The American global financial investment management and insurance company Principal Financial Group last week released the Global Financial Inclusion Index 2022. It is a new index that assesses the extent to which the government, financial system and employers of 42 countries provide tools, services and guidelines to allow for higher levels of financial inclusion.

First of all, what is financial inclusion? According to the World Bank, it is the degree of access that people and companies have to financial products and services. useful and convenient to meet their needs (from savings, credit and insurance, to education and counseling) and how these tools are offered in a responsible and sustainable way.

With 19.2 points, Argentina was at the bottom of this new ranking, a score that leaves it below countries like Ghana (22.2), Nigeria (26.9) and Colombia (32.2). At the other extreme, the top five financially inclusive countries according to the Principal Financial Group were Singapore (68.9), the United States (68.3), Sweden (65.4), Hong Kong (65.1) and Finland (64.7). Of the six Latin American countries evaluated by the US company, the most financially inclusive was Chile, which occupied the 24th position (45,4). Followed by Brazil (35th), Mexico (36th), Peru (38th) and the aforementioned Colombia (39th) and Argentina (42nd).

How the Global Financial Inclusion Index is composed. Hence the variables that make up this new ranking public data and own investigations Principal Financial Group and are grouped into three pillars: Government support, financial system support and business support. These three pillars represent the three most important actors for promoting financial inclusion among the population.

How did Argentina fare in each of the three?

SUPPORT FOR THE GOVERNMENT: 41st (21.38). This pillar assesses the degree to which governments promote financial inclusion and is measured by the state of public pensions, deposit protection systems, consumer protection regulations, the complexity of corporate tax systems, availability financial education provided by the government, at the level of this education and four other variables.

In this pillar, Argentina ranked second to last, with its government’s support for financial inclusion only better than that of Ghana (17,81). The Global Financial Inclusion Index finds that half of the markets ranked in the bottom 10 for government support are in Latin America: Peru, Chile, Argentina, Brazil and Colombia. This means that while Argentina’s score is the lowest of all Latin American countries in this pillar, it is broadly in line with the region.

FINANCIAL SYSTEM SUPPORT: 42 ° (22.11). This pillar examines the availability and use of various types of financial products and services that are critical for financial inclusion. It consists of the level of transactions in real time, access to credit, the presence and quality of fintechs and to enable, among other variables, both the growth and success of SMEs and the general confidence of businesses.

One of the determinants of Argentina’s position is its low score in this pillar: for its support to the financial system for financial inclusion, it scored 11.2 points, a number not only below average, but 10 points below the next closest market. this prop, which is Ghana (22.45).

According to the Global Financial Inclusion Index, this could be a reflection of the state of the Argentine economy in general: “Repatriated much of its financial system and faced high inflation and sovereign defaults over the yearsall of this has paralyzed the economy and probably damaged business confidence in the financial system. “In turn, the report indicates that the effects of economic recessions on business confidence in the financial system are evident in the index: Argentina records very low scores in several sub-indicators of this pillar, but especially in those that measure the facilities for the growth and success of SMEs and for business confidence in general.

BUSINESS SUPPORT: 26 (44.96). Of the three pillars, this is the one that shows Argentina’s best performance. It refers to the level of support that employers provide to their employees and evaluates variables such as providing guidance and support on financial matters, employee pension or pension contributions, employee insurance plans, and employer-funded initiatives. With its 44.96 points, Argentina managed to finish in 26th place, better than South Korea (40th), Spain (34th) or Japan (42nd), although below other regional competitors, like Peru (13th). ), Brazil (22nd) and Mexico (25th).

Although Argentina’s performance in this new index is not good, the Global Financial Inclusion Index highlights that this first ranking is not definitive and contains some conclusions that help qualify this debut. Perhaps most important of all for Argentina is that, overall, very few markets have scored very high scores on all three pillars. Indeed, even the best positioned economies show weaknesses in some of these categories. This suggests that there is a great opportunity to improve the support, promotion and development of financial inclusion. Ultimately, the scores on each pillar are an initial benchmark, not the final word.

The author is a research analyst at gormanlee.com