Namaskar, good Morning to all of you,
Welcome you all to the 8th IGF and 20th SME Finance Working Group Meetings in Kathmandu, Nepal! Allow me to convey my heartfelt appreciation to Acting Governor Dr Neelam Dhungana Timsina and the team from Nepal Rastra Bank (NRB), for co-hosting the joint working group meetings and the hospitality we were privileged to receive so far.
Our host this week, the Nepal Rastra Bank (NRB), has been one of the active members promoting financial inclusion within the network since joining AFI in 2010. In particular, NRB is one of the frontrunners in initiating and materializing the South Asia Region Financial Inclusion Initiative (SARFII), which was launched at the 2022 GPF as you will well remember.
We also recognise NRB’s leadership and contribution in the inclusive green finance space, especially in continuously imparting its knowledge and learnings from the development and implementation of its Environment and Social Risk Management Guidelines. The NRB is one of the first AFI members to issue these Guidelines, which are classified as World Class by the Global Green Growth Institute, and are being at par with international standards. At present, NRB is also involved in the development of a green finance taxonomy with strong Inclusive Green Finance elements, which will contribute to advancing the Sustainable Development Goals (SDGs) related to climate and environment and align with the Kathmandu Joint Declaration on accelerating Green, Resilient, and Inclusive Development (GRID) for Nepal. The green finance taxonomy will help channel resources towards low-carbon development initiatives and help build resilience among MSMEs and individuals in Nepal.
SME Finance is also a top policy priority for NRB, as there are around 270 000 registered SMEs (defined in terms of fixed capital investment) that contribute 22 percent to national economy in Nepal, out of which only 50 % obtain credits from banks. This is why NRB shows strong interest in the concept of digital banking and microlending provision by payment service providers of up to a certain amount to promote MSMEs and startups.
Ladies and gentlemen,
This gathering of the IGF and SME Financing WGs is the second series of AFI WG meetings, after successfully concluding the Digital Financial Services and Global Standard Proportionality working group meetings in Kuala Lumpur, Malaysia just last week. Next week, the remaining three working groups, the Consumer Empowerment and Market Conduct (CEMCWG) , Financial Inclusion Strategy (FISPLG) and Data (FIDWG) working groups will meet in Malawi to complete the first cycle of WG meetings in 2023. For this joint working group meeting here in Nepal, we have 82 registered participants across the AFI network representing 45 member institutions from 41 countries. In terms of gender, we have a quite balanced male and female representation for both working groups with 39 women and 43 men from our member institutions.
As you are aware, the WGs play an important role as the engines of content in the AFI network. WGs are not only issuing guidance on proven policies that can be adopted in other jurisdictions through Policy Models, regional Policy Frameworks and Guideline Notes, they also inform other AFI services which include capacity building, regional initiatives, in-country Implementation (ICIs), peer learning and engagement with private sector stake holders and developed country partners.
Let me mention at this point that this year we are also celebrating the 10th anniversary of the SME Finance Working Group and I would also like to congratulate and wish all members of the SMEFWG a happy 10th anniversary! It is a great coincidence that this time the SMEFWG counts more members present than ever before: we have 44 WG members in the room. Congratulations!
But there is one more important point to mention. I would like to especially greet the 20 representatives from member institutions in this room who actually come to an AFI event for the first time. This shows how vibrant our network is, after we already greeted 27 newbies last week in Kuala Lumpur, and I am sure we will get similar numbers from Malawi next week. Welcome to the newcomers. We hope you find this useful.
Dear members and partners,
Please allow me also to touch upon a few big picture issues beyond the actual agendas of the Working Groups.
2023 is a difficult year for AFI members. As the whole world is suffering from the impact of a poly-crisis with armed conflicts, inflationary pressures, disruption of value chains, impact of climate change, and many people ultimately losing their jobs, policymakers are challenged to manage conflicting macro-objectives. For developing and emerging economies, there is strong pressure to refocus their efforts on ensuring price stability and we do observe a real risk of financial inclusion being crowded out from the policy agenda, at least in the shorter term. This could again have tremendous negative impact on those vulnerable groups who have already suffered during the pandemic: women, youth, the elderly, disabled persons, and many others. In fact, we do risk to lose the financial inclusion gains that we have achieved over the last decade. Therefore, our voice and action are needed to demonstrate again what we have learned in the aftermath of the 2008 global financial crisis: that financial inclusion is a complementary and not a competing objective to monetary stability and financial stability and plays a significant role in crisis mitigation, economic recovery and building resilience.
As it looks, we will take this key message forward to this year’s GPF that will take place in September in Manila, co-hosted by Bangko Sentral ng Pilipinas. The intention is to follow-up on the discussions from at the GPF 2022 in Jordan, particularly on contemporary financial regulation, the last panel that discussed the scope of central bank mandates. As you remember, there was consensus among all leaders on the panel that there is a role to play for Central Banks in ensuring inclusivity and mitigating climate change, no matter whether there is an official mandate provided by act or not.
Talking about the GPF, let me please also remind us of the update of three of our flagship Network commitments, the Denarau Action Plan, the Sharm El-Sheikh Climate Change Accord, and the Sochi Accord on Inclusive Fintech during the 2022 GPF in Jordan. Those updates bring to our attention the need to keep our policy focus on gender, inclusive green finance, financial innovation, and targeting vulnerable groups including youth and forcibly displaced persons.
2023 will be a strategically important year for AFI as we continue the exploration of AFI’s intergovernmental organization (IGO) status.
We will also look to pilot AFI’s financial inclusion country assessments with at least two members on a voluntary basis and this will be led by the GSP working group.
Working closely with partners is a key success factor for the AFI network. For these meetings we would like to recognise participations from the Mastercard, the Smallholder and Agri-SME Finance and Investment Network (SAFIN) and the Ecobank. Furthermore, AFI is launching an initiative with the Canadian IDRC to support members in conducting research on inclusive green finance for MSMEs policy guidance to the broader network.
I urge everyone to leverage this meeting to your utmost benefit and invite you to share your thoughts and reflections to optimize the working group platform. I would like to thank you, the working group members, for your active participation and also for making the efforts to travel all the way to Nepal where we have been received so warmly. Thank you again, Nepal Rastra Bank and my AFI colleagues for organising this meeting.
Please spare some time to explore at least a few parts of this unique country. It is a small country with the highest mountains in the World, it is a country of diversity with numerous ethnicities and climate zones close together, and it is a country of a rich culture with ancient stories and great monuments.
Wishing you a week full of fruitful deliberations.
“Dhan’yavāda”- which is thank you in Nepali!
© Alliance for Financial Inclusion 2009-2023