Banking the unbanked for a better tomorrow

With a vast majority of Pacific Islanders having no access to banking services, the second stage of an ambitious financial inclusion programme was launched in Samoa on Sunday

Aiming to add one million more Pacific Islanders to the formal financial sector by 2019, the United Nations Development Programme (UNDP) and the UN Capital Development Fund (UNCDF) introduced a new US$5 million (T$11m) funding facility.

Implemented through Pacific Financial Inclusion Programme (P.F.I.P.), the facility invites financial service providers to develop new ways of enabling low-income and rural Pacific Islanders to access affordable savings, insurance, credit and other monetary services.

U.D.N.P. Administrator, Helen Clark said in emerging and developing countries generally around 80 per cent of people do not have access to formal financial services.

“That is certainly the case across the pacific, but in some countries it goes higher than 90 per cent (of people) not having any access,” she said.

“It is a mix of geographical challenges, poor infrastructure, high costs (and) sparsely spread populations, all of this impedes.”

“But of course given access to financial services is absolutely critical to supporting people to move out of poverty and in generating the kind of growth that will reduce poverty through access to credit, success to insurance lower cost remittances to secure savings.”

Miss Clark said such services must be well regulated and operated with integrity.

“Which is why it is great to have central banks on board,” she said.

“And the private sector role is key and critical for rolling out this second phase of this pacific financial inclusion programme.”.3

“This is the way to really support people to move out of poverty.”

Australia’s Foreign Affairs Minister Julie Bishop said the reason Australia had invested in the programme for the past five years was because it worked.

“Well it certainly ticks all the boxes as far as the delivery of Australian Aid is concerned,” she said.

“I believe that about 700,000 Pacific Islanders now have access to financial services that they didn’t before this program.”

“And in a very exciting outcome, about 40 per cent of the new bank accounts maybe more have been taken up by women.”

“I am a great champion and advocate for increased economic empowerment for women in the Pacific.”

Ms Bishop said giving women access to financial services was not only the right thing to do, but it made smart economic sense.

“From the moment I first visited this region many years ago I knew that the role of women was absolutely vital for the long-term prosperity of this region, as well as its peace, security and stability,” she said.

“And I truly believe that when you give women access to financial services then entire household, entire communities benefit as a result.”

Her New Zealand counterpart Murray McCully said what appealed to his department was private sector participation.

“It is common at conferences like this to hear a lot speeches about the role of the private sector, the importance of the private sector if you are going to see balanced growth,” he said.

“But it is rather harder to identify practical programs that are going see the private sector grow and people given the opportunity to become a part of it.”

“That is why we are a part of it.”

European Commissioner for Development, Andris Piebalgs added to Mr McCully’s comments, saying that access to formal financial services was a basic human right as it helped develop the private sector which in turn fuels sustainable economic growth.

P.F.I.P.S. Regional Financial Inclusion Advisor and Project Manager Reuben Summerlin said while there have been exciting advancements, such as Samoa’s financial Central Bank Act, which has added financial inclusion and financial literacy as core mandates, in the region there was still more to do.

“The Pacific continues to be one of the least banked regions in the world,” he said.

“And many Pacific Islanders are still excluded and thus cannot achieve their full economic potential, and they are denied opportunities to fully participate in their national commerce.”

“So in its next phase P.F.I.P. will continue to work with national regulators to expand the financial sector safely we will work to deepen financial access.”

“So that more pacific islanders can use financial services without having to travel long expensive distances.”

Samoa was also at the table with the Governor of the Central Bank Maiava Atalina Ainu’u-Enari saying one of its aims was to increase financial service access to 50 per cent of our rural population mobile phone financial services, institutional innovations and other initiatives by 2016.

She also said that in an effort to promote responsible financial behaviour we are targeting the formal education system through partnering with the Ministry of Education.

To highlight just how important this program was Miss Clark ended the press conference by sharing an experience she had in Papua New Guinea.

“I just want to perhaps tell a story about where I saw this program working in East New Britain,” she said.

“Because sometimes when we talk about financial services we have in mind someone who has a formal shop or a business.”

“I saw this program with a facilitator in a partnership with a bank with ladies who traded in the market and had no where secure to put their money.”

“And for the poor having somewhere to put your money more secure than under the mattress is extremely important.”

“And having somewhere secure to put your money enables you to budget, put a bit aside when you can and manage your cash flow.”

“So I was very, very impressed that this program was reaching down to the most micro business level in East New Britain.”

“Reaching the market women who are such a fundamental part of the economy of the Pacific.”

The U.N.D.P./ U.N.C.D.F Financial Inclusion Support Facility is designed to disburse grants to financial service providers—including those from the private sector such as banks, insurance companies and mobile network operators.”

The facility, totalling US$5 million, was created with funding from Australia, New Zealand and the European Union.