Financial growth & inclusion ensure stable societies and reduce poverty, Mozambique Governor tells Global Solutions Panel
Financial inclusion is key to maintaining stable societies and reducing poverty by ensuring that growth is more equally distributed among populations, particularly in rural areas, Bank of Mozambique Governor Dr. Rogerio Zandamela said at the Global Solutions Summit on March 19, 2019.
Speaking at a panel session on Implementing Sustainable Finance in Berlin he emphasized how a failure to engage often-neglected groups, particularly women and small, medium enterprises (SMEs), in favor of sectors like oil and gas, could trigger social tensions and curtail longer-term economic development.
“It’s not enough to have growth. Many countries can register high growth rates but also have serious problems in terms of leaving large populations behind,” he said. “That’s why it’s important to have inclusive and equitable growth, for which inclusive finance is very important.”
A passionate advocate of financial inclusion, Governor Zandamela argued that the success of getting people into formal banking lay in the ability of regulators and policy makers to ensure ease of access, distribution, usage and quality of financial services.
Echoing this sentiment was fellow panelist and AFI Executive Director, Dr. Alfred Hannig, who warned of the potential devastation that could result from implementing poor financial inclusion services.
“The global financial crisis was not the result of too much inclusion but of the poor quality of inclusion, such as irresponsible lending, poor consumer protection and so forth,” he said.
Hannig also spoke about ‘inclusive green finance’ where technology plays an important role in providing solutions for overlapping challenges of financial inclusion, climate change and green finance. Mobile money and its use in pay-as-you-go solar lighting and other utilities, he explained, had led to the “avoidance of 28.6 million tons of greenhouse gas emissions”, illustrating financial inclusion’s role in enabling Sustainable Development Goals (SDGs), specifically on access to affordable and clean energy (SDG 7) and taking action to combat climate change (SDG 13).
In line with these efforts, Dr Hannig said that AFI “started to do research among a sample of 20 countries and found that they have enacted quite an impressive array of policies. Based on this, we came up with the 4P Framework.”
“The four ‘Ps’ are provision, promotion, protection and prevention, and they make the framework for what AFI calls ‘inclusive green finance’”.
In his remarks, Governor Zandamela also highlighted SDG 1 on tackling poverty as an incentive for promoting financial inclusion, adding that innovation in technology had been instrumental to furthering these aims. Collaboration between the public and private sectors, he said, should be encouraged in order to sustain any advances.
“Digital finance, particularly mobile banking, has been very important. People who live in remote areas can access their accounts, transfer, receive money, get credit through the telephone,” he said.
“People can travel hundreds of kilometers to cities where there are banks, just to know whether they have been paid. That’s the reality. Technology plays an important role in shortening those distances.”
Organizations like AFI, Governor Zandamela said, help its members meet their financial inclusion targets by providing access to global experts. Bank of Mozambique has been an active member of the AFI network since it joined in 2011 and was instrumental in the creation of the 2015 Maputo Accord, the world’s first set of measurable commitments to financial inclusion.
Mozambique is currently reeling from the effects of climate extremes after floods caused by Cyclone Idai killed more than 300 people. Experts say that the climate change is worsening the impact of deadly storms, underscoring the urgency to promote policies that emphasize mitigation, resilience and recovery efforts.
Following the Paris Agreement, AFI members endorsed its landmark Sharm El Sheikh Accord, when they committed to pursuing practical financial inclusion policy solutions that have positive outcomes for the environment. The Accord was endorsed at AFI’s flagship 2017 Global Policy Forum with support from members, including the Bank of Mozambique.
About AFI Inclusive Green Finance
Financial exclusion and climate change are key barriers to financial stability. While a lot of important work has been done on green finance globally, the focus has been largely on capital markets and big project finance. Little attention has been paid to financial sector policies that focus on individuals and micro, small and medium enterprises (SMEs) and bring them into mitigation efforts or build their resilience to climate change impacts.
AFI members outlined specific measures they can take to address financial inclusion and climate change challenges, and how best to use AFI's capacities for generating knowledge, information exchange and peer learning at the first inclusive green financial inclusion/inclusive green finance international conference in November 2018 in Fiji.
Inclusive green finance plays a key role in enabling environmental objectives of Sustainable Development Goals (SDG), in particular SDG 1 (No Poverty), SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).
AFI’s Inclusive Green Finance program is part of the International Climate Initiative (IKI) and supported by the German Ministry for Environment, Nature Conservation and Nuclear Safety (BMU), based on a decision by the German Bundestag.
About the Global Solutions Summit (GSS)
Implementing Sustainable Finance was a panel discussion involving AFI’s Dr Hannig; Policy Analyst for the Environment Directorate at Organisation for Economic Co-operation and Development (OECD), Virginie Marchal; Counsellor Member at the Argentine Council for International Relations (CARI), José Siaba Serrate; and Governor Zandamela. Hiroshi Watanabe, Managing Director at the Institute for International Monetary Affairs (IIMA) acted as moderator. Earlier, AFI’s Executive Director spoke at the Implementers Forum – How to Make Implementation Work.
The Global Solutions Summit is an annual event that brings together international research organizations, thought-leaders and decision-makers from across political, business and civic communities. The event addresses G20 governments and provides narratives and implementable recommendations to deal with the challenges on the G20 agenda: cross‐border issues that require international cooperation to solve them. German Chancellor Angela Merkel was this year’s main keynote speaker.