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Thursday, 23 June 2022
Arusha, Tanzania
Hon. Dr. Mwigulu L. Nchemba, Minister for Finance and Planning, Republic of Tanzania
Prof. Florens Luoga, Governor Bank of Tanzania.
Governors, Deputy Governors for Central Banks in the Africa Region, distinguished partners, stakeholders, and guests.
Ladies and Gentlemen,
On behalf of Alliance for Financial Inclusion (AFI), I am delighted and honored to welcome you, to Arusha, the safari capital of Tanzania, for our first, regional, in-person engagement after two years of virtual meetings. We are delighted to be able to co-host the 10th Annual Leaders Roundtable of AFI’s African Financial Inclusion Policy Initiative, together with the Bank of Tanzania.
First and foremost, allow me to express my gratitude to the Government of the Republic of Tanzania, represented here by the Hon. Dr. Mwigulu L. Nchemba, Minister of Finance and Planning, Prof. Luoga and the Bank of Tanzania for welcoming us to this wonderful city, nestled between the towering peaks of Mount Meru and Mount Kilimanjaro.
We thank you for hosting us and jointly organizing this Leaders’ Roundtable, along with the events held earlier this week: the meeting of AfPI’s Expert Group of Financial Inclusion Policy (EGFIP), training on Regulatory and Supervisory Technologies, Public-Private Dialogue (PPD) and Developing-Developed Countries Dialogue (3D). We are grateful for the outstanding arrangements, your generous support, and the warm hospitality. We also convey our sincere gratitude to the Bank of Tanzania for virtually co-hosting the AfPI events in 2020 and 2021. The AFI network truly appreciates all that you have done and continue to do to promote financial inclusion.
Let us remember that Tanzania is the place where the AFPI was born.
Bank of Tanzania’s leadership, personified by Prof. Ndulu, Governor of BoT, who delivered the keynote at the first AFI GPF in Kenya in 2009, was member of the AFI Board and Chair of the Board (2015 to 2017). As the driving force of AfPI, he was instrumental in he;ping organize the the initiative’s first meeting here in Tanzania, held in Zanzibar in March 2012. The strong leadership of Bank of Tanzania has been carried forward by Governor Prof. Luoga who is our host of today’s meeting. It is nice to see the loop closing from Prof. Ndulu to Prof. Luoga and the momentum AfPI has gained under Prof. Luoga’s leadership.
Therefore, today in the year 2022, a decade after we first met as a regional initiative, we are again at the right place.
AFI as an organization has matured and stabilized since our launch in Kenya 2009, at the first-ever Global Policy Forum. Let me take this opportunity to welcome Mr. Norbert Mumba, AFI’s former Deputy Executive Director, who is with us today and is one of AFI’s pioneers who witnessed the launch of the organization, as a member representative in September 2009 in Kenya.
And it is remarkable to see how surprisingly well the organization managed to get through the global health crisis that has paralyzed many of us over the past two years. As I said last night, AFI is more than alive, and the collaborative spirit we all feel during this week in our African Regional Initiative (AfPI) stands out as a testimonial to this statement. Therefore, the key message of this gathering is: We are happy to be together again, this is a peer network, and this is the way we work.
Over the years, AfPI has consistently provided a platform for AFI members in Africa to develop policy and regulatory frameworks and to determine effective policy solutions for advancing inclusive financial services across the African continent. Despite the challenges of the COVID-19 pandemic, AFI members in the Africa region have shown great resilience and have continued to be actively engaged in the AFI network. AFI Africa members have been taking part in AFI events, providing useful and insightful inputs on new knowledge products such as policy models, policy frameworks, guideline notes, through peer learning and knowledge exchange. On the other hand, AFI Management Unit has continued to leverage on technology to ensure that momentum is maintained for AFI activities.
Most recently, AFI members in Africa took part in the series of working groups meetings, held in-person for the first time in two years. Out of over 200 participants who took part in meetings held in Latin America, 100 were from member institutions in Africa.
The region has been at the fore of transforming the AFI network into the leading, financial inclusion global policy alliance. Since the first Global Policy Forum, that brings together policymakers from across the globe to discuss advancing financial inclusion, was first held in Nairobi, Kenya, in 2009, Africa has hosted 4 more GPFs, in South Africa, Mocambique, Egypt and Rwanda. The leadership of the Central Bank of Kenya chaired the first meeting of the AFI Board of Directors. AFI members in Africa make up 47 percent of the current global membership, making it a region with the highest number of members.
