameworks are usually outdated, or ar e not updated as frequently as they should. New 
business models, which span the financial, distri bution, telecommunications and ICT sectors, raise 
new challenges for coordination among regulators.  S/FIN/W/88/Add.1 
 
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  3  THE ROLE OF TRADE IN SERVICES 
3.1.  International trade in services – defined, as in the GATS, to include the supply of services 
across the border, the consumption of services ab road, and the supply of a services through the 
establishment of a commercial presence or throug h the temporary presence of a natural person – 
can contribute significantly to financial inclusion.  
3.2.  As explained previously, financial inclusion is a complex issue. The basic objective is to bring 
essential financial services (e.g., payments, money transmission, deposit taking, lending, 
insurance, and savings) to those who have no access to the formal financial system, such as the 
poor, small and micro-entrepreneurs, and rural po pulations. Clearly, a wide range of financial 
products is needed to meet the needs of different segments of society.  
3.3.  The channels used to reach out to the so -called "unbanked" population are of a diverse 
nature (e.g., bank branches, including mobile on es, agents, ATMs, POS (point-of-sale) terminals, 
mobile phones, and the Internet). All these ch annels represent different ways of supplying 
financial services – but not different financial services per se. They require the participation and 
interaction of a myriad of service suppliers, including traditional financial service suppliers as well 
as telecommunications operators, technology companies, and retail agents.  
3.4.  The advancement of financial inclusio n requires therefore the development of an 
"ecosystem", that is, a community of multiple providers of services interacting through different 
business models with the fundamental objective of bringing necessary financial services to the financially excluded (CGAP, 2013). The list of providers that reach the poor usually includes microcredit institutions, mobile network operators, traditional banks doing agent banking, 
specialized banks (such as the recently established "payment banks" in India), agents (such as 
retailers), the postal service, state-owned banks,  payment platforms, aggregators, as well as 
finance and technology companies.
6 Those providers interact against the backdrop of a broad 
policy environment that includes different regulators.  
3.5.  Mobile financial services, which are generally considered to offer high potential for promoting 
financial inclusion, provide a clear example of the ecosystem approach to financial inclusion 
(CGAP, 2015). Mobile financial services can be cl assified into two broad categories: 1) mobile 
banking, which entails the use of a mobile device to remotely access a bank account, whether for information (e.g. alerts, account balance and history) or for transactional purposes (e.g. bill payment, brokerage); and 2) mobile money and payments, where a mobile phone is used to make 
payments and transfers of money (e.g. salary di sbursements, pensions, government allowances, 
domestic and international remittances). The latter may include peer-to-peer applications, allowing users to use their mobile phones to send money directly to family and friends at different 
locations, even abroad. Banks are not the only participants in these businesses – other service 
suppliers, such as mobile network operators, mobile banking technology providers, payment card companies, and providers of payment platforms ac cessible through remote devices, are also key. 
In addition, although mobile technology is central to these business models, mobile financial 
services supply is more than just technology – it requires a cash-in, cash-out infrastructure, usually accomplished through a network of "agents" (e.g. retailers, merchants, the post offices), 
who make it possible to turn cash into electronic value (and vice versa). Finally, a host of 
supporting services, such as credit information and collateral registration, are also necessary. 
3.6.  This "ecosystem" provides an opportunity  for the expansion of trade in many different 
services, such as deposit-taking, lending, payment and money transmission, credit reference and 
analysis, financial intermediation and advise, insurance, telecommunications and ICT-related 
services. At the same time, in allowing the depl oyment of these "ecosystems" not only within 
national boundaries but also across borders, trade in services may significantly contribute to 
financial inclusion and development.  
                                               
6 Payment aggregators provide services and infrastructure to link the systems of entities that want to 
send money to or receive money from end customers an d those of payment instrume nt providers (e.g. MNOs 
offering mobile money services or banks offering mo bile banking). See "Understanding the East African 
Aggregator Landscape", by CGAP, available at http://www.cgap.org/b log/aggregators-secr et-sauce-digital-
financial-expansion . S/FIN/W/88/Add.1 
 
