Building the Ecosystem for Financial Inclusion while Protecting Clients
Track: Partnerships Building a National Ecosystem
Date: Wednesday, October 9th
Time: 2:30 – 4:00 PM
Artfully moderated by Dr. Sipho Moyo of the ONE Campaign, the plenary session “Building the Ecosystem for Financial Inclusion while Protecting Clients” at the 2013 Partnerships against Poverty Summit highlighted the advancement of the Maya Declaration in select developing countries.
The Maya Declaration, the first of its kind, is a commitment by developing countries to make significant progress in financial inclusion. This plenary session showcased the progress the Philippines, India, and Bangladesh have made thus far and the role policy makers play in bringing about full financial inclusion.
Sung-Ah Lee of the Alliance for Financial Inclusion kicked off the plenary session by giving the current empirical evidence on the status of financial inclusion globally as well as the evidence of the contributions this inclusion makes towards poverty alleviation and business sector stimulation.
After presenting the data and evidence, Lee moved to expressing how policy plays a key role in catalyzing full financial inclusion. The policy environment not only creates avenues for access to financial services by the poor, but also creates favorable environments for microfinance providers to expand their services. Rather than leaving the sector to market forces, regulation is advocated to not only give confidence and security in the business but can also mitigate risks in the sector such as over-indebtedness.
Lee gives us much hope for the future, as she closed her statements with a note on holding countries to their commitments in reaching the poorest with financial services, a feat that cannot be achieved without effective partners and collaborators. In this way, the Maya Declaration can become a reality.
Dr. B.S. Suran of the National Bank for Agriculture and Rural Development in India presented a moral argument for financial inclusion—that it has been proven to better clients’ standard of living. He spoke about financial inclusion creating social change, touching on the importance of providing financial literacy training. While financial literacy education may change the way the poor interact with the financial world, he argued it may also change the way the poor interact with the rest of society. “We need financial inclusion in a place like India that is very socially stratified.”
The presentation was then turned over to Pia Roman-Tayag of the Central Bank of the Philippines, who introduced some hard hitting points about the geography of this problem as well as some possible solutions.
Building on Dr. Suran’s argument about stratification was Tayag’s data on the geographic stratification of banking institutions; in the Philippines, as in many nations, they are the most concentrated in urban areas. This is especially an issue where physical infrastructure is underdeveloped, but there is a solution to the limited access points: mobile technology.
Tayag told the assembly that even though 15% of the Filipino population does not have access to financial services, the mobile phone penetration rate is 140%, meaning that most of the rural poor can feasibly start savings accounts and even gain access to credit. Innovations such as mobile technology can catalyze low cost solutions to bringing about full financial inclusion. This is especially pertinent to Tayag as she insisted that financial inclusion means “access for all.” (Learn more about mobile technology.)
Finally, Abdul Karim of Palli Karma-Sahayak Foundation, brought forth the evidence of financial inclusion in Bangladesh and their success of having achieved the 2nd highest rating of access to financial services in South Asia.
Karim emphasized the importance of serving clients in agriculture, the source of many poor family livelihoods, with not only financial services but also capacity building for both the farmers and the institutions serving these small agriculturalists. They face unique challenges and thus have unique opportunities to service this cohort.
With initiatives such as the Maya Declaration, countries are working together to provide favorable policy and regulatory environments that can achieve the goal of full financial inclusion and poverty alleviation. Using these high-level partnerships and sharing best practices, countries not only can provide the favorable environment to the sector’s development but also shield clients from harmful practices and over-indebtedness by implementing accountability and regulatory structures.
Dr. Moyo concluded the plenary session by stating that “financial inclusion is an idea whose time is now.”
Watch the full video of this plenary