Taking the credit - how financial services liberalisation fails the poor
World Development Movement (UK) | March 2009
The World Development Movement has published a new report “Taking the credit - how financial services liberalisation fails the poor” (www.wdm.org.uk/takingthecredit) with India FDI Watch.
The report looks at how financial services liberalisation, and especially the entry and ongoing presence of foreign banks in the global south, as promoted at the World Trade Organisation and through European bilateral trade deals, leads to the prioritisation of richer customers and larger companies resulting in poorer customers losing out. Small businesses and local producers find it harder to access loans as foreign banks cut loans for production in favour of loans for personal consumption. Overall, WDM is very concerned at the negative impacts on the provision of affordable financial services overseas and the lost opportunities for economic development locally.
The report includes specific case studies of Mexico and India which have undergone whole or partial financial services liberalisation in recent years. In particular, the personal stories and experiences of rural producers, urban-dwellers and small businesses who have tried to access financial services are featured throughout the report. There is also analysis of the numerous financial services lobby groups which seek to promote their agenda to decision-makers in Brussels and London.
As a result of this report, the World Development Movement is calling for:
– The European Commission (EC) to stop negotiations on Europe’s proposed free trade agreements. As an immediate step, financial services liberalisation demands should be taken out of all proposed trade deals.
– Donors and government agencies to develop a clear agenda for getting affordable and sustainable financial services and productive credit to those who need it.
– Governments, including the UK, and international institutions to begin to overhaul the governance of the global financial system so that it supports progressive social and environmental objectives.
– The banks to ensure that their investment and lending does not undermine the development of local communities in the global south. The UK government must ensure that banks receiving public funds urgently rethink their overseas expansion strategies and investment criteria.
– The European Commission to create a mandatory lobby register.
