“rural financial inclusion and the challenges involved”
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“Rural Financial Inclusion and the Challenges Involved”
Rural Financial Inclusion: Western Isles experience
Financial inclusion
What does it look like in the Western Isles?
Rural barriers
Opportunities
Western Isles – sustainable change
Issues and questions.
Rural Financial Inclusion: definition (1)
Financial exclusion can be defined as the inability of individuals, groups and communities to access and use appropriate and affordable personal, business and organisational financial products and services.
Financial exclusion can be defined as the inability of individuals, groups and communities to access and use appropriate and affordable personal, business and organisational financial products and services.
adapted from the Scottish Executive Financial Inclusion
Action Plan.
adapted from the Scottish Executive Financial Inclusion
Action Plan.
Rural Financial Inclusion: definition (2)
What this means for us in the Western Isles; seeking ways to prevent financial exclusion from arising
providing individuals and households with the advice, information and guidance needed to manage their way out of poverty and stay out
being ‘cleverer’ about the ways we get this help to people and doing so when it is most needed
ensuring access to the products and services needed to underpin financial inclusion
encouraging individuals to plan and manage their finances over the short and longer-term
providing social enterprises with the advice, support and resources required to grow and create new opportunities
… it’s not just about poverty and the poor!
Rural Financial Inclusion: what does it look like (1)
What are the conditions we seek to change – underpinning issues;
declining population – 10% since 1991; young people in particular
26% of population is over the age of 60 - 23% for Scotland; more pronounced in smaller communities
over 15% of the population recognised as ‘income deprived’
unemployment of 3.1% compared to 2.9% in Scotland
… but labour market characterised by seasonality, low income occupations and dependence on declining industries.
Rural Financial Inclusion: what does it look like (2)
What are the conditions we seek to change – higher costs;
0 5 10 15 20 25 30
clothing
housing/fuel
transport
food
% household income
UK
W. Isles
0 5 10 15 20 25 30
clothing
housing/fuel
transport
food
% household income
UK
W. Isles
Rural Financial Inclusion: what does it look like (3)
What are the conditions we seek to change – the outcomes;
the average gross weekly salary in 2005 was £380.5 - Scottish average was £411.7
average Western Isles household income during 2003 was £21,700 - Scottish average of £25,500
heavier reliance on pensions – 14% of income compared to 7% in Scotland
highest levels of fuel poverty in Scotland, 24% in 2005, more prominent in smaller communities
CAB reported over 6,000 Benefits enquiries in 2004/05 - 45% of these being Disability Benefits/Disabled Person Tax Credit constituting the single most frequent form of enquiry
Money Advice had dealt with over 2,000 enquiries, taking on almost 600 crisis debt cases with £6,000 worth of debt on average
Rural Financial Inclusion: rural barriers
choice of and access to services more limited – heightened by concern over post offices
‘specialist’ support limited – extra pressure on partners such as CAB
both above exacerbated by costs of providing services in most remote and fragile communities
local people not inclined to give information about themselves relating to finance
scale/nature of communities precludes any targeting of services at too narrowly defined social groups
financial wellbeing of young people migrating for education/work, without the support available to their mainland peers is a concern
awareness of good practice in financial inclusion in a rural setting is very limited.
Western Isles: sustainable change (1)
using resources over the next two years to lay groundwork for sustainable change.using resources over the next two years to lay groundwork for sustainable change.
Our action planning process…
Understanding the nature and characteristics of financial exclusion – people and place
Understanding the nature and characteristics of financial exclusion – people and place
Building up a picture of what where we want to be in terms of our people, our organisations and services
Building up a picture of what where we want to be in terms of our people, our organisations and services
Mapping current services – where are we strong; what are the gaps; what we can realistically change
Mapping current services – where are we strong; what are the gaps; what we can realistically change
Building a consensus around the changes we want and testing or pump-priming new approaches
Building a consensus around the changes we want and testing or pump-priming new approaches
Rural Financial Inclusion: opportunities
Western Isles has many natural advantages; extremely vibrant voluntary sector – can reach most
vulnerable groups
services know each other – although we are aware that joint working can still improve
staff involved in delivery as well as strategy – closer to clients
excellent broadband infrastructure can provide a platform for information and new services
new Credit Union central to our plans
understand and comfortable with the need for sustainable developments
Western Isles: sustainable change (2)
Enhanced Service Coordination – CAB and
Credit Union at core
Enhanced Service Coordination – CAB and
Credit Union at core
Preventative approaches – schools and young people,
tools and materials
Preventative approaches – schools and young people,
tools and materials
Targeted multi-agency awareness and take-up
campaigns
Targeted multi-agency awareness and take-up
campaigns
Support for CU to ensure a focus on
financially excluded
Support for CU to ensure a focus on
financially excluded
Supported by a Financial Awareness
Communication Strategy
Supported by a Financial Awareness
Communication Strategy
A joined-up approach – key themes:
Western Isles: sustainable change (3)
key messages; generic and client specific information channels e.g. vol sector information means e.g. broadband TV build capacity of mainstream staff e.g. health
Financial Awareness Communication Strategy
support sustainability of Credit Union develop inclusion approaches through CU assess feasibility of social enterprise CDFI
Products and Services
OutcomesOutcomes
new Credit Union accounts opened and additional savings
vulnerable clients receiving advice/information through trusted intermediaries
people living in most remote communities receiving advice and information
increased incomes.
inter-agency awareness and referrals targeted information campaigns holistic advice and guidance to clients
Service Co-ordination
Rural Financial Inclusion: issues/questions
to what extent are the conditions in the Western Isles different from more urban areas or other rural communities
we have sought to avoid targeting specific communities or groups too explicitly to avoid stigmatisation – is this the correct approach
there is still a need to target vulnerable groups and we will do this through the voluntary sector – is this achievable in other rural areas
what role might information communication technology play in the financial inclusion agenda in rural communities
we see social enterprise as a means of creating growth opportunities in a low income economy and this is part of our agenda – would you agree
what networks exist for sharing practice and learning on rural financial exclusion in Scotland and with other parts of the world?
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