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<li><a href="/blog/post/ontario-alabama.html">Ontario Falls Behind Alabama</a></li>
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<li><a href="/blog/post/global-south-banking.html">Global South Banking Access</a></li>
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<div class="date">August 21, 2025</div>
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<h2>When "Developing" Countries Lead: How the Global South Outpaces Canada and the EU on Banking Access for Entrepreneurs</h2>
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<!-- ===== Main Article ===== -->
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<p><em>A legal policy analysis revealing how supposed "third world" nations have built better financial inclusion frameworks than their wealthy counterparts</em></p>
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<p>The regulatory geography of financial inclusion reveals an uncomfortable truth for wealthy nations: when it comes to ensuring banking access for low-income entrepreneurs and micro-enterprises, countries like India, Kenya, and Brazil have implemented more innovative, effective, and comprehensive solutions than Canada and the European Union.</p>
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<h3>The Innovation Gap</h3>
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<p>While Canada and the EU have focused primarily on consumer banking rights—leaving micro-enterprises in regulatory limbo between consumer protections and full commercial banking requirements—countries traditionally labeled as "developing" have built entirely new regulatory frameworks specifically designed for financial inclusion.</p>
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<h3>India's Revolutionary Scale</h3>
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<p>India's Business Correspondent (BC) model, launched in 2006, now reaches vast rural populations via distributed agents and is structurally designed to extend services and credit to the underserved
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<a class="fn-ref" href="#fn-1" id="fnref-1" role="doc-noteref"><sup>1</sup></a>
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<a class="fn-ref" href="#fn-2" id="fnref-2" role="doc-noteref"><sup>2</sup></a>.
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The model enables doorstep banking and supports microcredit workflows by collecting KYC, facilitating account openings, and maintaining digital records
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<a class="fn-ref" href="#fn-2" id="fnref-2b" role="doc-noteref"><sup>2</sup></a>.
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</p>
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<h3>Kenya's Mobile Money Revolution</h3>
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<p>Kenya's M-Pesa has transformed payments and savings for households and micro-enterprises alike, achieving national-scale usage and high transaction volumes through mobile channels
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<a class="fn-ref" href="#fn-3" id="fnref-3" role="doc-noteref"><sup>3</sup></a>
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<a class="fn-ref" href="#fn-4" id="fnref-4" role="doc-noteref"><sup>4</sup></a>.
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Its regulatory pathway prioritized inclusion and practical risk protections to enable rapid adoption
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<a class="fn-ref" href="#fn-4" id="fnref-4b" role="doc-noteref"><sup>4</sup></a>.
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</p>
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<h3>Brazil's Correspondent Banking Success</h3>
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<p>Brazil pioneered large-scale correspondent/agent banking through partnerships among banks, retailers, and technology providers—dramatically expanding points of service and enabling millions of new accounts, especially outside major metros
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<a class="fn-ref" href="#fn-5" id="fnref-5" role="doc-noteref"><sup>5</sup></a>.
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</p>
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<h3>The Wealthy World's Blind Spot</h3>
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<p>Canada’s consumer banking protections explicitly focus on natural persons using personal accounts, leaving micro-enterprises without equivalent access guarantees—and subject to full commercial onboarding and monitoring standards
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<a class="fn-ref" href="#fn-6" id="fnref-6" role="doc-noteref"><sup>6</sup></a>.
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In the EU, the Payment Accounts Directive improves consumer access but does not directly secure basic accounts for businesses; implementation gaps and de-risking have continued to impede inclusion outcomes
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<a class="fn-ref" href="#fn-7" id="fnref-7" role="doc-noteref"><sup>7</sup></a>
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<a class="fn-ref" href="#fn-8" id="fnref-8" role="doc-noteref"><sup>8</sup></a>.
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</p>
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<h3>Why the Global South Succeeded</h3>
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<h4>1. Necessity-Driven Innovation Beyond Traditional Banking</h4>
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<p>India’s BC architecture treats micro-entrepreneurs as participants in the formal financial system, with agent workflows that support microloans and ongoing engagement (rather than one-off onboarding)
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<a class="fn-ref" href="#fn-1" id="fnref-1b" role="doc-noteref"><sup>1</sup></a>
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<a class="fn-ref" href="#fn-2" id="fnref-2c" role="doc-noteref"><sup>2</sup></a>.
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Kenya’s M-Pesa allowed rural workers and informal traders to transact and save using basic phones—bypassing branch and card infrastructure entirely
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<a class="fn-ref" href="#fn-3" id="fnref-3b" role="doc-noteref"><sup>3</sup></a>
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<a class="fn-ref" href="#fn-4" id="fnref-4c" role="doc-noteref"><sup>4</sup></a>.
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Brazil’s agent networks embedded access in everyday retail environments, collapsing distance and formality barriers
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<a class="fn-ref" href="#fn-5" id="fnref-5b" role="doc-noteref"><sup>5</sup></a>.
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</p>
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<h4>2. Regulatory Boldness That Transcends Traditional Categories</h4>
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<p>Kenyan authorities enabled an e-money model with consumer protections tailored to mobile flows—rather than forcing mobile money into legacy bank categories
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<a class="fn-ref" href="#fn-4" id="fnref-4d" role="doc-noteref"><sup>4</sup></a>.
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India broadened who could serve as BCs (beyond NGOs/MFIs) to include individuals and small businesses, creating dense last-mile reach
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<a class="fn-ref" href="#fn-1" id="fnref-1c" role="doc-noteref"><sup>1</sup></a>.
