World Bank
Report Year
1st MAR Year

Implement new tools in country-based diagnostics and strategies. In countries with a substantial current or planned engagement in financial inclusion, the Bank Group should implement an appropriate, holistic, and systematic diagnostic tool and, based on such diagnostics, develop country-level strategies for financial inclusion to guide its work. Special attention is appropriate for frontier customers and market segments in countries where there is already substantial engagement. Such diagnostics could inform the Systematic Country Diagnostics and Country Partnership Frameworks. Connected to this, M&E systems should take account of results frameworks established in country financial inclusion strategies, and take a practical and cost-effective approach to improving measures of beneficiary impact.

Recommendation Adoption
IEG Rating by Year: mar-rating-popup HNTNTNT Management Rating by Year: mar-rating-mng-popup HNTNTNT
NANot Accepted
NRNot Rated
Findings Conclusions

The World Bank Group plays a significant role at the country level in advancing the policy reform needed for financial intermediaries to thrive and better serve the needs of the poor and unbanked. But the Bank Group's approach to identify and tackle constraints to financial inclusion is neither sufficiently systematic nor comprehensive.
The World Bank Group played an important role in identifying major legal and oversight gaps, and most projects were also executed with good work quality. According to the World Bank's own self-rating scheme, analytic and advisory work delivers an important and often successful contribution to the policy reform process.
The Bank Group's diagnostic work is more comprehensive in some areas than in others. Payment systems, remittances, and financial infrastructure were covered by structured surveys or tool-based diagnostics in other areas, such as consumer protection and financial literacy, stronger analytical support is under way or planned. However, particularly in areas in which prudential regulations would not be applied, the identification of constraints and priorities was at times not part of a holistic assessment of the adequacy of the various elements of the financial inclusion framework. Given the emergence of new technology as a potential solution, such diagnostics would have to also address issues of stability and consumer protection relating to Mobile Network Operated (MNO)-led mobile financial services - currently not systematically part of a country assessment. For the rural poor, savings and credit cooperatives often matter, yet the Bank Group's country diagnostics pay uneven attention to these important financial inclusion tools. In some country cases, the lack of traction in policy dialogue at the strategic level may have contributed to such an omission in the absence of a coherent national strategy for financial inclusion.
One of the root causes for this is the fact that there is no dedicated tool in the World Bank Group's financial inclusion tool kit designed to provide a comprehensive and systematic assessment of the various aspects of financial inclusion. Therefore it would seem appropriate that the holistic and systematic diagnostic tool for financial inclusion that is currently under development be finalized and implemented. Initiatives to develop a systematic financial inclusion module for the FSAP, to roll out the Financial Inclusion Support Framework (FISF), and to elaborate country-level financial inclusion strategies appear to be positive steps.
To assess progress in policy reform and in financial inclusion in general, monitoring and evaluating the results of country-level financial inclusion strategies is essential. A vital part of this is tracking beneficiary effects. However, projects most often track only the level of financial intermediation (about 45 percent), that is, the number and volume of loans. About 20 percent of projects track outputs related to the provision of workshops, trainings, reports, and studies. About 7 percent track changes in the enabling environment or other goals related to policy reform work. Only 2 percent report on beneficiary effects such as improvements in welfare or increases in income. In assessing beneficiary effects, the unavailability of baseline data is often a challenge.

Original Management Response

Management has adopted a systematic and comprehensive approach for new engagements in over 20 countries, linked to national financial inclusion strategies, Financial Inclusion Support Framework programs, and Financial Inclusion Programmatic Approaches, as well as for payment systems-related engagements globally. Central to this approach is a focus on data, diagnostics, and monitoring frameworks.

Management will also further strengthen and add to the "tool kit" of products, technical guidance, and diagnostic models relevant to Universal Financial Access and financial inclusion. During the first half of FY16, Management will complete the revision of the Guidance Note for financial inclusion in FSAPs (Financial Sector Assessment Program).

Action Plans
Action 1
Action 1 Number:
Action 1 Title:
Action 4A: Develop / update Financial Sector Assessment Program (FSAP) guidance on the Financial Inclusion module
Action 1 Plan:

Action 4A: Develop / update Financial Sector Assessment Program (FSAP) guidance on the Financial Inclusion module
Indicator: FSAP FI Guidance Notes finalized and used as guide for FSAP exercises.
Baseline: Guidance Note in development.
Target: FSAP FI Guidance Note adopted in FY17 to include a.o. coverage of consumer protection, financial literacy, and regulation of financial services by non-traditional institutions. Guidance note consistently used as the frame of reference in FSAP operations.
Timeline: FY19

Action 2
Action 2 Number:
Action 2 Title:
Action 4B: Develop and apply UFA country-focused toolkits. Toolkits help identify opportunities, design projects, scope activiti
Action 2 Plan:

Action 4B: Develop and apply UFA country-focused toolkits. Toolkits help identify opportunities, design projects, scope activities in SCDs, and track results.
Indicator: Set of toolkits to facilitate country-based diagnostics – Opportunity Dashboard, Traffic Light Tool, Operational Models for lending and ASA activities, M&E frameworks, National Financial Inclusion Strategies frameworks.
Baseline: Standardized / comprehensive set of toolkits for UFA in design.
Target: Toolkits developed and applied, including to inform SCDs and ASA/lending operation design.
Timeline: FY19

Action 3
Action 3 Number:
Action 3 Title:
Action 4C: Finalization and dissemination of Payment Aspects of Financial Inclusion report, chaired by the World Bank and Commit
Action 3 Plan:

Action 4C: Finalization and dissemination of Payment Aspects of Financial Inclusion report, chaired by the World Bank and Committee for Payment and Market Infrastructures (CPMI). Indicator: Dissemination of Payment Aspects of Financial Inclusion report.
Baseline: Lack of standard-setting body guidance on payments linked to financial inclusion. Target: PAFI guidance informs relevant WBG diagnostics and country engagements (ASA). Timeline: FY19

Action 4
Action 5
Action 6
Action 7
Action 8
IEG Update:
No Updates
Management Update:
No Updates
IEG Update:
No Updates
Management Update:
No Updates
IEG Update:
No Updates
Management Update:
No Updates
IEG Update:

IEG finds the actions taken substantive and fully consistent with those committed. IEG believes further monitoring is important to assure that , under B, toolkits are applied to inform SCDs and ASA/lending design and under C) "PAFI guidance informs relevant WBG diagnostics and country engagements (ASA)".

Management Update:

Action 4A Response:
Guidance Note for Financial Inclusion in FSAPs was completed and is in active use. This Guidance Note informs the treatment of financial inclusion in FSAP exercises, and includes tailored guidance for financial inclusion for firms (MSME finance), financial inclusion for individuals, and also responsible finance (consumer protection).
FSAP assessors are using this Guidance Note for the FSAP Aide Memoires/core analysis, and also for Financial Inclusion-related technical notes (e.g. in Russia, China, Saudi Arabia, and El Salvador over this period). Currently, FSAPs in Malawi and Namibia are under preparation with guidance using this technical note.
Rating of implementation progress for Action 4A: Complete
Action 4B Response:
The following toolkits were developed for UFA and financial inclusion purposes:
- Opportunity dashboard. This tool is used to design the UFA country action plans, and to prioritize reforms to support with ASA and lending engagements, and is linked with the "operational models for lending and ASA activities", and "traffic lights tool" below. The tool calculates the "country opportunity" in terms of the "number of unbanked adults that can potentially own a transaction account" if certain reforms are implemented during a certain timeframe.
- Traffic light tool. This tool was developed to select and prioritize the 25 UFA focus countries and thematic areas. In addition, the tool is also used for monitoring progress on improvements in the enabling environment for financial access and inclusion in a systematic way. Recently, this tool was revised to align with the PAFI framework, and is now labelled as the "UFA/PAFI tracker" (see Action 4C). During FY17, this tool was used in discussions with the Bill & Melinda Gates Foundation to select the countries for PAFI implementation for the new "FIGI" program (see Action 4C). Lastly, the tool is currently updated with the latest data from the Global Payment Systems Survey (GPSS) and the Global Financial Inclusion and Consumer Protection (FICP) Survey.
- Operational models for lending and ASA activities. A note was developed for this purpose. The models link with the "opportunity dashboard" and the "UFA/PAFI" tracker.
- M&E Frameworks - for use in lending and ASA engagements on financial access, financial inclusion and payments
- Template for National Financial Inclusion Strategies (NFIS). During FY17, TA was provided to the following countries to design, operationalize or implement NFIS: Ethiopia, Pakistan, Philippines, Afghanistan, Mozambique, Zambia, Russia, Indonesia, Kyrgyz Republic.
- M&E tools and templates for NFIS designed and in use.
- Technical note on design, operationalization and implementation of NFIS (forthcoming in FY18)
Rating of implementation progress for Action 4B: High
Action 4C Response:
Payment Aspects of Financial Inclusion (PAFI) report was published in April 2016. The report was disseminated widely during operational missions such as in Pakistan and in Kyrgyz Republic, and also in the Global Payment Systems Week (Turin, 2016) where approximately 50 central banks participated.
A methodology based on PAFI foundations and catalytic principles was developed for assessing countries' enabling environments and drivers for financial inclusion. Such PAFI Assessments were completed in South Africa, Albania, and Congo, Dem. Rep. until now, and planned in a number of countries. Recent FSAPs also use PAFI methodology, including the technical n