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.

• We will strive to achieve our commitments to financial inclusion through a set of measurable national goals.
• We will measure our progress in financial inclusion based on common indicators as identified and quantified in the core set of AFI Financial Inclusion Data and will publicly release this information annually.
• We will continue to work in a cooperative and cohesive manner to integrate the financial inclusion agenda into our countries’ policies and programs, and ensure the implementation of financial inclusion at the national level will contribute towards improvement of the underserved in the global community.
• We will reinforce our institutional capacity and talent for formulation and implementation of effective financial inclusion policies that will deliver the optimal impact.

To read the full Sasana Accord, click here. To view video recordings of other GPF sessions, including “Maya Declaration: Raising Commitments and Measuring Progress” where our Managing Director Elisabeth Rhyne was a panelist, click here.  

Have you read?

Forty Countries (and Counting) Committed to the Maya Declaration

‘What AFI is doing is unprecedented’ – Beth Rhyne on the Global Policy Forum

A Timeline of National Financial Inclusion Strategies

If you regularly follow financial inclusion news, you probably come across articles on the financial inclusion progress of particular countries all the time. Just today I read headlines on the extent of inclusion in Bangladesh as compared to other South Asian countries, on the growing mass of mobile money subscribers in Kenya, and on life insurance penetration in India. Last week we added to the conversation with a post on Nigeria’s financial inclusion strategy. Keeping track of all these national developments is a challenge, even for those of us who have the opportunity to focus much of our attention on financial inclusion.

Earlier this month AFI released the National Financial Inclusion Strategy Timeline, a document that chronicles the steps AFI member institutions have taken in recent years to develop and implement national financial inclusion strategies in their countries – a resource any of us financial inclusion media junkies can embrace. Created by AFI’s Financial Inclusion Strategy Peer Learning Group (FISPLG), the timeline is organized by region and lists national-level developments for 28 countries from 2007 to the present. Here’s the Sub-Saharan Africa region section.

In looking at the timeline, a few trends quickly come to the surface. Not surprisingly, there’s been an increase in inclusion activity among central banks and financial regulatory institutions in the past few years. Specifically in 2013, a number of countries have drafted or implemented national strategies, including the Philippines, Thailand, Belarus, Turkey, Nepal, and Tanzania. Another trend expressed in the timeline is the rise of branchless banking, with many countries developing guidelines for agent and mobile banking.

The National Financial Inclusion Strategy Timeline was created by the FISPLG at their second group meeting, held in Bangkok in March earlier this year. The group, created last year, is designed to support AFI members with the challenges of developing and implementing national strategies by documenting and sharing the experiences of the group’s members. To access the full timeline document, click here.

Have you read?

‘What AFI Is Doing Is Unprecedented –  Beth Rhyne on the Global Policy Forum

Getting Inside the Heads of Policymakers – AFI Survey Sheds Light on Financial Inclusion Policymaking

Ensuring Consumer Protection in the Caribbean

A year ago, Nigeria put forward an ambitious financial inclusion strategy. This National Financial Inclusion Strategy (NFIS) is an exciting development, and with this post I want to take a closer look at it and spotlight some areas to watch as implementation progresses in the years to come.

So, what is it all about? In October 2012, President Goodluck Jonathan and the Central Bank of Nigeria (CBN) promoted the program as a key driver for achieving their larger Vision 20: 2020 strategy, an ambitious initiative aiming to make Nigeria one of the world’s 20 largest economies by 2020.

The CBN is already one of 36 national institutions that have signed the AFI Maya Declaration, a set of commitments from emerging economies’ governments’ designed to increase access to and lower the costs of financial services, and its governor often makes the case that financial inclusion benefits economic growth. After all, despite being West Africa’s largest economy and holding an impressive mass of natural resources, Nigeria is also home to 100 million people living on less than US$1.25 a day. In the financial sector, only 30 percent of adults have an account at a formal financial institution. Public sector borrowing crowds out private borrowers and lending institutions have become increasingly risk averse, reflecting recent crises and adjustments to new regulatory reform. Credit markets remain underdeveloped with limited products, short-term horizons, and high borrowing costs. Making the financial landscape even harsher, Nigerians must contend with inadequate physical infrastructure, ineffective legal institutions, and everyday challenges like distant bank branches, missing identification documents, and high fees.

At the heart of the NFIS is the goal that by 2020, at least 70 percent of Nigerians will be financially included in the formal sector. On top of this, the CBN has set specific targets for certain services such as insurance, savings, and pensions. The bank also plans to lead the development of strategic sub-sectors, including mobile banking, cashless initiatives, and agricultural finance, as well as a unique identity scheme which will issue all Nigerian adults with identification smart cards that are equipped with access to basic banking services. Simultaneously, the government has introduced new regulation in the effort to strengthen client protection measures and institutional stability safeguards and has created new oversight bodies, such as a consumer protection department and a credit risk management system. In addition to all this, I’m sure I won’t be the only one in the industry continuing to watch some of the other pioneering CBN initiatives, like the Agent Banking Guidelines and tiered Know-Your-Customer (KYC) requirements, which help encourage institutions to reach out to underserved segments. Similarly, as Islamic finance continues to take off globally, the CBN’s efforts to make Nigeria a hub for Islamic banking and improve regulation for non-interest bearing, Shariah compliant, bank services could open new doors for the unbanked.

Clearly, as innovative or comprehensive as these programs may appear in last year’s paper trail, their success hinges on their implementation in the coming years. For example, Nigeria’s pilot program in Lagos for a cashless economy using a new electronic payments system is worth noting – it aims to move 21 million people and an urban economy that some estimate to be as high as $45 billion into the fully electronic realm – but it is already somewhat behind schedule due to hurdles such as poor PR management (now they’re using the term “cashlite” instead of the more rousing “cashless”) and inadequate point-of-service terminals. Additionally, the country’s smaller institutions which typically serve the very poor will likely struggle as the government introduces more strident prudential regulation, and some may be forced to close due to insolvency. In 2010 the Central Bank revoked the licenses of 224 MFIs who had not complied with new regulation.

As the government targets its 70 percent marker, watchful eyes must see to it that financial inclusion proceeds in an even demographic sweep. Right now women are more highly excluded than men with rates of inclusion that are 10 percent less, and geographically the incidence of financial exclusion is most acute in the North of the country where rates are more than double the rates recorded in the South. Similarly, addressing service gaps within the informal sector, where 17 percent of the population currently accesses financial services, in addition to addressing those in the formal sector, will be uniquely challenging and call for innovative approaches.

It remains to be seen how successful Nigeria’s Central Bank will be in accompanying its policy groundwork with subsequent action but it is certainly a positive step forward that the achievement of financial inclusion is being promoted as a centerpiece in the administration’s agenda for economic growth.

Image credit: Jrobin08

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