2018-11-29

Financial inclusion: We need a forward-thinking and collaborative approach to succeed

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Written by Governor Caroline Abel, Central Bank of Seychelles

In recent years, there has been both national and global efforts to enhance financial inclusion, which is not only about people having access to financial services and products, but also about people having the right knowledge and capabilities, to use these products and services to better their lives.

The Global Findex Database, produced by the World Bank, provides an overview of the significant strides, as well as remaining challenges, in ensuring access for all to the basic financial services needed, for people to secure their financial wellbeing and future. According to the 2017 Global Findex Database, 69 percent of the world’s adult population today have an account at a bank or mobile money provider. Nevertheless, 1.7 billion adults worldwide remain unbanked, in spite of two-thirds of them owning a mobile phone that can provide easy access to financial services.

These figures are important to us as policy makers, as they portray the gaps and opportunities that exist to increase access to financial services and expand financial inclusion. Having said that, it is important to acknowledge that having a bank account and access to financial services alone, will not address the issue of financial inclusion in its entirety. There needs to be more progress when it comes to offering quality and affordable products and services, accessibility, as well as enhanced consumer interaction and education. These are essential to support increased and knowledgeable use of financial services. Effective usage of a bank account and other financial services will only come about if there is sufficient and clear understanding of the services being accessed. This also needs to be accompanied by a well-formulated consumer protection framework.

It is therefore vital that we take time to reflect on our respective situations – where do we stand, how far have we come, what still needs to be done, how do we get it done? These are all questions that we need to ask as we continue operating in today’s volatile financial landscape. As leaders, we need to remain focused on pushing the financial inclusion agenda forward, while remaining abreast of emerging issues. We also need a collaborative approach, as financial inclusion should not only be of concern to the regulators and policy makers, but it should be everybody’s business.

Working in partnership to enhance financial inclusion is already off to a good start in Seychelles. A National Financial Education Strategy is currently being implemented to address shortcomings identified through a survey conducted in 2016. The survey clearly established that while 94 percent of the adult population has access to financial services, there is a considerable lack of knowledge and skills required to make informed financial decisions. With the fast evolving financial landscape, where consumers are being exposed to more innovative and complex financial services, it is imperative that consumers are financially literate, to be able to make the right choices. Financial literacy is undeniably a key factor that supports financial inclusion, consumer protection and financial stability.

Our objective to promote domestic price stability, our vision to become a model Central Bank and our mission to contribute towards the economic growth and development of Seychelles, all remain unchanged. However, at this juncture, as we celebrate our 40th anniversary in 2018, we have found it necessary to further enhance our mandate to deliver on financial consumer protection matters, as well as build capacity and devote more resources to promote financial education. I firmly believe that a financially empowered population is imperative, if we want to have a nation that understands and supports the policies that are put in place to safeguard the economy.

As we move forward with our financial inclusion efforts, it is equally important that we do not lose sight of one important buzzword in today’s financial sphere – FinTech. The new wave of technological innovation is accelerating change in the global financial services sector and it is evident that this cannot be ignored. There is a need to further explore, how financial technologies can be used to advance financial inclusion and make it more convenient, affordable and fast for consumers to access financial services.

We also need to ensure that absolutely no one is left behind, as we strive to address and extend solutions to the challenges and barriers faced by individuals and businesses alike when accessing financial services. We need to start educating our young children from an early age, both at home and in schools. The adults, including the socially and financially vulnerable segments of the population, also need to be educated on how to budget, save and invest. Access to credit for businesses, particularly small businesses, and building their capacity to come up with solid business plans is another challenge that needs to be addressed in developing economies, including Seychelles. Due to several factors such as the unwillingness of banks to extend credit facilities, lack of collaterals and the absence of credit information, the Micro, Small and Medium Enterprises (MSMEs) are severely constrained when it comes to accessing funds and to also expand their businesses. This is a critical issue that needs significant attention, as MSMEs play a critical role in the fostering economic development.

As we reflect on the way forward, I would also like to highlight our human capital as one of the most valuable assets in ensuring the financial inclusion deliverables are well executed. We need to continue to invest in building the capacity of our human resources, as they are the champions of the financial inclusion initiatives. Our young leaders should be groomed with the necessary skills, to further build on what the current leaders are doing and why not find innovative ways of doing it to achieve better results. While there is no perfect formula for enhancing financial inclusion, having capable, knowledgeable and devoted leaders, committed to doing what it takes to make it happen, will go a long way in bringing the financial inclusion agenda to the next level.

On a final note, I also firmly believe in collective efforts; if we continue to work together towards a set of shared objectives, we are definitely going to succeed in making affordable, convenient and quality financial services accessible to all and achieve our goal of having a more financially empowered population.  

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