However, I believe it would be irresponsible to just highlight all the positive developments in the network, without being aware of the ongoing challenges we are facing.
We are living through turbulent times of the post-pandemic world. In this current situation, we are realizing the meaning of the saying “every crisis comes with opportunities”. But at the same time, the post-pandemic situation is still with insecurities and as we are grappling with those, we are already impacted by enormous, new challenges. The global impact of the war in Eastern Europe, inflation is on the rise and risks in food security in many countries, including the African continent, are emerging. The pressure on the vulnerable populations around the world, including women who have already suffered most from the health crisis, continues to rise. And if that is not enough, we keep hearing that with the climate crisis, the next threat is just around the corner.
With all this in mind, the importance of financial inclusion to balance some of these detrimental developments cannot be challenged. This is why financial inclusion needs a strong organization like AFI that puts financial policymakers and regulators in the lead to make sure that the promise to leave no one behind can be kept.
However, this requires that the strength of the organization is maintained. But what makes a strong organization like AFI?
First, good governance. With a growing complexity of the organization, characterized by an increasingly diverse membership and a multitude of interests, our structure will be continuously tested. Until now, we have managed to overcome governance challenges, yet, maintaining highest standards of corporate governance will be crucial for the future of the organization. We can’t afford to follow the path which has been shown by other fast-growing international organisations, which are often perceived to be dominated by country groupings, regional and even personal interests, or financial and organisational mismanagement. In contrast, AFI needs to continue to be driven by its genuine values, translated into its culture and organisational principles, with the spirit and practice of open dialogue and a cooperation model based on modesty, humility, mutual respect, and honesty. Those are important pre-requisites that facilitate a neutral and effective platform for dialogue and exchange among global financial inclusion thought leaders. I have said these words at the AGM in Sochi, Russia in 2017 and I believe they are still more than relevant.
Second, solid funding base. Our business model has proven to be strong so far. The commitments from the members are key to maintain the operations of the organization, while also helping us convince funders to support specific projects and initiatives. I would like to take this opportunity to thank AFI’s funding partners that include Agence Française de Dévelopement (AFD), German Federal Ministry for Economic Development and Cooperation (BMZ), Ministry of Finance Luxembourg, Mastercard Foundation and Bill & Melinda Gates Foundation, among others that have facilitated support to AFI members in the region.
Third, technical excellence and policy leadership. The AFI network has continued an upward trajectory in implementing practical policy solutions to ensure that no one is left behind. Through AFI’s services that hinge on peer-learning and knowledge exchange, coupled with technical support, partnerships, and capacity building, AFI members in Africa have reported over 150 policy changes between 2019 and 2021. The top three thematic areas of the policy changes reported in 2021 by AFI member institutions in Africa included digital financial services (DFS), national financial inclusion strategy (NFIS) and SME finance.
Our members in Africa have been making enormous contributions to make sure that these three preconditions are consistently met.
Ladies and Gentlemen,
The third point I just mentioned is reflected by the theme of this annual AfPI leaders’ roundtable: “Africa’s leadership on inclusive finance through digitization for stability and growth”.
The African continent is witnessing digital transformation led by an increasing digital connectivity and access to mobile phones. This digital transformation offers great opportunity to drive inclusive growth and innovative digital financial services, which help meet the targets of several Sustainable Development Goals (SDGs). This is especially true when it comes to reaching the most vulnerable groups such as women, forcibly displaced persons, or those living in rural and remote areas.
The region has been a cradle of transformative digital financial services, starting with the introduction of M-Pesa, in Kenya, which has achieved phenomenal success over the years. The mobile money revolution has led to an impressive growth in financial inclusion, mainly driven by mobile money and agent banking.
The message is clear: the future of the financial services is digital
Indeed, the African region has long been a star performer in the evolution of digital financial services not only in reach, but also in innovation. Banks in the region are increasingly forming partnerships with DFS providers to offer accessible and affordable services beyond person-to-person transfers and continue to invest in their own digital operations to build new ways of banking. FinTechs have sprung up across the region, and the regulators continues to provide an enabling environment for them to thrive. There is every reason to believe that the early success shown by deployments of mobile money will be replicated, and even surpassed, in the rest of sub-regions.