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  3.7.  The remainder of this section provides examples of how trade in services contributes to 
financial inclusion.7  
3.1  The case of Pan-African banks 3.8.  Trade in services is already contributing to financial inclusion in various ways. The most 
obvious one is through the cross-border expansion of banks that, building on their experience with 
inclusive finance in their home markets, replicate their business models in other countries in pursuit of business opportunities and as a way of reaching economies of scale.  
3.9.  Cross-border banking in Africa is a case in point.
8 According to the IMF (2015), the expansion 
of so-called Pan-African banks (PABs) "is contributing to improve competition, support financial inclusion, and give rise to greater economies of  scale. In addition, PABs have been filling the 
recent gap left by European banks and are becoming the lead arrangers of syndicated loans". 
3.10.  Cross-border banks in Africa have deployed different market strategies and degrees of 
engagement in host countries. In fact, it has been argued that the major potential contribution of cross-border banking towards financial inclusion lies in the transfer of innovative banking models 
from countries where banks have engaged in both developing outreach, for example in the form of 
agency banking and collaboration with mobile mo ney providers, and in deploying new products 
targeting micro-lending (Beck et al., 2014) 
3.11.  Beck et al (2014) made an inventory of 45 banks headquartered in 21 African countries with 
branches and/or subsidiaries in at least two other African countries.
9 The largest Pan-African banks 
are Ecobank (headquartered in Togo, majority-own ed by South African investors, and present 
in 32 African countries), United Bank of Africa or  UBA (headquartered in Nigeria, majority-owned 
by Nigerian investors, and present in 19 African countries), Standard Bank Group or Stanbic 
(headquartered in South Africa, majority-owned by  South African investors, and present in 18 
African countries), Banque Marocaine du Commerce Extérieur or BMCE (headquartered in Morocco, 
majority-owned by Moroccan investors, and pres ent in 18 African countries), Attijariwafa Bank 
(headquartered in Morocco, majority-owned by Moroccan investors, and present in 12 African countries), and the Banque Centrale Populair e du Maroc or BCP (headquartered in Morocco, 
majority-owned by Moroccan investors, and present in 11 African countries).
10  
3.12.  The experience of these banks provides te lling examples of how cross-border banking may 
contribute to financial inclusion. Ecobank, for example, partnered with Airtel to offer mobile-banking services in 14 countries. In Nigeria, Ecobank put in place a Sustainability Framework for 
Socially Responsible Finance, which includes micro-finance and micro-banking, as well as other 
community engagement initiatives. Ecobank's financial inclusion programmes target primarily the economically active poor, namely micro entrepreneurs trading in goods and services in urban and 
rural areas (e.g., artisans, traders, fashion designers, hair dressers, and a host of other micro 
businesses). Access to credit is facilitated, inter alia, through internet banking and mobile money, Point of sale terminals (POS), and text banking.  In Nigeria alone, as of end-2014, Ecobank had 
provided credit for over N1 billion to more than 2,600 customers, and had received deposits 
from 1,5 million micro-savers.
11 
3.13.  Another case in point is Attijariwafa Bank, a leader in microfinance in Morocco, which has 11 
subsidiaries in 11 African countries, totalling 613 branches in the group's international network. 
Attijariwafa Bank caters to the low-income se gment of the market through a subsidiary named 
                                               
7 While the cases presented in this section are the result of research by the Secretariat, Members are 
welcome to provide additional  information and feedback.  
8 Cross-border banking is understood here in a broa d sense, as comprising not only the supply through 
mode 1 but also the establishment of premises abroad.  
9 See Annex Table 1.3 in Beck et al. (2014).  
10 Information drawn from Annex Tabl e 1.3 in Beck et al. (2014). 
11 Ecobank Nigeria Limited, Annual Report and Fi nancial Statements, 31 December 2014. Available at: 
http://www.ecobank.com/upload/20150424114643650413NqzAyDndnW.PDF . In 2016, the Ecobank Group won 
the Award for Financial Inclusion delivered by the Africa n Bankers Association. The prize is awarded to banks 
that have succeeded in delivering financial products and services to wider parts of so ciety, particularly to the 
most disadvantaged and low income segments.  S/FIN/W/88/Add.1 
 
