On financial inclusion

Pakistan has scaled many heights in microfinance sector in the last decade and a half. Now a latest report by the Economist Intelligence Unit (EIU) shows the country among top performers for regulatory environment for financial inclusion.
The report titled Global Microscope 2014 examines 12 exhaustive indicators. It modified its previous ranking-based methodology, so year-on-year ranking shifts are pretty much meaningless this year, though for the future, the 2014 baseline would come in handy. How well did Pakistan do?
Among 55 countries studied, Pakistan was tied on number seven with Bolivia. It was just a notch below India and Mexico, both tied at five. In East and South Asia, the most aggressive region in the world on financial inclusion besides Latin America and the Caribbean, Pakistan was ranked third behind the Philippines and India. Except for India, Pakistans rank was better than rest of the Asian countries like Indonesia (ranked 11), Thailand (23), Turkey (28), Bangladesh (29), China (42) and Sri Lanka (44).
Peru, Colombia, and Philippines were the top-three nations, which the EIU attributed to "strong leadership" and "institutional depth". "Countries with a favourable environment for microfinance are better positioned to provide strong conditions for financial inclusion by leveraging institutional support already in place," the report identified.
Pakistans score of 58 is in the third quartile, where 16 top countries resided. Thus Pakistans is a favourable regulatory environment, and there are some positive observations in the EIU report:
"Pakistan is one of the few countries in the world that has a separate legal and regulatory framework for MFBs, which is first formulated in 2001. In March 2008 the SBP introduced some of the first regulations anywhere in the world designed specifically to encourage branchless banking. It revised those regulations in 2011 as a way by which to foster the growth of agent banking. The SBP has worked closely with both MFBs and conventional banks to devise suitable regulations for innovations in delivery systems."
But the report also highlighted whats holding the countrys financial inclusion efforts back. Painfully familiar issues come up: law and order situation, electricity crisis, and high government borrowing, besides sector issues such as low microinsurance outreach and consumer protection gaps.
This column would congratulate the policymakers and the market players for consistently putting Pakistan on the global financial inclusion map. But it would be great if there are regular surveys that solicit beneficiary (user) feedback. After all, regulatory environment is not an end in itself, but a means to the end of improving lives of those at the bottom of the pyramid.
Secondly, the government must come up with a financial inclusion strategy with explicit goals and milestones. But then, even a utopian financial inclusion system will not be the panacea. So, there need to be opportunities: people must have a business opportunity to borrow for, future promise to save for, and an asset to insure against. Only then can a robust financial inclusion infrastructure help.