Smash hit

However, there is a long way to go. Fewer than 20 per cent of people in many African countries have access to bank accounts, something that most of us take for granted. It has been shown that a 10 per cent change in the ratio of private credit to GDP can lift 3 per cent of the population out of poverty. This in turn can be the catalyst in creating and bolstering the economy, boosting the middle classes.

Back in 2005, I had a conversation with the Indian Minister of Finance Sri Chidambaram, which though only lasting a short period stayed with me. In Mr Chidambaram India has a Finance Minister who is not only guiding one of the fastest growing global economies, but is also a passionate champion of the poorest and most vulnerable members of Indian society. The Minister talked to me that day about the central role that financial inclusion was playing in his efforts to reduce poverty and increase financial participation. We were of the same view. We both see financial inclusion as a tool to ensuring that economic growth is both broad-based and sustainable.

The difference today is that financial inclusion is now a commercially viable proposition. Whether it is banking microfinance institutions in Africa, or injecting capital into the rural microfinance centre of Nepal, this is a business like any other part of a commercial portfolio: it’s based on economic common sense, it has experienced international business managers driving it, and most importantly it makes a profit.

I’m always frustrated by the criticism levelled at international companies operating in developing countries simply because they make a profit. You can today make profit with principles. Profit can equate to sustainability, and part of being a sustainable business is making profit.

Financial inclusion offers the ability to alleviate poverty at a profit for its financiers, and its new widespread acceptance is already lifting millions out of poverty. This paradigm shift offers the chance to unlock the full economic potential of some of the world’s most exciting markets, and the effect of this cannot be underestimated.

Take Kenya – a country which I absolutely love, which I’ve visited on numerous occasions, and a country which receives millions of dollars of aid money every year to fight poverty. Yet despite the donor efforts, little trickles down to the small-scale traders unless they have collateral.

In Asia, over 100 million people have obtained small loans thanks to the rapid growth of financial inclusion. In Kenya, as in Asia, the commercial viability of financial inclusion has been matched by progressive governance in-country. The Kenyan government has seized this opportunity and implemented a new law to provide the right framework for microfinance institutions to transact business. This means that government and industry can work together in facilitating sustainable funding to those who have traditionally lacked access to capital, to skills, and to opportunities. Across Asia and Africa access to finance is rightly being seen as the key to unlocking sustainable economic growth. The work of microfinance institutions and development organisations is essential in helping the poorest in society. Financial inclusion offers a door to the mainstream economy. Large organisations have a role to play alongside governments and microfinance institutions to catalyse the development of small enterprises.

Last September, I took the stage with President Bill Clinton in Washington, at the Clinton Global Initiative, and made a pledge on behalf of Standard Chartered: a commitment to establish a $500 million financial inclusion facility, reaching out over the next five years to four million people across Asia and Africa. We’ve made great progress. We now have 37 microfinance institutions as customers in South Asia and Africa, including India, Bangladesh, South Africa and Ghana. Last year alone, our loans gave one million people access to finance they would otherwise have been denied. What is very very interesting is that nearly 90 per cent of these borrowers were women.

Other than through contributing to the sustainable economic growth of developing countries across the world, how else will financial inclusion touch our lives? We are seeing new online companies where anyone in the world can log on and grant loans to individuals after viewing their profiles and business proposition. Loans are granted at your own risk and repaid after several months. And as we are currently judging international companies by their impact on the environment, or their charitable donations in the future I believe customers will expect banks to have an active, financial inclusion department as a core part of their business, and to take responsibility for the role they play in ensuring they’re contributing to the sustainability of the markets in which they operate.

So not only would financial institutions be letting their shareholders down by not taking advantage of the business opportunities presented by financial inclusion or microfinance, they would be letting down their customers. What more reason do we need?

Now look, I hope I’ve convinced you. We’re in a fast-changing world. It’s very difficult to predict the future. But one thing is certain: we all need to play a role in getting people out of poverty, and this is one major way.