17 March 2021
Honorable,Mr. Noel Vari, Director Financial Regulation Department, Reserve Bank of Vanuatu, Chair & Co Chairs of the Financial Inclusion Data and SME Finance Working Groups, Ladies and Gentlemen,
Welkam and halo! It is with great pleasure that I welcome you to the second virtual Working Group Meeting of 2021. Allow me to express my sincere gratitude to the Honorable Governor Athy and Deputy Governor, Peter Tari of Reserve Bank of Vanuatu, as well as the RBV team for their excellent support for virtually co-hosting this second series of working group meetings. I was looking forward to visit your beautiful country again but we continue to be prevented by travel restrictions and challenges brought about by COVID-19 pandemic we hope the health interventions being made will make it possible for the working groups to meet face to face soon.
The Reserve Bank of Vanuatu is one of the longest serving members of the AFI network having joined in August 2009 and has played active roles across all working groups. RBV shows its commitment to reducing the total unbanked population through the formation of a specific taskforce for financial inclusion which is in line with its eight Maya Delaration targets across a number of themes that include financial inclusion data and SME finance. From the regional perspective, the Reserve Bank of Vanuatu is seen to be making great strides towards financial inclusion in the Pacific through Vanuatu’s National Financial Inclusion Strategy (2018 – 2023). RBV has been a champion in supporting evidence-based policymaking by implementing demand-side survey and supply-side data collection, and has also focused in the strenghtening of MSME financing as one of the critical elements to generate employment and economic and social well-being. In the last PIRI EGFIP meeting in 2019, RBV also shared its progress on the Small Business Development Bill and stock-take of financial literacy modules/trainings for individuals and businesses. We therefore see that by co-hosting this meeting RBV provides us with an opportunity to learn from their important experiences in financial inclusion data and SME finance.
Despite data showing that to date the Pacific Islands have experienced fewer cases of COVID-19 (about 30,000 in total), a recent World Bank Report; PACIFIC ISLAND COUNTRIES IN THE ERA OF COVID-19: MACROECONOMIC IMPACTS AND JOB PROSPECTS – December 2020 reveals to us the extent of the devastating impact of the pandemic on PIC where GDP growth is expected to decline significantly in 2020 and likely in 2021. This joint working group meeting of FIDWG and SMEFWG is therefore appropriate to enable us share how data can tell a story to help us design responses and policies to aid recovery and also consolidate the gains so far achieved in financial inclusion.
We see tourism dependent economies of Pacific Islands such as Vanuatu, Fiji, Samoa, and to a lesser extent Tonga experienced a major recession. For example, the tourism office in Vanuatu reports a 64% contraction in the number of employees in the tourism industry in the country, Fiji stands to lose nearly 602,000 air travel arrivals in 2020, equivalent to US$ 631.3million loss in tourism receipt. The impact of this particularly on women and youth is huge and calls upon you as policy makers to use this evidence and design sustainable policy interventions to aid the recovery process.
There is no doubt that the success of our post pandemic recovery efforts will largely hinge on how effective our policy interventions will be in reviving the SME sector to recreate jobs and increase productivity.
Even with the challenges faced in 2020, a total of 141 new policy improvements have been reported by AFI members. Of the new policy changes reported in 2020, 34 policy improvements were around DFS, focusing specifically on FinTech, E-money and National Payment Systems reviews. Four new policy improvements reported in 2020 were related specifically to Gender Inclusive Finance.
In 2020, AFI has also successfully delivered 18 Capacity Building (CB) events which was attended by 1,309 policymakers across the network. AFI knowledge products and policy learnings have been used as the anchor for CB events such as Joint Learning Programs and member training. AFI achieved a new milestone where female participation rate in these events surpassed 50 percent. Of the total participation, 53 percent are female, and 47 percent are male.
I would like to take this opportunity to share that the AFI Board of Directors at its meeting in December 2020, requested the AFI Management Unit (MU) to express their commendation and appreciation to the Working Groups on the outstanding leadership shown by the Working Group Chairs and Co-Chairs in successfully ensuring the completion of the Working Groups deliverables for the year 2020.
Despite the positive results, we are reminded of our commitment under the Denarau Action Plan to position access to quality financial services for women as the central feature in our recovery plans to quickly provide relief to the women and youth who are badly impacted by the COVID-19 pandemic and to make significant gains towards our 2021 target to halve the gender gap.
The COVID-19 pandemic invokes a new sense of responsibility that should motivate our efforts towards more sustainable inclusion that will be more resilient to future shocks. AFI is confident that FIDWG and SMEFWG will live to this challenge in the coming months to drive the needed policy change and best practice.
The SME Finance Working Group has worked consistently across twelve AFI services with various policy initiatives and knowledge products to elevate the importance of MSME as another segment of financial inclusion beside individuals/households. AFI member institutions have benefitted from the core Guideline Notes No 36 on SME Finance and Guideline Note 23: The Role of Financial Regulators in Promoting Access to Financing for MSMEs – Lessons from the AFI Network.
Notable achievements in 2020 were knowledge products that focus on MSME financing ecosystem; The Scoping and Assessment Report – MSME Access to Finance Ecosystem in Africa, which addresses the importance of education in mitigating information asymmetry through Financial Education for the MSMEs: Identifying MSME Educational Needs, maintaining sustainable businesses through Member Countries and Inclusive Green Finance Policies for MSMEs Survey Report on Alternative Finance for MSMEs and most importantly guiding members amidst the pandemic through SME Finance Responses to COVID-19 in AFI. The working group also facilitated the peer review for National SME Survey to Assess the Impact of COVID-19 by Bank of Papua New Guinea.
On the other hand, the Financial Inclusion Data Working Group, has remained active in enhancing the key recommendations on collecting financial sex-disaggregated data and the Guideline Note 34 on Sex-disaggregated data report templates complements the Toolkit developed some years ago to collect financial inclusion segmented data to better inform the gender gap and policies to enhance women opportunities on financial inclusion. In the context of a prevailing global pandemic specially disrupting the financial lives of women there is more than ever an increasing need and interest to implement actively these methodolgoies to identify these gender gaps and devise policies and activities to reduce them.
In line with AFI’s Phase III Strategy (2019-2023) envisioning AFI as a Policy Leadership Alliance, 2020 has seen the endorsement of two Policy Models on National Financial Inclusion Strategy and Consumer Protection for Digital Financial Services, developed with the tremendous support of the Working Groups. This year, we envisage an additional two Policy Models on MSME Finance and E-KYC.
I commend once again all members of FIDWG and SMEFWG for your diligence and determination in an otherwise tough and tumultous year.
I wish to end by thanking you for your participation and thanking Governor Athy and team at the Reserve Bank of Vanuatu and my colleagues at AFI for organising this joint working group meeting. Stay safe and wish you fruitful deliberations. Thank you