Home Publications & Resources Global Microscope

Global Microscope

2015 Global Microscope Shows Progress in the Environment for Financial Inclusion in Most Countries

EIU Microscope 2015Latin America and the Caribbean (LAC) and East and South Asia have the most conducive environments for financial inclusion; India, Haiti, and Egypt are among the most improved countries this year.

Access to affordable, diverse financial services is expanding and deepening in many parts of the world, according to The Economist Intelligence Unit's (EIU) 2015 Global Microscope on Financial Inclusion. Two-thirds of the 55 countries studied have improved their enabling environment for financial inclusion in all areas in the past year. Peru, Colombia, and the Philippines remain at the forefront of the international country rankings.

Developed by the EIU in collaboration with the Multilateral Investment Fund (a member of the Inter- American Development Bank Group) and CAF—Development Bank of Latin America, and with additional financial and technical support from the Center for Financial Inclusion at Accion and the MetLife Foundation, the Microscope is intended to benchmark national progress on financial inclusion and catalyse reform. The Global Microscope 2015 assesses the regulatory ecosystem for financial inclusion by evaluating 12 indicators across a range of developing economies in East and South Asia, Eastern Europe and Central Asia, Latin America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa. This year's Microscope is the ninth edition of the study and the second that looks beyond microfinance, evaluating countries across the wider landscape of financial inclusion.

2015 Microscope RankingCompared with last year, the index results show a number of improvements. The average score for the 55 countries has increased (from 46 points to 48 points, where 100 is best) and only one country in 2015 has a score that is 25 points or lower. Moreover, conditions globally have improved this year for ten of the 12 indicators covered in the index. These gains indicate that some very basic elements of policy essential to promoting financial inclusion are now widespread.

Consistent with last year's overall performance, Latin America and the Caribbean (LAC) and East and South Asia tie for the highest overall scores regionally, with LAC countries capturing five of the global top ten countries by rank. Eastern Europe and Central Asia and Sub-Saharan Africa had very similar scores (one point difference), finishing third and fourth in regional rankings, respectively. The Middle East and North Africa (MENA) posted the lowest overall score in the index.

The countries with the greatest increases in their overall scores this year are more likely to have a comprehensive strategy in place, or at least programmes and laws that tackle multiple, often interlinked, barriers to inclusion simultaneously. India recorded one of the biggest increases of any country in its score this year (10 points), which reflects in part a substantial drive to make banking more accessible to the entire population. This improved accessibility was accomplished through the introduction of guidelines for creating specialised Payment Banks and Small Finance Banks specifically aimed at the poor. Two other top gainers over the past year – Haiti and Egypt (each of which improved their scores by eight points) – implemented measures to establish an even broader set of financial inclusion mechanisms that include government support and regulation and supervision of credit.

Challenges in the financial inclusion environment remain. Many institutions, such as credit unions and co-operatives in LAC and Sub-Saharan Africa, are still not prudentially regulated. Although more countries are developing unique rules for insurance that specifically target low-income consumers (including microinsurance), many countries still regulate this type of insurance under broader policies that cover all insurance types. Finally, consumer protection remains a concern for many consumers of financial products: only eight of the 55 index countries provide a comprehensive framework and capacity to protect the financial consumer.

Previous editions of the Global Microscope:

2014 Microscope

Revamped 2014 Global Microscope Calls for Comprehensive Strategies for Financial Inclusion

Screen Shot 2014-11-06 at 9.00.30 AMPeru, Colombia and the Philippines have the most conducive environments for financial inclusion; East & South Asia and Sub-Saharan Africa posted the highest scores for electronic payments

The Global Microscope, now in its eighth year, has expanded its framework to measure financial inclusion beyond microfinance. The 2014 Microscope examines the inclusiveness of countries’ financial sectors by considering best practices in the national regulatory environment and institutional support in the safe provision of a wider range of financial products and services to low income populations.

Developed by the EIU in collaboration with the Multilateral Investment Fund (a member of the Inter-American Development Bank Group) and CAF (the development bank of Latin America), and with additional support from the Center for Financial Inclusion at Accion and Citi Microfinance, the Global Microscope scores countries as a way of benchmarking their progress toward a financially inclusive environment for the bottom of the pyramid.


