De-Risking, FinTech and Gender in focus at the 9th Annual G-24/AFI Roundtable in Washington DC

2017-04-21

De-Risking, FinTech and Gender in focus at the 9th Annual G-24/AFI Roundtable in Washington D.C.

The Annual G-24/AFI Roundtable took place on 19 April in Washington DC, marking the 9th anniversary of this important event.The meeting, held at the IMF headquarters, was attended by high-level AFI and G-24 participants from more than 25 countries. Representatives from the World Bank, IMF, FSB, BMGF and The Omidyar Network were also in attendance and, for the first time, the meeting included observers from the private sector.
 
Ms. Marilou Uy, Director of the G-24 Secretariat opened the meeting by highlighting the G-24s commitment to achieving inclusive growth, and emphasizing financial inclusion as key to achieving this objective. Ms. Uy made special note of the G-24/AFI joint publication ‘Stemming the Tide of De-Risking Through Innovative Partnerships’ and congratulated AFI for the launch of the ‘Denarau Action Plan: The AFI Network Commitment to Gender and Women's Financial Inclusion’
 
Ms. Uy was followed by the AFI Chairperson, and Governor of the Bank of Tanzania, Benno Ndulu, who provided the keynote address for the meeting. Governor Ndulu, noted that the issue of de-risking continues to be a serious challenge for members of the AFI network. While he acknowledged the progress that had been made, Governor Ndulu emphasized that ‘risk avoidance’ remains the dominant trend in this area, and asked what actions could be taken to ensure that recommendations coming from AFI and the G-24 are translated into action. The Governor informed the roundtable of the new formed Global Standards and Policy Committee (GSPC) and Gender & Women's FI Committee (GWFIC) and outlined the key activities to be taken up in AFI's new peer learning initiative on FinTech and RegTech.
 
The first session of the roundtable, moderated by Banco de Moçambique Governor Rogerio Lucas Zandamela, was focused on the challenges of de-risking and the importance of new technologies. 
 
During the discussion, Governor Maiava Atalina Emma Ainuu-Enari from Central Bank of Samoa explained the particular de-risking challenges in the Pacific region. She noted that the number of money transfer operators (MTOs) has fallen, resulting in less consumer choices and higher costs. As money transfer operators close, people are pushed to high-cost services or back into the informal sector. The Governor emphasized that remittances are the lifeline for pacific islands representing up 20% of GDP. They also represent the first line of funding platforms after a natural disaster. The potential impact of de-risking therefore can be devastating. Governor Ainuu-Enari called for donor support to build the regulatory infrastructure needed to meet the challenges of de-risking. 
 
In the same discussion, Emile van der Does de Willebois of the World Bank agreed that there was a strong movement towards a risk-based approach. This movement has created uncertainty and subjectivity. This uncertainty, according to Mr. Willebois, leads to withdrawal and ‘risk-based’ quickly evolves into a ‘fear-based’ approach. Mr. Willebois described how the Word Bank is using its convening power to bring together those countries under pressure from risk-based approaches so that the practical challenges and implications can be better heard. 
 
The second part of this session had participants focused on the impact of financial technology and the rapid developing fields of FinTech and RegTech.  
 
The Central Bank of Kenya Governor Patrick Ngugi Njoroge opened the discussion with recognition on the progress that had been achieved across the AFI network. The Governor noted that 2017 would mark the 10th anniversary of MPESA and also the 10th anniversary of the iPhone; “While both these 10 year anniversaries represent landmark achievements in technology, I would argue that it is MPESA and not the iPhone that has made a more transformative impact on people’s lives.” 
 
Governor Njoroge asked participants to think about the future of financial technology as part of ‘financial inclusion 2.0’. The Governor stressed the need to go beyond access efforts and begin to give greater emphasis to usage and quality. Doing so, according to Governor Njoroge, requires leadership and courage. He noted that the fast moving nature of FinTech means that the regulatory environment will always be playing catch up to the technology. However, this should not be an excuse to limit new initiatives. The Governor encouraged a test and learn approach, letting the product lead the way, so long as financial stability is not threatened. 
 
Rupert Thorne from the Financial Stability Board (FSB) noted the strong connection between inclusion and stability. But warned that while the two areas usually complement each other, this is not always the case and a balanced approach is required. Mr. Thorne also outlined the FSB's current work on balancing FinTech Innovation and Financial Stability, and welcomed the inputs AFI has already made to this work stream. 

In the second session, the participants turned their attention to financial inclusion’s ‘gender gap’ and discussed how support for the implementation of AFI’s Denarau Action Plan could help to close this gap.
 
The session, moderated by BSP Governor Amando Tetangco, Jr., featured a presentation from Bank of Zambia Deputy Governor, and Chair of the AFI Gender and Women’s Financial Inclusion Committee, Dr. Tukiya Kankasa-Mabula. Dr. Kankasa-Mabula highlighted the Committee’s goal of halving the gender gap by 2021. She asked the participants what they can do within their own workstreams to advance the cause of gender and called on AFI members to make specific commitments towards this effort. ‘This is a cause that we all have an interest in promoting, because when you empower women, you empower all of humanity’. 

Governor Kone Tiemoko Meyliet from the Banque Centrale des Etats de l’Afrique de l’Ouest, focused on the need for better financial literacy and education programs specifically targeted to the needs of women.  
 
Central Bank of Egypt Deputy Governor Lobna Helal, highlighted the cultural and traditional challenge to gender and financial inclusion that exists in many regions. However, she also noted that a focus on gender and financial inclusion was about much more than just equality as there are undeniable economic benefits. “We cannot hope to achieve our economic objectives without closing the gender gap”, said Dep Gov Helal.
 
The IMF’s Martin Cihak noted that the gender gap appears to increase as efforts move from access to usage. He warned that there remains a serious lack of data which threatens to slow progress. Mr. Cihak encouraged all participants to make gender disaggregated data a priority so that the reasons for and solutions to the gender gap can be properly understood.
 
AFI’s Executive Director, Alfred Hannig, provided a wrap-up of the discussions and noted how much the financial landscape has changed since this meeting was first held 9 years ago. Mr. Hannig highlighted the AFI networks commitment to both de-risking and gender as priority issues for financial inclusion, and noted the importance of these issues in achieving the objectives of the UN’s Sustainable Development Goals. Mr. Hannig also agreed on the need to increase the networks focus on FinTech, given is transformational potential for financial inclusion.
 
The closing statement was delivered by the G-24 Chair, Sufian Ahmed, Minister of Finance and Economic Development, Ethiopia. He thanked the participants for the interesting debate, giving special emphasis to the important role that gender will play in the future of financial inclusion. “Women’s financial exclusion constraints our economic activity, it is key to ending poverty and to supporting sustainable development.”

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