As we rebuild from the pandemic, what are the roles and responsibilities of business and government in creating a more equitable economy?
This was the focus of last week’s Global Inclusive Growth Summit, which convened a host of purpose-driven leaders and inclusive economy experts to discuss how innovative solutions, new partnerships, and collective action have the power to rebuild an economy that works for all. Presented by the Aspen Institute and Mastercard Center for Inclusive Growth, the summit featured three plenary sessions, interactive deep-dive discussions, and remarks from global leaders including former United States President Bill Clinton, Vice President of the United States Kamala Harris, World Trade Organization director general Ngozi Okonjo-Iweala, and H.M. Queen Maxima of the Netherlands, who serves as the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development.
While cross-sector action and new technology have created a more inclusive economy over the past decade, there are still dire challenges for households and small businesses that are disproportionately led by women and people of color.
But there is hope in cross-sector financial inclusion strategies and partnerships. The conversations that were presented at the Summit illuminated how we can continue reshaping our financial systems so they are more inclusive and sustainable. Some key takeaways:
- Financial inclusion is necessary but not sufficient to achieve financial health, and we need both: Although 90% of Americans have financial access, only 30% feel comfortable with their financial lives. In her plenary remarks, M. Queen Maxima of the Netherlands recognized that financial inclusion has become a widely understood and valued concept over the past ten years. Now, she said, we need to better understand and track the positive outcomes associated with this shift. “Are people living better lives because of financial access?” she asked, encouraging the adoption of uniform financial health KPIs that can help us better understand whether financial literacy, choice, and agency are creating more secure, stable lives.
- More than 35 countries have national financial inclusion strategies, and the US must join them: The Covid-19 pandemic exposed cracks in the US economic, social, and financial systems and revealed the need for an overarching, coordinated financial inclusion strategy. That’s why Senator Chris Coons used his time at the Summit to call for President Biden to establish a commission at the Department of Treasury. This commission would be tasked with making recommendations to create a national, interagency financial inclusion strategy that the government can implement in partnership with the financial services industry and nonprofit organizations. In doing so, the US would join more than 35 other countries that already have national financial inclusion strategies.
- To build more inclusive financial systems, we must meet small businesses where they are and build trust within communities: The traditional financial system leaves out many people, particularly women, people of color, older adults, and those with disabilities. To engage these underserved individuals and small businesses, Tunde Kehinde, co-founder and co-CEO of Lidya, recommends a more hands-on, empathetic approach. For example, loan decisions should be made based on business data rather than physical collateral or bias. Loans should be re-adjusted more frequently based on previous payments, ability to pay, and macro conditions. Technical assistance should also be available to help navigate new systems and technologies. There’s an important historical element, as well. Luz Urrutia, CEO of the Accion Opportunity Fund, acknowledged that many US small business owners have been victims of predatory financial practices, so it’s imperative to establish trust first. This can be accomplished by establishing community-based partnerships in centers of influence, listening to the challenges facing business owners before assuming their needs, and “coming to work with a lot of humility and a lot to learn,” she said.
In addition to highlighting the opportunities and challenges to building a more inclusive economy, key Summit participants unveiled 10 new programs and announced more than $54M in investments to promote economic opportunity and bottom-up growth in communities across the United States and around the globe. A few of these programs include:
- Mobility Capital Finance, Mastercard, and the City of Birmingham will develop, launch, and manage Birmingham’s financial services infrastructure program to help 50,000 underbanked and unbanked residents.
- Prudential is building on the impact of its decade-long partnership with the Aspen Institute with a pledge of $11 million over five years to together establish “Equity Re-imagined,” improving job quality, empowering people to build financial security, and amplifying wealth creation opportunities for historically underserved communities.
- Mastercard and Microsoft will link workers to training providers and employers, unlock access to capital for small businesses, and reduce bias in the financial services industry by identifying and mitigating bias in data and algorithms used by financial services providers.
- Beyond The Billion will secure pledges from venture funds and limited partner investors as part of their goal to unlock $10 billion in venture capital to be invested in a diverse group of women founders.
Learn more about the Global Inclusive Growth Summit here.