Regionally, Latin America and the Caribbean (LAC) and East and South Asia tie for the highest overall scores in the Global Microscope 2014. LAC countries also captured half the slots in the global top ten. The Middle East and North Africa (MENA) region posted the lowest overall score. East and South Asia and Sub-Saharan Africa tied for the highest regional scores in regulations for electronic payments, one of the new topics in this year’s Microscope. Countries like Bangladesh, Pakistan and Sri Lanka have the electronic payments infrastructure to serve the bottom of the pyramid’s needs for financial services and Kenya and Tanzania have adopted regulations that are conducive to the growth of mobile payments.

Microscope RankingDespite the change in methodology, Peru held the top position in the Global Microscope 2014 for the seventh consecutive year, followed closely by Colombia and the Philippines. Both South American countries showed strength across the board, ranking in the top five in most of the indicators. Colombia and Peru are global leaders in prudential regulation and rules for deposit-taking, and have strong records in micro-loans and provision of savings products to the poor.

The study found that most of the countries that fared well in the previous index also achieved good scores in the new Microscope. In fact, six of the top ten countries from last year’s Microscope are among the best performers this year (Bolivia, Cambodia, Colombia, Peru, Pakistan, and Philippines). The study revealed that countries with enabling environments for microfinance tend to have favourable conditions for financial inclusion.

At the other end of the spectrum, countries at the bottom of the index performed especially poorly on measures of institutional support for financial inclusion. The institutional architecture for financial inclusion is covered through such indicators as government support for financial inclusion, credit reporting systems, market conduct rules, and grievance redress and availability of dispute resolution mechanisms. Countries near the bottom of the index struggle in all of these areas. These results highlight two important needs: first, to make a serious national commitment to financial inclusion and, second, to enact regulations that will build a healthy ecosystem for financial inclusion. 

2013 Microscope

2013 Edition of the Global Microscope on Microfinance Highlights Progress in Credit Bureau Infrastructure, Client Protection and Mobile Banking

2013_microscope

Latin American and Caribbean countries dominate the top ten; most Asian countries experience significant improvements; Middle East and North African countries posted the lowest scores

The Microscope, now in its seventh year, examines countries’ microfinance sectors by considering the national regulatory environment and the corresponding institutional framework. Developed by the EIU in collaboration with the Multilateral Investment Fund (a member of the Inter-American Development Bank Group) and CAF (the development bank of Latin America), and with additional support from the Center for Financial Inclusion at Accion and Citi Microfinance, the Microscope scores countries as a way of benchmarking progress. Of the 55 countries studied in this year’s report, 30 improved their scores, 19 fell back and six were unchanged.

Most of this year’s improvements occurred in the Supporting Institutional Framework for microfinance, while scores for Regulatory Framework and Practices mostly declined. The growth of credit bureaus, increased client protection activities, and the expansion of mobile banking drove the improvements, with Bosnia and Herzegovina and Pakistan joining the top performers in this category. Even so, one-fifth of the countries in the study still do not have a functioning credit bureau.

Latin America and the Caribbean (LAC) once again had the highest overall regional score in the 2013 Global Microscope. LAC countries also captured half the slots in the global top ten. Asian countries experienced significant improvements in overall rankings because of changes in their institutional frameworks, led by better dispute resolution systems and improved credit bureaus. Although the four countries in the Middle East and North Africa (MENA) showed slight improvements from the year before, the region still posted the lowest overall score.

Country highlights:

  • New to the top ten are the Dominican Republic and Uganda, while Nicaragua breaks into the top 15.
  • Improvements in credit bureaus contributed to Cambodia’s continued rise. After entering the top ten last year, Cambodia jumped two more spots this year to number six, just behind Kenya.
  • India rose to 16th from 22th. Except for the State of Andhra Pradesh (AP), the country has overcome the effects of the October 2010 microfinance crisis. Indian MFIs have also made significant progress in establishing proper grievance-redress systems.
  • Ecuador, Mexico and the Kyrgyz Republic all faced challenging microfinance environments in 2013. Ecuador’s NGOs operating in micro-credit face more operational obstacles, while Mexico’s financial supervisor faced difficulties bringing some types of deposit-taking institutions under its supervision. The Kyrgyz Republic fell significantly in the rankings because of the imposition of interest rates caps and disruptions to the dispute resolution mechanisms. 

The 2013 Global Microscope used the same set of indicators and methodology as the 2012 study. This year, however, the EIU increased consultations with microfinance institutions, networks, regulators, consultants and investors to gather additional insights.