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  Wafacash. Widely extended throughout Morocco, Wafacash has also applied for licenses in Western 
Africa and Central Africa.12  
3.14.  More modest in size, Letshego, a bank headquartered in Botswana, specialized in 
microfinance, has lending and deposit-taking subsidiaries across ten countries in Southern, East 
and West Africa, including Nigeria and Tanzania. It has 268 representation points, servicing a base 
of over 300,000 borrowers and 100,000 savers. 
3.15.  Formal financial institutions also participate in "linkage" activities13, offering group savings 
products. A recent report commissioned by the Banking on Change Partnership (2015) identified 
five banks that offer group savings products in more than one market: 1) Barclays/Absa, which operates in Ghana, Kenya, South Africa, Tanzan ia, Uganda, Zambia; 2) Bank of Africa, which 
operates in Kenya and Uganda; 3) Kenya Commercial Bank, which operates in Kenya and 
Rwanda; 4) Opportunity International Bank, which operates in Malawi and Uganda; and 5) FINCA, 
which operates in Malawi, Tanzania, Uganda, and Zambia. 
3.2  The case of microfinance commercial banks 
3.16.  When the microfinance movement started in  the late 1980s, very few financial institutions 
showed interest in exploiting this market. Henc e, most microfinance banks were started with 
philanthropic backing from institutions that were able to risk the financial capital in order to 
achieve potentially huge social returns. In recent years however, microcredit was proven to be a 
viable business model, and fully sustainable commercial microfinance intermediaries have emerged. These intermediaries provide loans and voluntary savings services to the economically 
active poor at reasonable cost. Their loan portfo lios are financed by savings, commercial debt, and 
for-profit investment in varying combinations. Even though it has been argued that microfinance 
commercial banks are not suitable vehicles to fina nce the needs of the extremely poor populations, 
they can still promote financial inclusion among some of the vast segments of the unbanked 
market.  
3.17.  Interestingly, some of the microfinance  banks have gone on to become microfinance 
multinationals. Such is the case of Compartamos Bank in Mexico, the largest microfinance bank in 
Latin America, offering not only lending but also insurance services, and serving more than 2.5 
million clients. The bank was founded in 1990 and is headquartered in Mexico. Originally funded mostly by philanthropic capital, in 2000 Compartamos was incorporated as a for-profit company, and obtained a commercial banking licence in 2006. The following year, Compartamos raised 
U$S467 million through an IPO. In 2011, the grou p expanded operations to Guatemala and Peru, 
where it acquired another microfinance institution – Financiera Crear, Grupo Compartamos, the holding company, was renamed as Gentera in 2013. 
3.18.  Another notable case is that of Access Mi crofinance Holding AG ("Access Holding"), which 
was established in 2006 by a group of internatio nal shareholders from the public and private 
sectors. Access Holding is organized as a Joint Stock Corporation under German laws. The head 
office of Access Holding, the parent company of the Group, is located in Berlin, Germany. The 
business purpose of Access Holding is to build up and control a network of commercial banks in developing and transition countries (the "Access Group") focusing on micro, small and medium-sized enterprises (MSMEs). The Access Group currently comprises 10 financial institutions located 
in Sub-Saharan Africa, Central Asia, the Caucasus and South America.
14 As of December 2015, 
Access Bank Group had assets in excess of US$13 billion. 
3.19.  The ProCredit group is another example of  a commercial, development-oriented bank. The 
parent company of the group is ProCredit Holdin g, a Frankfurt-based company which guides the 
group. At a consolidated level the group is supe rvised by the German federal banking supervisory 
                                               
12 Interview with Ismail Douiri, co-c hief executive officer of Attijariwafa Bank based in Casablanca, 
conducted by Knowledge@Wharton, on 29 February 2016. Available at: http://knowledge.wharton.upenn.edu/article/moroccos- leading-financial-institution-is-banking-on-a-pan-
african-strategy/ . 
13 "Linkage" is the process through which informal savings groups are able to access products and 
services from formal financia l service providers (FSPs).  
14 Access Bank Azerbaijan, AccèsBanque Madagascar,  AccessBank Tanzania, AB Microfinance Bank 
Nigeria, AccessBank Liberia, AccessBank Tajikistan, AB  Bank Zambia, AB Bank Rwanda, MFO Credo Georgia, 
and AccessCrédito Brazil. S/FIN/W/88/Add.1 
 
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  authorities (BaFin and Bundesbank). The ProCre dit group is made up of a bank in Germany 
(ProCredit Germany) and development-oriented banks operating in Eastern Europe and Latin America
15 All of the subsidiaries have full banking licences. Except for the bank in Germany, all are 
specialized in the supply of financial services to micro, small and medium-sized businesses. Other 
service suppliers are usually part of the commercial microfinance business model. For example, 
the ProCredit group also comprises a number of important support companies (all majority-owned 
by ProCredit Holding), which provide different se rvices, including the ProCredit Academies; and 
Quipu, the group software company. Access Holding has a strategic partnership with LFS Financial 
Systems GmbH, a German consultancy firm which provides managerial and other technical services both to the holding company and its network banks.  
3.3  The case of branchless banking in Pakistan and Senegal 
3.20.  Branchless banking
16 initiatives have also provided an opportunity for trade in services to 
contribute to the supply of financial services to the financially excluded. Pakistan and Senegal provide interesting examples in that regard.  
3.21.  The Government of Pakistan introduced branchless banking regulation in April 2008.
17 Since 
then, the branchless banking industry has thrived, reaching 13.2 million accounts in September 2015, and processing more than 100 million tran sactions during the quarter July-September 
2015.
18 There are seven participants in this market, holders of branchless banking licences: 
Easypaisa, Omni, Timepey, Mobicash, HBL Express, Upaisa, and Mobilepaisa. 
3.22.  The origins of branchless banking in Pakistan  shows how trade in services can contribute to 
financial inclusion. One of the main suppliers in the market, Easypaisa, was launched in 2009, as a 
joint endeavour between Telenor Pakistan an d Tameer Microfinance Bank. While Tameer 
Microfinance Bank Limited (TMFB) is the first and largest Microfinance Bank in Pakistan, and it is of Pakistani origin, Telenor Pakistan is 100% owned by the Telenor Group, a Norwegian provider of 
high quality voice, data, content and communication services in 13 markets across Europe and 
Asia. Telenor Group is among the largest mobile operators in the world with 180 million mobile subscriptions and a workforce of approximately 33, 000. Telenor Pakistan has reported a subscriber 
base of over 31 million, making it Pakistan's second largest mobile operator.  
3.23.  Another significant player in this market is Dubai Islamic Bank Pakistan Limited (DIBPL), a 
wholly-owned subsidiary of Dubai Islamic Bank UAE (DIB). The parent company DIB is a listed company in Dubai. DIBPL obtained a license to operate in Pakistan in 2005, and was later on 
authorized to supply branchless banking services as well. Today DIBPL stands at 243 locations 
(200 branches and 43 branchless banking booths) in 62 cities across Pakistan, and has a customer base of over 200,000. 
3.24.  Senegal's experience is also noteworthy. As  early as 2006, the Central Bank of West African 
States (BCEAO), which regulates banking in the 8 countries of the West African Economic and Monetary Union (WAEMU), issued regulation on electronic money, paving the way for nonbanks to 
receive an e-money issuer licence. Six years later, 12 branchless banking initiatives had been 
launched in 6 of the 8 WAEMU countries. But among all these countries, Senegal stands out, hosting the broadest range of actors and bran chless banking business models, showcasing an 
ecosystem that includes commercial banks (BICIS, a subsidiary of BNT Paribas), microfinance 
institutions (ACEP and PAMECAS), mobile telecom operators (Orange), nonbank e-money issuers 
(FERLO), technology companies (Cellular Systems International), and regional banking switches for interbank payment systems (GIM-UEMOA). 
                                               
