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Building resilient financial sector crucial to uplifting people’s lives

IN recognition of poverty eradication in all its forms and dimensions, including extreme poverty, is the greatest global challenge and an indispensable requirement for sustainable development.

Various societies have been struggling to fight against poverty so that they may achieve high living standards.

It is indeed a concern that the number of people living in extreme poverty and hunger surpasses one billion and inequalities between and within countries remain a significant challenge.

To address this situation, financial solutions have been sought as among the best strategies for empowerment and lifting people out of poverty.

Banks and other financial institutions have proved to be instrumental in fighting and supporting the war on poverty through the provision of loans and other forms of capital to facilitate economic activities.

Although the penetration of financial services in most developing countries has remained low, its impact on such countries has been tremendous.

In Tanzania, for example, the penetration of banking services has remained as low as below 20 per cent. However, mobile technology has gradually introduced the excluded population to formal financial services.

This has boosted financial inclusion, which is essential for inclusive growth and it is a prerequisite for sustainable economic growth and development to over 70 per cent.

Prudent measures taken by the central bank in regulating the financial sector have helped to harness the power of technology, which is one of the most effective ways of integrating the unbanked population in the financial mainstream.

It is acknowledged and argued that increasing access to the financial system may be as important in reducing poverty as in increasing its depth.

All these efforts aimed at promoting the penetration of financial services got new impetus few years ago after the United Nations adopted and designated December 4 each year as International Day of Banks.

This commemoration aims at recognising the significant potential of multilateral development banks and other international development banks in financing sustainable development and the improvement of the standard of living.

According to the UN, collaboration between national development banks and multilateral banks, through co-financing or on-lending arrangements, can enhance goal-related finance through the complementarity of international resources and local market knowledge.

It adds that the global economy is facing heightened risks and financial volatility, with global growth likely to have peaked. Geopolitical factors, trade disputes, financial market volatility and non-economic factors, such as climate change risk further impeding growth, stability and development and worsening poverty, inequality and vulnerabilities.

It is becoming increasingly urgent to address the systemic economic and financial risks and architectural gaps that threaten the implementation of the 2030 Agenda.

Therefore, building resilient financial sector can be a powerful tool in uplifting the people from poverty in the country.

 

THE World Bank recently estimated that the value ...

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Author: EDITOR

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