Box VI.2: Diagnostic Tools for Financial Sector Development

institutions to develop savings and other products around these regular cash flows received by their clients from family members living abroad or in other domestic major towns. In many African countries, including fragile states, some financial institutions have developed savings and loan products for remittances recipients as their remittances become regular income flows.

Box VI.2: Diagnostic Tools for Financial Sector Development

To ensure the efficient use of scarce resources available to fragile states, coordination between government and development partners is of paramount importance and all the more crucial in an environment which typically lacks a roadmap and stakeholders’ consensus around a unique national agenda/action plan for the financial sector. Diagnostic tools such as the World Bank/IMF backed Financial Sector Assessment Programs (FSAP) and the diagnostic works of the CGAP are good indicators of driving components of financial inclusion.

The UNCDF in collaboration with FinMark Trust and Cenfri, have developed a holistic diagnostic and programmatic framework for financial inclusion, driven by detailed demandside data that links the needs of poor households within the political economy of nation states, with a special focus on Least Developed Countries. Making Access Possible (MAP) is a diagnostic and programmatic framework to support expanding access to financial services for individuals and micro and small businesses. The MAP framework creates the space to convene a wide range of stakeholders around an evidence-based country diagnostic which leads to the development of national financial inclusion roadmaps. MAP includes an integrated and holistic diagnostic that shifts beyond the narrow supply-led focus to a broader focus on the financial ecosystem. The toolset goes beyond microfinance to look at the entire financial sector by taking a detailed look at the demand-side through the implementation of a nationally representative survey on financial inclusion which examines the usage of products, barriers and enablers to uptake of financial services, particularly for poor households, a detailed supply-side diagnostic which also takes into consideration the nature of distribution networks and the availability of both products and infrastructure to serve market demand. This diagnostic is captured within the policy and regulatory frameworks of the country and benchmarked against international best practices.

The growing momentum around financial inclusion leads us to re-think the role and responsibilities of traditional service providers in a rapidly evolving financial eco-system and compels us to help governments develop concrete tools and processes to help situate financial inclusion within their national development agendas. MAP diagnostics have been completed in Cote d’Ivoire and active in Mozambique, Myanmar, Thailand, Laos and DRC.

Source: UNCDF.