15 ProCredit Bank Albania, Banco Los Andes ProCredit Bolivia, ProCredit Bank Bosnia and Herzegovina; 
ProCredit Bank Bulgaria, Banco ProCredit Colombia, Ba nco ProCredit Ecuador, Banco ProCredit El Salvador, 
ProCredit Bank Georgia, ProCredit Bank Germany, ProCre dit Bank Kosovo, ProCredit Bank Macedonia, ProCredit 
Mexico, ProCredit Bank Moldova, Banco ProCredit Nicara gua, ProCredit Bank Romania, ProCredit Bank Serbia, 
and ProCredit Bank Ukraine. 
16 Branchless banking is defined as the delivery of financial services outside conventional bank branches, 
often using agents and relying on information and communications technologies to transmit transaction details – typically card-reading point-of-sale (POS) terminals or mobile phones (CGAP, 2010) 
17 http://www.sbp.org.pk/bprd/2008/Annex_C2.pdf . 
18 State Bank of Pakistan (2015), Branchless Bank ing Newsletter, Issue 17, July-September 2015. 
Available at: http://www.sbp.org.pk/publications/acd/BranchlessBanking-Jul-Sep-2015.pdf.  S/FIN/W/88/Add.1 
 
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  3.25.  Within WAEMU, Senegal's experience shows the potential of trade in services, both in terms 
of the supply of financial services by supplie rs of other Members to unbanked consumers in 
Senegal (e.g. Orange Money and CSI), and the supply of financial services from Senegal to unbanked consumers abroad, in particular in other West African countries. 
3.26.  For example, in 2014 BICIS (a subsidiary of BNP Paribas, headquartered in France) and 
Sonatel-Orange Group (a subsidiary of Orange, also headquartered in France) launched Mobibank 
in Senegal, a new banking service that allows customers to make payments from a mobile phone, 
and makes it possible to customers to conduct banking transactions in real time between a BICIS 
account and an Orange Money account.  
3.27.  Wari Gateway is a technology platform developed by Senegalese entrepreneurs CSI 
(Cellular Systems International), which offers a money transfers solution on the basis of a wide 
and dense network of agents. Wari, as the brand is  known in Senegal, focused originally on the 
Senegalese unbanked, which make up 94% of the population. Customers are not required to open 
an e-wallet account; CSI has instead opted to offer simple products at agent points. In Senegal 
along, in a typical day, Wari supports 65,000 transactions through a network of about 2000 
agents.  
3.28.  After initial success in Senegal, CSI has launched the Wari platform in a host of other 
African countries, from the Ivory Coast in the west, to Tanzania in the east. However, in 
approaching those new markets, Wari has develope d a different strategy. Recognising its lack of 
knowledge of those markets, Wari chose to prov ide the technology and build partnerships with 
local institutions and businesses, such as post offices, petrol stations, and even 
telecommunications operators, that understood local needs but were not able to fully serve them. 
Within the Wari platform, CSI offers e-payments, e-wallets, payment cards, virtual accounts for salary or aid disbursement payments, and has focused on accessing local, regional and 
international remittance corridors. CSI has developed a presence in seven European markets, the 
USA and Canada, largely by partnering with companies such as Transfast, Valutrans, Remit Synergy, and other international remittance compan ies. Today, Wari conducts around 1.5 million 
transactions per day or 40 million transactions pe r month, the vast majority of which is occurring 
outside of Senegal.  
3.4  The case of mobile payments in Rwanda and South Africa 3.29.  Developments in the mobile payment business also demonstrate the potential for trade in 
services. In South Africa, for example, three very different types of service suppliers (Mobicash, a 
cashless financial platform, Boloro, a mobile payments network, and Big Save Group, one of the largest wholesalers operating within South African townships servicing tens of thousands of small 
scale "scaza" shops)
19 launched a joint mobile payments ecosystem in May this year. The objective 
is to roll out Mobicash and Boloro services across Big Save's thousands of scaza community members, accelerating financial inclusion and financial interoperability to formerly disenfranchised 
businesses and communities. As an identity solution, MobiCash uses multi-factor authentication 
mechanisms such as fingerprints and voice biometric technology prior to authorizing any funds transfer. Boloro is a mobile payments network offering consumers the ability to securely pay for goods and services using any kind of mobile phone and any source of funds. 
3.30.  In fact, both Mobicash and Boloro are foreign-owned. MobiCash, headquartered in Hong 
Kong, is a cashless financial platform that allows unbanked customers easy access to banking and payment services. It currently offers its mobile banking platform in 13 African countries including 
Rwanda, Uganda, Burundi, Kenya, Ghana, Tanzan ia, Cameroon, DRC, Malawi, Zambia, Zimbabwe, 
Botswana and South Africa. Boloro South Africa is a subsidiary of Boloro Global Limited, which is headquartered in New York City. Boloro also operates in South Asia, Middle East and Africa and will 
soon launch operations in Latin America, the Caribbean and East Asia. 
3.31.  Rwanda is another case in point. In May 2016, KCB Bank and GoSwiff, a global payment 
acceptance solutions provider, launched a mobile point-of-sale (mPOS) service for Rwandan merchants, to drive financial inclusion and digital payments in the country.
20 The introduction of 
                                               
19 A "scaza" shop i s an informal convenience shop business  in South Africa, usually run from home . 
20 A mobile point-of-sale (Mpos) is a smartphone, ta blet or dedicated wireless device that performs the 
functions of a cash register or electr onic point of sale terminal. Any smar tphone or tablet can be transformed 
into an mPOS with a downloadable mobile app. Typicall y, when the business owner registers the application, S/FIN/W/88/Add.1 
 
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  the mPOS solution, a first of its kind in Rwanda, follows an earlier roll out of a similar mPOS 
service in Kenya. The new mobile payment service will make it possible for businesses of any size 
to accept digital payments in Rwanda, includin g insurance premiums and public disbursements, 
with the simple use of a mobile application and a mPOS terminal.  
3.32.  Both KCB Bank and GoSwiff are foreign- owned. KCB Bank Group, established in Kenya 
in 1896, is East Africa's largest commercial Bank. It has subsidiaries in Burundi, Rwanda, South Sudan, Tanzania and Uganda. Today KCB Bank Grou p has the largest branch network in the region 
with over 250 branches, 962 ATMs and 11,000 agents offering banking services on a 24/7 basis in 
East Africa. Incorporated in 2010, GoSwiff, a lead ing provider of payment acceptance services, is 
headquartered in Singapore and currently has operations in 25 countries around the world, including Rwanda. 
3.5  The case of payment banks in India 
3.33.  Financial inclusion strategies may also be based on the establishment of alternative financial 
institutions, specifically conceived to cater for the financially excluded. These strategies also 
provide an opportunity for trade in services through the establishment of foreign suppliers. Recent 
developments in India are noteworthy in that regard. As part of its revamped strategy to further financial inclusion, in November 2014, India issued guidelines for licensing of so-called payment 
banks.
21 A payment bank is a differentiated bank whose business scope is limited to the 
acceptance of deposits (up to Rs. 100,000 per indi vidual customer), issuance of ATM/debit cards 
(payments banks, however, cannot issue credit ca rds), payments and remittance services, acting 
as business correspondent of other banks, and distribution of non-risk sharing simple financial 
products like mutual fund units and insurance products, etc.. Importantly, they are not allowed to 
undertake lending activities at all. 
3.34.  The new guidelines allow various types of entities – so-called "promoters" – ranging from 
telecommunications companies and prepaid payment instrument issuers (PPIs), to supermarket 
chains and non-banking finance companies (NBFCs), that are owned and controlled by residents in India, to apply for a payment bank licence. They can also choose to have a joint venture with an 
existing scheduled commercial bank to set up a payments bank. However, scheduled commercial 
banks can take equity stake in a payments bank to the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949 – currently, 74%. Promoter/promoter groups should be ‘fit and 
proper’ with a sound track record of professional experience or of running their businesses for at 
least a period of five years in order to be eligible to promote payment banks. The maximum 
permitted shares of foreign banks in payments bank is in line with the Foreign Direct Investment (FDI) policy for private sector banks – currently 74%. 
3.35.  In August 2015, the Reserve Bank of India granted "in-principle" approval to the following 
11 applicants to set up payments banks, nine or ganizations (Aditya Birla Nuvo Limited, Airtel M 
Commerce Services Limited, Cholamandalam Distribu tion Services Limited, Department of Posts, 
Fino PayTech Limited, National Securities Deposi tory Limited, Reliance Industries Limited, Tech 
Mahindra Limited, and Vodafone m-pesa Limited) and two individuals (Shri Dilip Shantilal Shanghvi, Shri Vijay Shekhar Sharma).
22 These entities, which are required to have an initial 
capital of Rs. 100 crore each, will have to start operations within 18 months. Vodafone m-pesa Ltd 
is a wholly-owned subsidiary of the British multinational telecommunications company Vodafone.  
3.6  Mobile financial services in Africa and the Middle East 3.36.  Since the launch of M-Pesa in 2007, mobile financial services have revolutionized African 
countries' local economies, enabling large segm ents of unbanked population to access basic 
financial services.
23 M-Pesa is a mobile phone-based money transfer, financing and microfinancing 
service, developed by British company Vodafo ne and launched commercially by the company's 
affiliates in Kenya and Tanzania, Safaricom and Vodacom, respectively. Now well established in 
                                                                                                                                               
