Despite the progress that’s been made over the past several decades, the global poverty rate is rising for the first time in 25 years.
Amplified by the combined effects of the global health crisis, war and economic changes, billions of people are still experiencing a lack of access to basic necessities. For example, over 3.5 billion people don’t have reliable electricity, 771 million don’t have access to clean water and over 58 million children are not in school.
In response, global banks are helping drive progress by creating financial solutions for companies that are aiming at increasing access to everyday needs like clean water, housing, reliable energy and more with an approach called social finance.
Typically, a bank will invest in an organization with the expectation of economic growth and gain. But with social finance, banks are specifically investing in organizations that are doing good in the world.
Jorge Rubio Nava, Global Head of Social Finance at Citi, refers to social finance as “the financing activities that we do for clients around the world that are expanding access to essential services that lower-income communities need and don’t have at the moment.”
But what does that type of financing look like in action, specifically for a global bank like Citi?
The World Bank estimates that more than 60% of the adult population in Mexico don’t have access to a bank account or a credit history. To combat that, Citi provided financing to a fintech company in Mexico that finances smartphones to customers with limited or no credit histories. This helps enable individuals to pay for their smartphones in installments and build their credit history at the same time, resulting in expanded financial inclusion for their customers.
According to Ramona Ortega, Social Impact Entrepreneur and Fintech Expert, “This is the kind of thing that banks have a real opportunity to invest in and so they’re really one of the prime players. I think banks are so critical in making change because they are really the shepherds of deploying capital.”
To continue leveraging its global presence, Citi is committing $1 trillion in support of the United Nations’ Sustainable Development Goals which provide a blueprint to a more equitable and sustainable world by 2030.
With the support from progress makers like Citi, social finance initiatives can unlock new sources of capital to help create a global economy that is more sustainable, inclusive and successful.