Nigel Wilson

Nigel Wilson

Group Chief Executive

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Three ways we're inching toward financial inclusion

Writing in, Nigel Wilson explains how Inclusive capitalism can break the 'vicious cycle' of social exclusion and isolation. Too many people are being left behind, excluded from the benefits of capitalism.

Too many people are being excluded from the benefits of capitalism. One unintended consequence of this is the rise of “populist” parties at the extremes of both Left and Right. “Populism” has become a catchall shorthand for anything the “included” disagree with. The irony, though, is that populist movements advocate socially divisive rather than genuinely popular policies.

There have been at least 30 years of well-meaning initiatives on financial inclusion, but for the most part, they haven’t delivered on their promise.

Few deny that capitalism raises global standards of living. As Churchill said of democracy, capitalism is the worst economic system we have, except for all the others. The problem is that, as in the 1920s, its benefits have become increasingly unevenly distributed.

Capitalism has very obviously benefited rich people in rich countries, but it has also benefited rich people in poor countries. Poor people in poor countries defined by the World Bank as living on less than the international equivalent $1.90 per person per day, have also been big winners in absolute terms, with global levels of absolute poverty falling sharply.

Every year between 1990 and 2010, the number of people living on less than $2 per day in today’s terms fell by an average of 50 million. Today, 760 million people globally live below this official definition of extreme poverty: that is around 10%. But back in the 1980's, it was over 40%.

Financial exclusion is a very real problem, as almost a quarter of the world’s population —1.7 billion people—have no bank account. This is a problem in developed countries, too. FDIC data points to 7% of U.S. households being unbanked, including over 20% in Miami and 12% in New York City. The U.K.’s Financial Inclusion Commission similarly shows around 2 million people without access to a bank account.

To read the full article, with Nigel Wilson's three solutions to the problem of exclusion, please follow the link below: