You are currently browsing the tag archive for the ‘Alliance for Financial Inclusion’ tag.
> Posted by Jeffrey Riecke, Communications Associate, CFI
Rwanda has a lot to celebrate in terms of financial inclusion these days. Last week in Kigali the National Bank of Rwanda (NBR) hosted a conference in partnership with the World Bank, the African Development Bank, and the Alliance for Financial Inclusion (AFI) commemorating their 50-year anniversary. At the event, titled Financial Inclusion for Inclusive Growth and Sustainable Development, NBR Governor John Rwangombwa highlighted the country’s recent rise in access levels, from 48 to 72 percent between 2008 and 2012 across formal and informal providers. Rwanda now has the laudable goal of increasing this figure to 90 percent by 2020. To help it get there, on Friday the World Bank launched a $2.25 million program supporting key financial inclusion areas for the country.
Along with overall exclusion rates dropping from 52 to 28 percent over 2008 to 2012, formal services access increased from 21 to 42 percent during the same period, according to the 2012 FinScope Rwanda Survey. The new government goal of 90 percent access by 2020 is an extension of the country’s Maya Declaration Commitment of 80 percent access by 2017. Rwanda’s growth in formal access can be attributed to products offered by both banks and non-bank providers, like the country’s community savings and credit cooperatives known as Umurenge SACCOs. Over the past three years, Umurenge SACCOs have attracted over 1.6 million customers. Ninety percent of Rwandans live within a 5 km radius of one of the cooperatives. Countrywide, the number of MFIs, including Umurenge SACCOs, increased from 125 to 491 between 2008 and December 2013. Elsewhere in the sector, over the last three years, the number of banks increased from 10 to 14, the number of insurance companies increased from 9 to 13, and the number of pension providers increased from 41 to 56.
> Posted by Center Staff
Last week Palestinian government officials announced plans to create a national financial inclusion strategy, an initiative that would put it on a short list of two countries in the Middle East and North Africa (MENA) region that have nationwide, government-led inclusion plans (Morocco being the other).
The Palestine Monetary Authority (PMA) and the Palestine Capital Markets Authority (PCMA), the country’s central bank and a national regulating body will co-lead the project along with support from the Alliance for Financial Inclusion (AFI) and other public and private groups.
The policies and guidelines of the strategy will aim to facilitate greater access, improve awareness and financial education, and reinforce client protection. An area inviting particular attention is access to credit, which is low for both individuals and SMSEs. The strategy will build on inclusion principles endorsed by the G20, World Bank, AFI, and the OECD Principles on National Strategy for Financial Education.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
A few weeks ago Tanzania launched a National Financial Inclusion Framework, which includes the ambitious goal of expanding access to more than half the country’s population by 2016. As of 2012, 17 percent of Tanzanians had access to formal financial services accounts, compared to an average of 24 percent for all of Sub-Saharan Africa.
H.M. Queen Máxima of the Netherlands in her role as UN Special Advocate on Inclusive Finance for Development joined the framework’s launch event, and emphasized how the effort builds on the country’s recent national commitments. At the G20 Leaders Summit in 2012, Tanzania was one of 17 countries that pledged to create a national financial inclusion strategy. It was also one of the first countries to make a Maya Declaration commitment.
Despite disappointing account ownership figures, the country has achieved progress in other areas. Between September 2012 and 2013, access to mobile money services increased from 63 to 90 percent nationally, with nearly 43 percent of the population actively using a mobile money service.
The national framework, alongside the goal of 50 percent account ownership by 2016, aims to achieve 50 percent regular usage, 25 percent of adults with at least two weeks’ worth of income in formal savings accounts, and 25 percent of adults with electronic personal financial records.
> Posted by Caitlin Sanford, Lanna Lome-Ieremia, and Sameer Chand, Bankable Frontier Associates, Central Bank of Samoa, and Reserve Bank of Fiji
Another version of this post is published on the Alliance for Financial Inclusion website.
Until now there have been few sources of publicly available data about financial access and usage in the Pacific Islands. Although individual central banks are measuring and tracking progress towards financial inclusion, the small island countries in the Pacific region have often been left out of international financial inclusion datasets, such as the Global Findex. The IMF Financial Access Survey captures some key financial inclusion indicators but this does not include all the countries from the Pacific.
The Pacific Islands Working Group on financial inclusion (PIWG) of the Alliance for Financial Inclusion came together this year to define and collect financial inclusion data specifically tailored to the region. Fiji, Papua New Guinea, Samoa, Solomon Islands, and Vanuatu participated in this data project. While the Alliance for Financial Inclusion (AFI) and the Global Partnership for Financial Inclusion (GPFI) have elaborated key sets of financial inclusion indicators to be used for global comparison, in some instances, individual countries such as Mexico, Brazil, Tanzania, and others have crafted broader sets of country-level indicators. This is the first time a broader set of common indicators have been developed at a regional level.
> Posted by Elizabeth Davidson, Financial Inclusion 2020 Consultant
What’s Financial Inclusion 2020 going to do next? Since the conclusion of the FI2020 Global Forum just a few weeks ago, we’ve gotten this question a lot. For me, the more interesting question is, “What are you going to do?”
Over 140 Global Forum participants answered this question by filling out a postcard with their personal commitment to advancing financial inclusion.
Here’s a sampling of what financial inclusion leaders plan to do to advance to full financial inclusion by the year 2020.
“Partner with government and the development community to not only launch scalable and relevant products but also build usage to ensure true financial inclusion.”
“Foster stronger collaboration through best practices between developed and developing countries.”
Increasing collaboration emerged as a huge theme, with over one-third of respondents referencing their commitment to increase work with other financial inclusion stakeholders and more than 20 participants identifying collaboration as the key component of their commitment. For us, this is exciting: collaboration is a key tenet of FI2020. We believe collaboration among different kinds of actors will be a big part of the solution to reaching full financial inclusion.
> Posted by Elisabeth Rhyne, Managing Director, CFI
The following post was originally published on the World Bank Private Sector Development Blog.
The issue of financial inclusion seems to be everywhere – from the World Bank Annual Meetings to the new UN post-2015 development goals. It’s got buzz in the private sector, public sector and development organizations big and small. Policymakers are increasingly making financial inclusion a priority through specific financial inclusion targets and commitments, such as the Alliance for Financial Inclusion’s Maya Declaration. In fact, World Bank Group President Jim Yong Kim recently launched an initiative “to provide universal financial access to all working-age adults by 2020.”
As we know from the Global Findex, more than 2.5 billion people lack access to even a basic bank account — a huge gap in inclusion and an enormous opportunity. Demographic changes, economic growth, and advances in technology are making global financial inclusion more possible than ever before. With a massive new market of people demanding new services as incomes rise among the bottom 40 percent, the stage is set for dramatic leaps in access in the next few years. Emerging technologies are bringing down costs and opening new business models while providing greater access to a range of services.
Recognizing that the time is ripe for significant progress on financial inclusion, the Center for Financial Inclusion developed a consultative process aimed to raise everyone’s sights about the possibilities of achieving full inclusion within a foreseeable timeframe – using the year 2020 as a focal point. The process sought to build a more cohesive financial inclusion “community” through the development of a common vision. It brought together experts from the World Bank, IFC, and CGAP along with many representatives of the private sector and the social sector. Financial Inclusion 2020’s Roadmap to Financial Inclusion is the result.
With all of the financial inclusion buzz, you would think that we would be closer to full inclusion. But if closing the gaps were easy, it would have happened already. Many factors still stand in the way. In the case of regulatory accommodation to new technology, for example, the gaps result from such factors as the pace of the spread of know-how among policymakers globally, national legislative and political processes, and uncertainty about the risks involved with new models. In the case of fully addressing the needs of customers at the base of the pyramid (BOP), gaps stem from a combination of doubt among providers about the likely profitability of these customers and limited knowledge inside institutions about the financial lives of the poor. In the case of client protection, providers face perverse incentives, while many regulatory bodies are only beginning the major task of establishing robust oversight of market conduct.
We see encouraging examples of financial inclusion in the most remote corners of the world, often done by surprising actors. However, the momentum is uneven. The Roadmap process included many of the thinkers and entrepreneurs behind such initiatives. Each of the five working groups — Addressing Customer Needs, Technology, Financial Capability, Client Protection and Credit Reporting — has developed a roadmap to direct the world community toward the actions most needed to achieve FI2020’s vision of full financial inclusion. Most of the recommendations are addressed either to governments or to providers, but they point the way to actions needed by a range of supporting organizations, including multilateral and bilateral organizations, donors, social investors and non-profits, at both the global and the national levels.
> Posted by Center Staff
This year’s Alliance for Financial Inclusion (AFI) Global Policy Forum (GPF) at Sasana Kijang in Kuala Lumpur concluded today with the AFI network launching the Sasana Accord. We wrote about AFI network countries’ commitments to the Maya Declaration a few weeks ago. The Sasana Accord further strengthens the effectiveness of these commitments, adding the layer of systemic assessment of impact to ensure quantifiable and measurable financial inclusion targets.
