National Strategies For Financial Inclusion Lessons Learned

Transcription

1 National Strategies For Financial Inclusion Lessons Learned Eric Duflos, Senior Microfinance Specialist, October 2011

2 Table of Content 1. Origins of National Strategies 2. CGAP Research Findings on National Strategies 3. What is new with Financial Inclusion Strategies? 4. Recommendations on National Strategies 2

3 Origins of National Strategies 3

4 Origins of National Strategies In 2008, people did not talk much about Financial Inclusion The terminology was rather National Microfinance Strategies Origins of National Strategies: Blue Book Poverty Reduction Strategy Papers Paris Declaration => Sector Wide Approach Why CGAP conducted a research on this topic: Large number of countries seemed to develop strategies but there was no publication on the topic Many CGAP members were involved Lack of information on lessons learned 4

5 CGAP Research Findings on National Strategies 5

6 Objective and Methodology of CGAP Research Objective of research: Better understand state of practice Suggest considerations for donors and governments Methodology: Desktop review Over 60 stakeholders interviewed in 2007 and 2008 Detailed reviews of over 20 strategies CGAP research results are available in the CGAB Brief National Microfinance Strategies - 6

7 Where are National Strategies? REGION MENA SOUTH ASIA EAST ASIA & PACIFIC AFRICA EUROPE AND CENTRAL ASIA COUNTRY Egypt, Jordan, Syria, Tunisia, Yemen Nepal, Pakistan Cambodia, Fiji, Indonesia, Lao PDR, Malaysia, Philippines, Solomon Island, Thailand, Vietnam, PNG Benin, Burkina Faso, DRC Congo, Congo Brazzaville, Côte d'ivoire, Ethiopia, Gambia, Ghana Liberia, Madagascar, Mali, Malawi, Mauritania, Mozambique, Niger, Nigeria, Rwanda, Sierra Leone, Senegal, Tanzania, Togo, Uganda, Zimbabwe Kyrgyz Republic, Russia, Uzbekistan LAC Brazil, Mexico Source: CGAP Research 2007 and In red some of the latest countries 7

8 Definition of National Microfinance Strategies A publicly approved document developed through a consultative process aimed at increasing poor people s access to finance 1) Document structure can vary but typically include: Microfinance sector overview Vision for the sector Strategic objectives Plan for reforms 2) Process: Diagnostic, consultation, document writing, adoption and implementation Source: CGAP Brief

9 Who Drove National Strategies? Over 21 donors involved in 2007 Donors have often initiated process with leading ones at that time: UNCDF World Bank AsDB IFAD KfW GTZ USAID Source: CGAP Brief

10 Process: From Diagnostic to Implementation Sector diagnostic Consultation Document Writing Source: CGAP Brief 2008 Adoption &Impleme ntation 10

11 Process: Typical Timeline 6-12 months Sector diagnostic 2-6 months Consultation 6-12 months 3-5 years Document Writing Adoption &Implemen tation 11

12 Potential Benefits Improved dialogue Increased knowledge of sector Commitment to good practices Examples of positive impact in the Philippines and in Cambodia 12

13 Challenge 1: Weak Diagnostics Not all actors/levels of the financial system included (e.g. postal banks, telcos, informal sector etc) + Incomplete assessment of institutions capacity (micro, meso and macro) = Weak diagnostics are used as basis to make strategic decisions 13

14 Challenges in the implementation MF sector assessment Strategy/ Action plan Implementation Template action plans Unrealistic targets Isolation from broader financial sector Inadequate government leadership and capacity 14

15 From Microfinance to Financial Inclusion 1998 National Microfinance Strategy 2010 Financial Inclusion Strategy???? 15

16 What is new with Financial Inclusion Strategies? 16

17 What Has Not Changed? 1. Donors are still very active (at least 10 involved according to latest CGAP research) 2. Few if any Financial Inclusion Strategies ocuments available 3. Still more focus on micro-credit than other financial access 17

18 What is new with Financial Inclusion Strategies? Several of the challenges identified by CGAP in 2008 have seen some improvements: 1. Broader mandate (including SME and Branchless banking) e.g Tunisia and Jordan 2. More government ownership - e.g. Pakistan, Tunisia 3. More emphasis on data - e.g. Mexico, Jordan 4. Some improvement in the quality of the diagnostics - e.g. Tunisia - though uneven in spite of efforts made by UNCDF 5. Nine G20 principles for innovation being used as reference 18

19 Recommendations on National Strategies 19

20 How to Improve the Results? Sector diagnostic Conduct in-depth analysis with team of experts (qualitative and quantitative) Consultation Involve broad financial inclusion actors to vet diagnostic (public and private) Build common vision Ensure that action plans are achievable and funded Disseminate broadly within and outside government, evaluate, and update regularly Document Writing Adoption &Impleme ntation 20

21 In-depth Analysis of the Sector Include the full breadth of actors in the financial sector Mobilize a range of experts with diverse technical skills (e.g. banking, regulations, branchless banking, microfinance, MSME) Update regularly 21

22 Participation of broad range of actors Industry Support: Financial Infrastructure Training Centers Bankers Associations Credit Bureaus Think tanks Academics & social scientists Retail Level: Cooperatives Postal Banks NGOs NBFIs State Banks Projects Telcos Commercial Banks National Strategy for Financial Inclusion Government: Central Bank Key ministries Parliament Mass Organizations Provincial authorities Political elite and/or sovereigns Funders : Commercial Banks Apexes Development banks Investment Funds Depositors NB: non exaustive list 22

23 Build a common vision and remain realistic G20 Principles for Innovative Financial Inclusion can be a useful tool to develop a vision Local context matters and the most important is to build a common vision that fits with the diagnostic Ensure that you don t over-promise and refrain from extensive action plans Ensure objectives are achievable politically and financially 23

24 Disseminate broadly, assess and update Ensure that different government actors are well informed about the strategy to avoid counter-productive reactions For example, in decentralized countries with diverse ethnic groups, ensure broad dissemination Regularly assess the situation through robust data collection otherwise progress will not be measurable (e.g. Mexico) Update when major changes occur 24

25 Consideration before Starting Is the timing ripe? Take into account political forces and determine whether timing appropriate. Who can champion? Which government agency has the mandate & capacity to champion the strategy. What expertise is needed? Assess required technical expertise for all stages of the process, especially at diagnostic stage. Are resources available? Conducting a strong diagnostic will usually require significant resources. How far do we want to go? Be realistic and flexible on action plans. Having a strong diagnostic is already an achievement. 25

26 Advancing financial access for the world s poor