Two important aspects of wealth creation are an individual’s ability to access financial services and their ability to have secure rights over their land and other property.
Financial inclusion has been broadly recognized as critical in reducing poverty and achieving inclusive economic growth. Financial inclusion is not an end in itself, but a means to an end—there is growing evidence that it has substantial benefits for individuals. Studies show that when people participate in the financial system, they are better able to start and expand businesses, invest in education, manage risk, and absorb financial shocks. Access to accounts and to savings and payment mechanisms increases savings, empowers women, and boosts productive investment and consumption. Access to credit also has positive effects on consumption—as well as on employment status and income and on some aspects of mental health and outlook.
An estimated 2 billion adults do not have access to formal financial services. A World Bank-Gallup survey in 148 countries in 2014 reported that 66% of the adults in Sub-Saharan Africa and 54% of adults in South Asia do not have access to formal financial services, compared to only 9% in high-income countries. There is a large gender gap in access to financial services. Globally, 58% of women had access to financial services in 2014, compared to 65% for men. In developing economies the gender gap is even higher at 9 percentage points. Many people lack access to financial services in the sense that these services have prohibitive costs or that there are barriers to their use, such as regulations requiring onerous paperwork, travel distance, legal hurdles, or other market failures. There is growing recognition that most of the barriers that limit access to services can be overcome by better policies.
Evidence is strong that secure land and other property rights enable sustainable and inclusive economic development, and reduce extreme poverty while empowering women. Insecure land rights act as a deterrent for productivity, economic growth and innovation. Weak tenure rights can also cause and exacerbate conflict.
As a key economic institution, secure land and property rights sit at the heart of the UK’s ‘golden thread’ vision for international development and poverty reduction. DFID is committed to scaling up programmes that improve the security of land tenure rights in developing countries, particularly for women and girls. The programmes contributing to this indicator tackle specific challenges to the security of rights to land and other property, especially for the poor, which make it more difficult for individuals, communities and businesses to invest and get a good return from their assets.