Financial Access and Rural Poverty: Fasset’s Last User
Rural Financial Management
In much of the developing world, rural poverty continues to be a problem. Rural people in developing countries often have poor financial literacy. This often leads to poor financial planning and limited financial service access. This condition has led to the rise of certain practices that ultimately burden already poor communities.
Financial management in villages, especially in developing countries, are usually done in rudimentary ways: such as stashing cash in piggy banks. The lack of formal financial institutions in rural areas are often superseded by more rudimentary parties that function as mediators between financial institutions and the rural people interested in using their services. These rural financial institutions are essentially middlemen and often operate at high rates, putting a heavy financial burden on the already impoverished rural people.
Even so, these village finance institutions are often the only financial access management services available to the rural poor. Due to this fact, these people live in financially marginalized communities that experience a vicious cycle of poverty.
Rural Financial Exclusion
By relying on the aforementioned services, financial inclusion in rural communities continues to be limited. Direct financial service access is rare, in that many rural people are unbanked. This has created the problem of rural financial exclusion.
Rural communities face financial exclusion due to other reasons than lack of access. Many people in rural communities do not trust the banks. This is because of a variety of reasons endemic to the rural global south. For instance, low financial literacy mixed with a fear of what they do not understand may lead many to be suspicious of the banks.
The rural distrust in banks is also fuelled from rural foreclosures by banks. Many rural communities have experienced or witnessed foreclosures of property in their proximity. This has led many of the financially illiterate rural communities to view banks as untrustworthy. Predatory loans aimed at poor communities facilitated by banks have also added fuel to the fire. Financial illiteracy in rural communities means many of the rural poor could not understand the implications of high interest rates. This has led many rural communities to fall in debt they cannot pay off.
Financial exclusion in rural communities however can be problematic in this day and age. Many families in rural communities of the global south rely on remittances from relatives who work in urban areas as migrant workers. Remittances often in and of themselves carry a surcharge that would burden the families. Moreover, when it comes to unbanked rural communities, these surcharges increase with their having to rely on middleman financial service providers.
Availability of the funds being remitted can also become a problem as remittance services often take time to have monies transferred. This can lead to situations where emergency situations would worsen due to untimely funds. These logistical and accessibility issues worsen in scope when the breadwinner of the household works overseas. And in an age of globalization, international migrant workers have become more prevalent.
Fasset's Last User
Financial literacy alone would not lift rural communities from poverty. Doing so would also take a long time as knowledge must also turn into habits which take even more time. A quick solution for this issue would be breaking down the barriers of financial access for the rural poor.
At Fasset, one of our core values is being able to reach the FLU: Fasset’s Last User. The FLU is a person who lives in a rural area of a developing country. They may not be very financially literate and may even be one of the many unbanked rural people who live in many global south countries. The FLU may have income from their own farming or ranching work, but they also rely on remittances from relatives who work in a far-off city or even foreign country.
The FLU's migrant worker relatives will be able to transfer money easily within minutes thanks to Fasset’s low-friction cryptocurrency wallet-to-wallet transfer feature. Expecting rural communities who are often financially illiterate to adopt cryptocurrency may seem like a strange idea. However, the low-cost and fast transaction rate of using said system would trump traditional remittance.
In traditional remittance, the time taken and money spent on the service itself would burden the already impoverished FLU. Often traditional remittances would also entail the FLU to travel to a bank or specific outlet to receive the money their relative sent. By using Fasset’s transfer feature, we envision FLUs being able to receive money within minutes from their migrant worker relative from wherever they may be: whether the relative works in a city within the country or even abroad as a migrant laborer..
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