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Brazil formalized correspondent banking relationships so banks could extend regulated services via retail partners at scale
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<a class="fn-ref" href="#fn-5" id="fnref-5c" role="doc-noteref"><sup>5</sup></a>.
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</p>
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<h4>3. Technology-First Infrastructure That Ignores Traditional Boundaries</h4>
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<p>India integrated payments with digital identity and public rails to enable direct benefit transfers and streamlined onboarding for low-income households and micro-entrepreneurs
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<a class="fn-ref" href="#fn-2" id="fnref-2d" role="doc-noteref"><sup>2</sup></a>.
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Kenya’s mobile ecosystem offers payments, savings, credit, and insurance through phones—treating access as a utility rather than a premium product
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<a class="fn-ref" href="#fn-3" id="fnref-3c" role="doc-noteref"><sup>3</sup></a>.
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Brazil’s correspondent stack coordinates banks and retailers with technology providers to deliver regulated functionality through familiar local touchpoints
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<a class="fn-ref" href="#fn-5" id="fnref-5d" role="doc-noteref"><sup>5</sup></a>.
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</p>
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<h3>The Wealthy World’s Blind Spot (Revisited)</h3>
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<p>Even where consumer access has improved, “de-risking” and documentation practices can still exclude small firms. Recent UK policy efforts highlight a trend toward safeguarding access for legitimate users against blanket debanking
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<a class="fn-ref" href="#fn-10" id="fnref-10" role="doc-noteref"><sup>10</sup></a>.
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</p>
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<h3>The Path Forward</h3>
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<p>Lessons for Canada and the EU include: creating fit-for-purpose regulatory categories for micro-enterprises; embracing agent-based and mobile distribution; aligning AML/KYC proportionality with inclusion goals; and measuring outcomes beyond account openings to ongoing usage and resilience
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<a class="fn-ref" href="#fn-7" id="fnref-7b" role="doc-noteref"><sup>7</sup></a>
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<a class="fn-ref" href="#fn-8" id="fnref-8b" role="doc-noteref"><sup>8</sup></a>.
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</p>
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<h3>Conclusion: Leadership from Unexpected Places</h3>
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<p>Comparative research shows that digital financial inclusion can materially improve the ease of doing business for micro-enterprises when infrastructure and rules are designed for their realities—not retrofitted from consumer or corporate paradigms
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<a class="fn-ref" href="#fn-9" id="fnref-9" role="doc-noteref"><sup>9</sup></a>.
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Countries that re-imagined the stack—from identity to agents to mobile money—now outperform wealthy nations’ incrementalism on inclusion.
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</p>
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<!-- ===== Footnotes (endnotes; become sticky sidenotes on wide) ===== -->
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<h4>Footnotes</h4>
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<ol>
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<li id="fn-1" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Union Bank of India</span>, <span class="fn-title">Business Correspondent Model</span>.</span>
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<a class="fn-backref" href="#fnref-1" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-1b" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-1c" role="doc-backlink"></a>
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</li>
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<li id="fn-2" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Federal Reserve Bank of Minneapolis</span>, <span class="fn-title">Business Correspondent model boosts financial inclusion in India</span>.</span>
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<a class="fn-backref" href="#fnref-2" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-2b" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-2c" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-2d" role="doc-backlink"></a>
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</li>
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<li id="fn-3" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Conduit Blog</span>, <span class="fn-title">What is M-Pesa? A Revolutionary Change in Africa's Digital Economy</span>.</span>
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<a class="fn-backref" href="#fnref-3" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-3b" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-3c" role="doc-backlink"></a>
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</li>
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<li id="fn-4" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Centre for Public Impact</span>, <span class="fn-title">Mobile currency in Kenya: the M-Pesa</span>.</span>
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<a class="fn-backref" href="#fnref-4" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-4b" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-4c" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-4d" role="doc-backlink"></a>
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</li>
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<li id="fn-5" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Wikipedia</span>, <span class="fn-title">Banking agent</span>.</span>
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<a class="fn-backref" href="#fnref-5" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-5b" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-5c" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-5d" role="doc-backlink"></a>
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</li>
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<li id="fn-6" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Canada Gazette</span>, <span class="fn-title">Financial Consumer Protection Framework Regulations</span>.</span>
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<a class="fn-backref" href="#fnref-6" role="doc-backlink"></a>
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</li>
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<li id="fn-7" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Finance Watch</span>, <span class="fn-title">Breaking down barriers to basic payment accounts in the EU</span>.</span>
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<a class="fn-backref" href="#fnref-7" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-7b" role="doc-backlink"></a>
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</li>
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<li id="fn-8" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">EUR-Lex</span>, <span class="fn-title">Directive 2014/92/EU on payment accounts</span>.</span>
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<a class="fn-backref" href="#fnref-8" role="doc-backlink"></a>
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<a class="fn-backref" href="#fnref-8b" role="doc-backlink"></a>
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</li>
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<li id="fn-9" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">Nature</span>, <span class="fn-title">Digital financial inclusion in micro enterprises: determinants and impact on ease of doing business</span>.</span>
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<a class="fn-backref" href="#fnref-9" role="doc-backlink"></a>
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</li>
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<li id="fn-10" role="doc-footnote">
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<span class="fn-source"><span class="fn-author">UK Government</span>, <span class="fn-title">Millions of people and businesses protected against debanking</span>.</span>
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<a class="fn-backref" href="#fnref-10" role="doc-backlink"></a>
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