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The ILO’s social mandate creates a powerful concern for
the most vulnerable segments of the population. People
in a vulnerable situation have the fewest options to access financial services,
and yet perhaps have the greatest need.
Microcredit is known for
its valuable contribution to poverty alleviation. Yet the movement out of poverty fostered by microenterprise credit is
slow and patchy. Poor people do not emerge from poverty just because they have
received one or two income-generating loans; even a steady stream of enterprise
loans may be insufficient. Livelihood improvements can
easily be reversed by shocks to the household that affect income, expenses or
both. Sustainable poverty alleviation requires, among other things,
long term access to a range of financial services to help the poor to
manage risks—including savings, emergency loans, remittances and insurance. Furthermore, to understand the types of services that
might be required to reduce vulnerability, it is necessary to consider the most
vulnerable segments of the population. These groups, be they refugees,
immigrants, women or victims of bonded or child labour, often need special types
of financial services that enable them to reduce their vulnerability. For
example:
• In a post-conflict environment, financial
services provide a social safety net and help launch the rebuilding process.
• The provision of financial services is a core
component of strategies to eliminate bonded labour because it reduces the need
for workers to take a salary advance from their employer and start down the
slippery slope toward debt bondage.
• Through savings, emergency loans and insurance,
social finance helps poor families to weather the storms of unpredictable
expenses and income droughts. Through research, training and technical assistance, the
Social Finance Programme supports financial institutions to develop services that can reach vulnerable
persons with a lasting impact. At the same time the Programme intervenes at the policy
level to improve the enabling environment required for the delivery of
poverty-oriented financial services.
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