the payment services supplier sends the business owner a card reader that plugs into  the mobile device's audio 
jack. Some payment service suppliers also provide optional  hand-held docking stations (called sleds) that allow 
the mobile device to read barcodes and print receipts. 
21 https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/IEPR1089PBR1114.pdf . 
22 https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=34754 . 
23 In  Ke n ya,  on ly 29% of adu l t s  h ave  ac ce s s t o a ban k ac c ou nt  bu t  68% of adu l ts  now ac t i ve l y use  
mobile money services. S/FIN/W/88/Add.1 
 
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  both Kenya and Tanzania, M-Pesa (a mobile financial services initiative developed by Vodafone and 
launched commercially by the company’s Kenyan affiliate Safaricom, continues to have a strong and growing presence in Africa. Since 2013, it has been extended to the Democratic Republic of 
Congo, Egypt, Lesotho, Mozambique and South Africa. In 2015, M-Pesa completed its 
establishment in India, where it has a partnership with ICICI Bank. M-Pesa has also established in 
Romania – its first European market.
24 –There are now 19.9 million active users of M-Pesa 
worldwide, and in 2014/15 3.4 billion transactions were processed. 
3.37.  Orange Money, launched by the French company Orange in the Côte d’Ivoire in December 
2008, is similar to M-Pesa. Orange Money is currently available in 14 countries in Africa and the Middle East: Botswana, Cameroon, Côte d’Ivoire, Egypt, Guinea, Jordan, Kenya, Madagascar, Mali, Mauritius, Morocco, Niger, Senegal, and Uganda. 
3.38.  Similar to the previous ones, Tigo is the mobile financial services initiative championed by 
Swedish telecommunications company Millicom. Tigo currently offers services that range from international remittances and money transfers, to interest earning mobile money accounts, micro-
credit, payments and billing. The Tigo brand has developed as Tigo Money in Latin America, Tigo 
Pesa in Tanzania, and Tigo Cash in the rest of  Africa. Tigo is currently present in 9 markets 
(Ghana, Tanzania, Chad, Rwanda, Senegal, El Salv ador, Guatemala, Paraguay and Honduras). In 
Latin America, for example, Tigo Money represents 42% of all active mobile money accounts in the 
region. 
3.39.  Another noteworthy experience in this field is that of Fundamo, a wholly-owned subsidiary 
of Visa Inc., headquartered in South Africa, and one of the largest specialist providers of mobile 
financial services in the world. Fundamo's mobile financial services platform has been deployed in 
more than 34 countries across Africa, Asia, and the Middle East, offering mobile financial services to unbanked and under-banked mobile subscribers including person-to-person payments, bill 
payments, and branchless banking. 
3.7  Mobile cross-border remittance services in Africa 3.40.  Mobile cross-border remittance services continue to grow dramatically in Africa. These 
services are delivered through different business models and partnerships. The most prevalent 
business models for providing mobile international remittance services in Africa are the following (Moyo and Rehak, 2014):  
 Operator-to-third-party. This involves partnership between an operator and an international 
 remittance provider or financial institution. Users send money to another country via, for 
 example, Western Union, and recipients receiv e it in their mobile wallets (or alternatively 
 collect it from the local Western Union agent). This is the most common type of mobile 
 remittance business model. 
 Intra-operator. Customers of the operator in one country can transfer money, using an 
 existing mobile money account, to a customer of the same operator in another country. 
 Millicom for example pioneered a cross-border mobile money remittance service in 
 February 2014 between Tigo Tanzania and Tigo Rwanda.  
 Inter-operator. This involves co-operation be tween different operators, enabling them to 
 reach countries that are outside their footprints. 
3.41.  In 2015, there were 29 cross-border mobile money initiatives connecting 19 countries – 
and, by volume, international remittances was the fastest growing product with 52% growth (GSMA, 2015). The majority of these initiatives are in Africa, but others are being developed in the 
Philippines and Singapore, as well as in Qatar (GSMA, 2015). 
3.42.  Partnering with an international financial institution is still the most common approach, 
because such players have established regulatory permission for cross-border money transfer, and 
                                               
24 In Romania, 39% of the population does not have bank accounts. The service offers access to mobile 
money transfer and payment services to approximat ely 7 million Romanians who rely mainly on cash 
transactions. S/FIN/W/88/Add.1 
 
