Menu

Sustainable development advocate Arshad Rab has called for a fundamental rethink of financial inclusion, arguing that expanding access to financial services is not enough if people remain trapped in poverty despite being formally included in the financial system.

Speaking at the High-Level Financial Sector Sustainability Summit organised by the Reserve Bank of Zimbabwe in Harare last month, Rab introduced what he described as a new principle, “Opportunity Inclusion”, which seeks to measure success not by access to financial products but by whether people can improve their economic circumstances and build long-term prosperity.

Rab challenged policymakers, regulators, financial institutions and development organisations to reconsider the ultimate purpose of financial inclusion programmes.

“For decades, financial inclusion has focused on bringing people into the financial system,” Rab said. “The question now is whether the financial system enables them to escape poverty.”

According to Rab, access to bank accounts, loans and payment services should be viewed as a starting point rather than an end goal. He warned that financial systems can sometimes perpetuate poverty rather than eliminate it if they provide only recurring financing for daily survival without creating pathways to economic advancement.

To illustrate his point, Rab described the experience of a market vendor who repeatedly takes out and repays small loans over many years yet remains in the same economic position.

“That does not end poverty. It merely finances its continuation,” he said.

Rab stressed that his criticism was not aimed at financial access itself but at treating access as the primary measure of success. Under his proposed Opportunity Inclusion framework, financial services should be evaluated on their ability to create opportunities for business growth, wealth creation and upward mobility.

“Inclusion should not be measured by access to finance alone,” he said. “It should be measured by access to opportunity.”

Rab outlined a vision in which finance helps individuals progress from micro-enterprises to larger businesses capable of generating employment and long-term wealth. He described a possible journey in which a woman receiving her first microloan grows her market stall into a shop, develops it into a business, and eventually becomes a corporate leader.

“That is the journey finance should make possible,” he said.

The proposal also challenges organisations involved in poverty reduction and development finance to focus on measurable improvements in people's economic independence, rather than continued participation in assistance programmes.

“Poverty is not – and must never become – a business model,” Rab said. He warned that poverty-reduction efforts risk becoming self-sustaining industries if programmes repeatedly fund the same conditions without delivering lasting economic change.

Rab argued that the success of financial inclusion should be judged by outcomes such as rising incomes, expanding businesses, reduced dependence on support programmes, and improved opportunities for future generations.

He also linked Opportunity Inclusion to broader economic development, suggesting that widespread economic mobility could help transform local enterprises into national, regional and even global businesses.

The concept requires more than access to financial products, Rab said. It also depends on access to markets, productive employment, technology, business growth opportunities, and financial institutions capable of supporting customers as they advance economically.

He applied the same principle to empowerment. If people remain permanently dependent on the programme intended to empower them, he argued, its ultimate purpose has not been fulfilled. The purpose should not be permanent dependence on empowerment programmes – but the economic power to no longer need any such programme, he said.

Rab concluded by urging financial institutions and policymakers to focus on whether finance helps people break intergenerational cycles of poverty.

“And that is how finance becomes an instrument not for managing poverty but for ending it.”

Rab is chairman of the International Council of Sustainability Standards for Value-Driven Financial Institutions and chief executive officer of the European Organisation for Sustainable Development (EOSD). He is recognised for his work in sustainable development and financial-system transformation.