The fifth annual GPF, the largest to date, brought together 400 participants from 80 countries, spanning senior policymakers, central bank governors, partners from international organizations, and key private sector players. Under the theme “Driving Policies for Optimal Impact,” participants discussed and deliberated on the optimal policy strategies by synergizing financial inclusion, financial stability, and consumer protection objectives. Here’s a video recording of the Forum’s final sessions – “Announcement of New Commitments to the Maya Declaration,” “Sasana Accord,” and “Closing Ceremony.”
In facilitating data-based and measurable results of financial inclusion policy and strategy, the Sasana Accord better positions countries to accelerate their progress towards full inclusion. The Accord lists out the following actions for countries to integrate into their commitments. Read the rest of this entry »
> Posted by Center Staff
This week the global financial inclusion community saw a mini-milestone: with the newly signed-on Nepal, 40 countries have committed to the Maya Declaration. The Maya Declaration is a global and measurable set of commitments by developing and emerging country governments to greater financial inclusion.
When a country commits to the Maya Declaration, they make measurable commitments in four financial inclusion areas: create an enabling environment to harness new technology that increases access and lowers costs of financial services; implement a proportional framework that advances synergies in financial inclusion, integrity, and stability; integrate consumer protection and empowerment as a key pillar of financial inclusion; utilize data for informed policymaking and tracking results.
Nepal announced its Maya Declaration commitment on Tuesday. In the commitment, Nepal Rastra Bank (NRB) vowed to increase the country’s financial literacy through the development of a national-level Financial Literacy Strategy by mid-2014. The bank also committed to conducting a financial literacy program for students, “NRB with Students,” and widely disseminating financial literacy materials to promote public awareness. To strengthen the country’s mobile money services, the commitment includes provisions to improve the quality of existing mobile money services and to introduce new services before the end of 2014. Also before the end of 2014, Nepal’s commitment outlines that NRB will direct a national-level survey on rural credit and create a Financial Sector Development Strategy. Other recent country commitments came from Belarus this past May and El Salvador this past March.
> Posted by Elisabeth Rhyne, Managing Director, CFI
I don’t know how they will do it. Bank regulators, that is. How will they cope with the challenges coming their way throughout this decade of rapid financial sector change?
In the good old days, if there were such days, bank regulators operated inside their comfort zones in a world with known risks. A standard set of skills and knowledge saw them through. If I may indulge in stereotype (without being entirely unfair), the profile a bank supervisor needed was: good with numbers, cautious, a stickler for details, dedicated, often courageous, and having a strong sense of right and wrong. These are all wonderful qualities, and for prudential supervision of banks, there was a good fit between the task and this personal profile. Just as important, the bodies of knowledge regulators and supervisors needed was well understood.
Not today. The post-financial crisis world deeply challenges the comfort zone for banking authorities. In specific, I want to focus here on how financial inclusion challenges it. Changes associated with financial inclusion require banking authorities to move beyond their zones and develop a broader range of skills and qualities in at least three ways.
1. Adapting to continual technology change. Regulators around the globe are struggling today to create regulations that will bring the wonders of mobile money into their countries. But mobile money is only the technology du jour. Just as regulators get mobile money squared away, new technologies and business models are bound to appear and render regulations on the previous model outdated. I suspect, for example, that the spread of smartphones will upend SMS-based mobile money models, forcing regulators to shift focus from telecoms operators to cyber-security. Each new technology brings different players, new business models, and its own set of stresses on regulatory boundaries. While there are many with deep technical expertise among bank regulators, the pace of change is daunting, especially for organizations that must work within or seek to change legislative and regulatory constraints.
2. New mandates for consumer protection, especially at the base of the pyramid. Bank regulation is built around a time-honored and economic-theory-backed justification that includes financial system stability, and in many cases depositor protection, but not what we know as consumer protection (transparency, product suitability, fair treatment, recourse). Regulators now need to view consumer protection supervision as an equal and necessary compliment to prudential supervision. But legislative mandates for consumer protection are new and still incomplete, organizational structures are often missing or overlapping, and the body of knowledge that supports consumer protection regulation is still quite young. Prudential supervision is still seen as the “hard science” by numbers-driven supervisors, while consumer protection may be viewed as nice but not really essential. Very few countries currently have consumer protection regimes that are mature and successful enough to serve as models.