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  have a commercial presence in many countries. Table…highlights selected partnerships between 
mobile operators and third-party remittance providers. 
Table 1. Selected cross-border re mittance partnerships in Africa 
Operator (country) Partner (country) 
Bharti Airtel (India) eServGlobal (Kenya, Sierra Leone, Tanzania) 
MTN (South Africa) eServGlobal (Ghana), MasterCard  (Ghana), MFS Africa (Côte 
d'Ivoire, Rwanda), Western Union (Côte d'Ivoire, Ghana, 
Uganda), World Remit (Uganda) 
Orange (France) MFS Africa (Madagascar) 
Vodafone (United Kingdom) Money Gram (Democratic Republic of the Congo, Egypt, Kenya, 
Lesotho, Mozambique, South Africa, Tanzania) 
 
Source : based on Moyo and Rehak (2014) 
 
4  CONCLUDING REMARKS: THE ROLE OF TRADE POLICY 
4.1.  The preceding discussion has shown that many obstacles stand in the way of financial 
inclusion. Those obstacles range from demand-side fa ctors (e.g. lack of income, distrust of formal 
financial institutions), to supply-side factors (e.g. unviable business models, inadequate product 
offering, inefficient and underdeveloped delivery networks), to weak institutional frameworks, to 
geographical constraints, to inadequate financia l regulation and subsequent legal uncertainty. 
Moreover, they are also likely to vary greatly in intensity and importance from country to country. 
4.2.  Fulfilling the goal of financial inclusion therefore means advancing on multiple fronts 
simultaneously.25 Striking the best balance in the choice and sequence of reforms in each country 
represents a major policy challenge in its own ri ght, and has been analysed in detail elsewhere 
(Demirgüç-Kunt, et al., 2007 and World Bank, 2014) . While regulatory changes are often needed 
to promote financial inclusion, progress in improving financial inclusion must be compatible with the achievement of the traditional objectives of financial regulation and supervision, namely, safeguarding the integrity and stability of the fi nancial system, and protecting financial service 
consumers. In order to achieve these objectives, governments must ensure appropriate prudential 
regulation and supervision of all financial services and service suppliers, together with strong consumer protection, anti-discrimination legislation,  contract enforcement, protection of property 
rights, and even financial education programs.  
4.3.  Financial inclusion initiatives may also benefit from a well-designed trade policy in services. 
As shown in the previous section, various types of  services and service suppliers operating through 
different business models are needed in order to bring financial services to poor and low-income 
populations and regions. Trade in services may th erefore significantly contribute to furthering 
financial inclusion. Financial policy-makers and regulators may not think specifically of "trade" when designing and implementing financial inclusio n initiatives and policies. However, insofar as 
foreign service suppliers participate in these mark et segments, and the supply of various different 
services through any mode of supply is affected, financial inclusion-related regulations become also trade policy. Just as fulfilling the goal of financial inclusion requires moving on multiple fronts, 
so too, reaping the potential benefits of trade in services to financial inclusion requires a holistic 
approach to trade policy in this area.  
4.4.  While no panacea for financial exclusion, trade policy in services can significantly 
complement, and contribute to, financial inclusion initiatives. Trade policy in services is about 
reducing barriers to entry and competition, ensuring a level playing field among market 
participants, guaranteeing transparency of regu lations and policies, and fostering diversity of 
products and services. As explained in Claessens and Rojas-Suarez (2016), "[c]ompetition matters 
for financial inclusion, especially in developing countries, because a market open to fair 
competition leads to a greater variety of products and services, higher efficiencies, and lower 
                                               
25 For discussions on regulation aimed at promoting financial incl usion, see Claessens and Rojas-
Suarez, 2016, Demirgüc-Kunt et al., 2007, United Nations, 2006, and World Bank, 2014. S/FIN/W/88/Add.1 
 
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  costs, which ultimately means potential consumers currently on the side-lines will be more easily 
included."  
4.5.  Trade policy in services can contribute to financial inclusion in at least three ways. First, it 
can help ensure that a full range of institutional options is available to a large spectrum of service 
suppliers who are important for the development of an inclusive finance market. Provided 
regulation is neutral with regard to the develo pment of the different business models and leaves 
the actual choice to the service suppliers invo lved, the prevalence of one model over another 
would certainly depend on specific country-circumstances and customer needs. Typical models 
include the following:  
a. Traditional full-service banks, which offer a range of financial services, such as deposit 
and savings accounts and loans (some of which can be offered digitally).  
b. Branchless banking or agency banking, whereby commercial banks are allowed to 
contract third parties (usually other service suppliers) to act as agents on behalf of the bank (e.g. supermarkets, grocery stores, gasoli ne stations, and lottery outlets) and offer 
basic financial services.  
c. Specialized payment banks, which differ from traditional full-service banks in that they 
have a much more limited business scope. 
d. Digital service suppliers (DSPs), includin g telecommunications service suppliers, and 
other non-bank DSPs, such as money transfer  operators, payment card companies, on-
line payment platforms and aggregators.
  