Just to give you one example about the impact of the digital revolution on reducing poverty:
According to enterprise surveys conducted in Kenya, Uganda, and Tanzania[1] use of mobile money by manufacturing and service firms was associated with a 16 percent increase in the likelihood of investing. Of the firms who adopted mobile money there was:
Policy makers in Africa have been at the forefront of leading the drive for sustainable and inclusive digital financial services through regulatory interventions by championing the creation of interoperable solutions and retail payment systems, as well as by focusing on emerging topics such as open finance, or central bank digital currencies (CBDCs).
For example:
The Bank of Uganda officially introduced a regulatory sandbox in June 2021 to support FinTechs in developing and launching their products. The Regulatory Sandbox Framework provides a regulatory environment for conducting limited scale, live tests of new, innovative products, services, solutions, delivery channels, or business models in a controlled environment, with regulatory oversight, subject to appropriate conditions and safeguards.
As we look at the future, I would like to reiterate that isolationism is not an option for us, especially in view of the global challenges we are all witnessing.
As the same time, there is need to protect the interests of Africa in the global discourse and to ensure a balanced dialogue with relevant stakeholders at the global stage. This will involve continued engagement with Standard Setting Bodies (SSBs), such as Financial Action Task Force (FATF) to ensure that set standards do not undermine the progress been made in increasing access and usage of financial services in the region. The region also stands to gain from engagement with policy makers from developed economies. Such engagements will allow for mutually beneficial learnings that support policy progress at the global, regional, and national levels. Finally, our Public Private Dialogue (PPD) is essential for knowledge exchange that helps to identify policy responses, particularly to risks of technology. This is the reason why I would like to thank our PPD partners for their active participation in this forum.
Ladies and Gentlemen,
With guidance of AFI’s Africa Leaders, a key deliverable for this 10th Leaders’ Roundtable is a regional policy framework on supervision of FinTechs in Africa. The policy framework aims to provide technical guidance to regulators within the African region on key considerations when formulating policies for the growing FinTech industry. It will serve as a benchmark for regulators in the development or reform of their supervisory frameworks for the FinTech industry within their respective jurisdictions.
During the meeting, the AfPI Experts Group on Financial Inclusion Policy (EGFIP) will submit the draft of this framework for your consideration. We are certain that the discussions during the roundtable will greatly enrich the framework.
In addition, the AFI Management Unit will share with leaders the AFI’s Special Report on CBDCs and its potential for financial inclusion in developing economies for further guidance In AFI’s spirit of knowledge sharing and peer learning, we shall hear from AFI members in Africa that will share their valuable practical experiences in exploring or in implementing CBDCs.
Ladies and gentlemen, I would want to re-emphasize that the future of financial inclusion, as well as broader financial services, will continue to be shaped by digitalization. While there are many opportunities, numerous open questions and issues to digitalization need to be answered. What makes these questions even harder is that some of them are outside the purview of financial sector regulators/central banks. These questions include, but are not limited to, the impact of cyber security in digital financial services, the role of data privacy and data protection in the provision of financial services, and the level of digital financial literacy of consumers among others.
As we appreciate the opportunities presented at this leader’s roundtable, let us continue to critically examine how digitalization of financial services can lead to inclusive growth, without compromising the integrity and stability of the financial systems.
As I conclude my remarks, I would like to take this opportunity to invite you to AFI’s flagship event, the 2022 AFI Global Policy Forum (GPF) to be held at the Dead Sea, Jordan on 5 – 8 September 2022. We are excited to welcome you in person at the annual, financial inclusion, global gathering after a pause of two years. Hosted by the Central Bank of Jordan and AFI at the stunning location of the Dead Sea, the four days of events will offer enlightening, focused and practical conversations to set the course of financial inclusion for the next decade. We look forward to welcoming and engaging with you at the 2022 AFI Global Policy Forum.
Once again, let me thank our host, the Bank of Tanzania, for making this event happen and allowing us to be here. Thank you all for being part of this journey.
Thank you for your attention.
[1] Islam, Asif, Silvia Muzi, and Jorge Luis Rodriguez Meza. “Does mobile money use increase firms’ investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania.” Small Business Economics 51, no. 3 (2018): 687-708
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