21 May 2021
Digital finance services and FinTech solutions offer the greatest opportunities for an accelerated and sustainable COVID-19 recovery within the region, leaders of AFI’s Pacific Islands Regional Initiative (PIRI), said at their 6th Annual Leaders’ Roundtable meeting, co-hosted virtually by current PIRI chair Bank of Papua New Guinea (BPNG) and AFI on 19 May.
“Digitalization is important to us and we are keen to move forward in this area,” said Governor Ariff Ali from the Reserve Bank of Fiji (RBF). In 2020, RBF expanded its mobile money services by using QR Pay to distribute cash assistance to people heavily impacted by the COVID-19 pandemic. While unlike many of its peers, Fiji recorded exceedingly high mobile remittances rates in the country, recording an inbound remittance increase by 338.9 percent to FJD91.4 million (USD39.6 million) last year.
Nevertheless, infrastructure limitations and considerations possess a challenge, especially in implementing financial inclusion solutions to the most vulnerable groups, explain
This sentiment was echoed by Governor Caroline Abel from the Central Bank of Seychelles (CBS) who noted that while the geographic nature and size of the region poses a challenge for the type of infrastructure that can be put in place, funding for digital financial initiatives is critical to advance financial inclusion.
“Digital financial services are growing in importance, and the region is making serious efforts to push for development in the area,” said Governor Abel. In the past year, CBS has worked hard in the implementation of its Digital Financial Literacy framework and reducing the cost of its digital financial services.
Other developments from the region included the successful implementation of a National Switch and National Card system in by Banco Central de Timor-Leste, the launch of a new National Financial Inclusion Strategy (NFIS 2021-2025) by Central Bank of Solomon Islands, coordination to support MSMEs that were negatively impacted by the pandemic by the National Reserve Bank of Tonga and work on a National Payment System Reform by the Central Bank of Samoa. All the central banks also reported positive developments in expansion of access and usage of digital financial services in their respective jurisdictions.
While the Pacific Islands have avoided large-scale COVID-19 outbreaks, the region has nonetheless been adversely impacted by ensuing repercussions including dwindling remittances, record low tourism levels and disruptions to supply chains.
While the crisis has changed the norms of everyday living and how the island nations conduct business and generate income, FinTech is “providing a renewed sense of hope and direction for the PIRI members to increase their focus on developing simple banking solutions” Deputy Governor Teria said.
Speaking on behalf of Governor Loi M. Bakani, he explained that the region, with a natural barrier of widely dispersed remote islands to stem the global health crisis, still faced unprecedented economic challenges brought on by the COVID-19 pandemic.
BPNG is currently undertaking a COVID-19 Business Pulse Survey to understand the economic standing of medium, small and micro enterprises (MSMEs) in the country and to build a comprehensive MSME database for future policymaking.
Amid these tough times, AFI Executive Director Dr. Alfred Hannig expressed his confidence in the promise of an inclusive, digital, and prosperous future “because PIRI members have consistently demonstrated resilience, led as springboards for innovation and charted new pathways of opportunities to achieve this objective.”
“PIRI will continue to lead and demonstrate innovation as we implement and formally launch the Pacific Regional Regulatory Sandbox this year, operationalize the recommendations of the de-risking action plan to support safe and affordable remittances and digital payments, and leverage digital technologies in a responsible and safe manner,” said Dr. Hannig.
These initiatives, he explained, will benefit vulnerable segments of society, such as the poor, women, MSMEs and persons displaced and affected by climate change-related events.
Development of the Pacific Regional Regulatory Sandbox Portal is on track and is expected to be concluded by the middle of this year. The region will also be working on a Pacific Islands Regional De-risking Action Plan to increase economic stability by strengthening global and regional banking relationships and financial services that are accessible to all Pacific islanders.
PIRI’s landmark Pacific Regional Regulatory Sandbox Guidelines aim to help not only the Pacific but also other regions looking to encourage innovative financial technology (FinTech) solutions that foster greater financial inclusion. By acting as a regional bloc rather than individual markets, countries participating in the sandbox will provide interested startups and FinTech companies with access to a larger and more diverse market, as well as greater potential within a well-defined, regional regulatory structure.
In his closing remarks, Assistant Governor Gilbert Wongsin from the Central Bank of Samoa (CBoS), reminded PIRI members to “keep our sights on the goal and reinvigorate efforts for important financial inclusion work to benefit our countries and country folk.” CBoS will take over from BNPG as PIRI chair and will host the region’s 7th Annual Leaders’ Roundtable next year.
The high-level event was preceded by the 14th Experts Group for Financial Inclusion (EGFIP) Meeting on 18 May, where members were given updated on the deliverables agreed in PIRI’s 2022 workplan. EGFIP members outlined the status and progress made to leaders during the roundtable meeting.
Since its launch in 2015, PIRI members have made a series of Maya Declaration commitments largely around financial literacy and education – and have achieved 36 percent of set targets. PIRI is also AFI’s first regional initiative to outline regional policy commitments on financial inclusion and climate change.
PIRI aims to make formal financial services accessible to all Pacific Islanders through its unique model of south-south engagement and peer learning. The region has one of the highest rates of unbanked persons globally due to factors including geographically dispersed islands, small populations, and limited banking infrastructure.
This event was partially funded with UK aid from the UK government.