4.6.  Second, trade policy in services can support the introduction of new products and 
technologies. As shown previously, new financial services and products, as well as novel 
distribution channels, have emerged over the last years. These have the potential to contribute enormously to the three key elements of financia l inclusion: access, use and quality. These new 
technologies can be especially useful for low-income populations in developing countries because 
they offer a chance to leapfrog outdated financial systems and obtain the financial services they need. The latter include not only lending, but also other banking services (such as deposit-taking), 
as well as payment and money transmission services, and savings and insurance products.  
4.7.  However, the development of the different models described above is sometimes hampered 
by out-dated regulatory frameworks that rely on the supply of banking and other financial services 
exclusively by full-service banks. Trade policy could contribute to the availability of financial 
services by ensuring that, provided all companies involved in the supply of financial services to 
low-income persons – banks, MNOs, and others – are subject to regulation aimed at protecting consumers and safeguarding financial stability and integrity, no unnecessary barriers to entry and 
competition are applied. Functional regulation (i.e., identical rules applicable to functionally 
identical services, regardless of the institutional form of the provider), together with product regulation restricted to the fulfilment of consumer protection and financial stability objectives, 
have been advocated as a means to promote the expansion of products available to low-income 
segments of the market (Claessens and Rojas-Suares, 2016). 
4.8.  Finally, trade policy in services can contri bute to the well-functioning of inclusive finance 
markets, by supporting the development of the financial infrastructure.
26 Indeed, trade policy can 
help in various ways, by eliminating restrictions preventing nonbanks from accessing the national 
payment system, by allowing the entry and operatio n of digital payments platforms, by ensuring 
the interoperability of different payments system s and networks, and by fostering the development 
of regulatory frameworks for the expansion of credit bureaus and collateral registries.  
__________________ 
                                               
26 Financial infrastructure comprises a set of market institutions, networks and shared physical 
infrastructure that enable the effective operation of financial intermediaries, the exchange of information and data, and the settlement of payments  between market participants. Broadly speaking, it includes collateral 
registries, credit bureaus, credit ratings agencies, and payment and settlement systems; entities whose services are covered by the definition of  financial services used in the GATS. S/FIN/W/88/Add.1 
 
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  ANNEX 
Table 1. The 2010 AFI Survey results: Overall Rankings 
 OPPORTUNITY  OBSTACLE 
1 Financial education (66) 1 Limited financial literacy (57) 
2 Expanding the range of products (65) 2 Limited institutional capacity among MFIs (54) 
3 Credit bureaus (60) 3 Microfinance's single-product approach (52) 
3 Mobile (phone) banking (60) 4 Limited understanding of client needs (52) 
5 Client protection regulation (59) 5 Political interference (51) 
6 Capacity building for microfinance institutions 
(55) 6 Lack of credit bureaus (48) 
7 Full-inclusion financial institutions (51) 7 Product cost-structures (48) 
8 Improved regulation and supervision of 
microfinance (48) 8 Inadequate regulatory framework for MFIs (46) 
9 Correspondent/Agent banking (47) 9 Insufficient infrastructure (44) 
10 Improved demand-side information (38) 10 Inadequate client protection (42) 
11 Strengthening financ ial infrastructure for 
electronic (non-cash) transactions (35) 11 Poor business practices (41) 
12 Reaching out to new client groups (34) 12 Costs of building/operating branches (39) 
13 Competition (32) 13 Weak legal infrastructure (32) 
13 Prudential regulation and supervision (in 
general) (32) 13 Lack of network cooperation (32) 
15 National identification documentation (31) 15 Limited know-how of mainstream providers (28) 
15 Mobile (branch) banking (31) 15 Appropriate funding (28) 
17 Village savings and loan associations/self-help 
groups (31) 17 Unsustainable growth (28) 
17 Expansion and improvem ent of microfinance 
associations (31) 18 Commercially oriented entrants (27) 
19 Microfinance transformation (27) 19 Non-business-friendly environment (27) 
20 Building investor markets (24) 20 Regulation that lags technology (25) 
21 Commercial bank downscaling (22) 21 Financial regulatory  priorities (24) 
22 Collateral and secured tran sactions reform (20) 21 Lack of demographic information on the 
excluded (24) 
23 Self-regulation (18) 23 Impact of financial inclusion (23) 
24 Matched savings and/or cash transfer schemes 
(17) 24 Documentation requirements (22) 
25 Non-traditional providers (15) 25 Lack of interest by providers and policymakers 
(22) 
26 Linking government transfers to deposit 
accounts (14) 26 Weak industry voice (20) 
26 Product bundling and cross-selling (14) 27 Publ ic mistrust of financial institutions (19) 
28 Mandates to provide no- frills bank accounts (12) 28 Client risk (17) 
29 State bank reform (9) 29 Negative press image (17) 
30 Directed credit/service mandates (4) 30 Transient, migrant, displaced populations (10) 
 
Source : Gardeva and Rhyne (2011) 
Note: n=301. Numbers in parenthesis indicate the percentage  of respondents placing an item in their top ten. S/FIN/W/88/Add.1 
 
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