Opening ceremony of "Smart Policies for Green Financial Inclusion"
Monday, 26 November 2018
Opening remarks from Governor Ariff Ali, Reserve Bank of Fiji
Your excellence, Honorable Deputy Prime Minister, Government of The Russian Federation
The Executive Director of Alliance for Financial Inclusion (AFI), Dr. Alfred Hannig
Deputy Governors and Senior Central Bank Officials
Members of the Reserve Bank of Fiji Board
Participants and Stakeholders
Ladies and Gentlemen
BULA VINAKA and a very good morning to you all!
It is with great pleasure that I welcome you all to Nadi, for this inaugural Conference on Smart Policies for Green Financial Inclusion. I would like to especially welcome those who have travelled to Fiji from abroad. I understand we have delegates from as far as Armenia, Tanzania, and southern Asia, as well as our friends from the Pacific Islands.
I also extend a special welcome to our distinguished guests and speakers who are here to share with us their invaluable knowledge and experiences. As you know, this important event launches AFI’s work stream on financial inclusion and climate change.
Why Did RBF Support this Conference?
Ladies and gentlemen, the timing of this conference is pertinent, particularly for Fiji and our Pacific neighbours for a number of reasons.
Firstly, data for the past decade shows that our recent experiences with natural disasters brought about by climate change has been twice that recorded in any decade and has been more severe. In February 2016, Fiji felt the full brunt of Tropical Cyclone (TC) Winston, a severe Category 5 storm system which brought home the reality that climate related events are becoming more frequent and increasing in strength.
Our rebuilding efforts for TC Winston still continues today, almost 3 years after, and has cost the country almost 1/3 of our GDP. This year, we had 2 back to back cyclones - Tropical Cyclones Josie and Keni weeks apart in the early part of the year followed by a drought. So we have first-hand experience of climate change and its impact on our people.
Secondly, as policy makers we are all aware that in seeking to manage the challenges brought about by the aftermath of these natural disasters, a key observation we have made is that our low income and vulnerable households are the hardest hit and worst affected. This directly impacts our ability to meet our vision which is “Leading Fiji to economic success”.
Thirdly, as developing or emerging economies, we also acknowledge that public funds are limited, and furthermore, due to a number of competing priorities, are not sufficient for all our communities to rebuild their livelihoods and ensure protection against impending climate related events. This therefore creates a need for the financial sector to play a critical role in allocating resources towards a sustainable and green economy, particularly given the magnitude of investments required to weather future storms.
Lastly but equally important is that we are therefore grateful to AFI for initiating this important conversation through the organising of this conference. We do not profess to be experts in this area. Partnering with AFI augurs well for our reputation as well. AFI is widely and internationally recognised as the leading institution in the Financial Inclusion space.
The Reserve Bank of Fiji therefore thanks AFI for the opportunity to co-host this event, which is very timely given Fiji’s current presidency of COP23, and in light of a number of green finance initiatives that Fiji has been driving.
The Role of the Financial Sector in Green Finance and Building Resilience through Policies on Financial Inclusion and Climate Change
Let me briefly touch on RBF’s role and its current Commitments in Green finance and building resilience through policies on financial inclusion and climate change.
Our initiatives are anchored on Fiji’s Green Growth Framework which has laid the foundation for sustainable development in the country while the Financial Sector Development Plan 2016-2025 also recognises the need to support green finance in Fiji.
The Reserve Bank of Fiji is also committed to working with partners on developing and promoting sustainable business models under the Maya Declaration. This is supported by the National Financial Inclusion Strategic Plan 2016-2020 on the development of green financial products and services for individuals, households, and Micro & Small Enterprises. Moving forward, the Reserve Bank is currently working with the Sustainable Banking Network to draw up a roadmap towards building a sustainable financial system in Fiji.
I recall that Green Finance and its Linkages with Financial Inclusion was one of the key discussion topics at the 2016 AFI GPF which the Reserve Bank of Fiji co-hosted at this very same venue. As we now know, green finance has become a prominent policy agenda among governments, regulators, policymakers, and developmental agencies.
In Fiji, the concept of green finance is still embryonic and will require further research and consultation on products that would be appropriate for a small developing economy like ours. Nevertheless, we have achieved a significant milestone when Fiji became the first emerging market economy in the world to issue a green bond in 2017. The issue raised FJD100 million towards financing government infrastructure projects targeted at climate change mitigation and adaptation. Our green bond is listed on the LE and we are the first sovereign to list its Green bond on the Exchange. One of the key requirements of the green bond principles is increased transparency and this is done to a special audit and monitoring report on the use of the funds. I am pleased to inform that this report is now ready having been audited by KPMG and should be released any time soon.
Ladies and gentlemen, in acknowledging that financial services are a tool to build resilience in the face of shocks related to climate change, the transformation of the financial system is therefore important in promoting green finance. Such a transformation needs to be complemented by enabling regulatory frameworks, adequate fiscal incentives, and appropriate reforms.
In this regard, the Fijian Government, in collaboration with the Reserve Bank of Fiji and some licensed financial institutions, has introduced various programs to support climate change mitigation, adaptation and resilience in Fiji. This includes the establishment of the RBF Natural Disaster Rehabilitation Facility -to assist businesses and households affected by tropical cyclones, floods and other natural disasters.
Two keys initiatives announced in the National Budget were Parametric Insurance and Crop insurance. I am pleased to highlight that Government has now finalised parametric insurance which be announced by the Minister very soon. Work on crop insurance continues and we should be able to finalise this in 2019.
A pioneering initiative that we have undertaken is the introduction of a bundled microinsurance product for our sugar cane farmers, which has now been extended to dairy and rice farmers, and as of the latest National Budget, to civil servants. While this bundled product does not cover climate related risks such as cyclones, windstorms, floods and droughts at this time, the Fijian Government is adamant in its efforts to design and offer climate resilience insurance products to Fijian households in the very near future, and discussions are well underway with relevant international agencies on this initiative. This micro insurance product has increased the in penetration of insurance from 14% to around 40% in just over a year.
Ladies and gentlemen, as I mentioned at last night’s welcome dinner, you have an exciting two days ahead of you.
I recall one of the outcomes of the 2016 AFI GPF that Fiji hosted was recognising that capacity building and awareness form the critical first steps in developing the relevant technical and analytical capabilities with regard to better understanding the financial implications of environmental risks. It was therefore acknowledged that AFI, as a proven, successful global knowledge exchange platform in financial inclusion policies, can contribute in building capacity of its members in the area of green finance. I therefore wish to acknowledge again with gratitude AFI’s continued efforts to elevate our knowledge and capacity through the organisation of this inaugural conference.
This conference aims to synthesize these challenges to meet three objectives:
(1) discuss specific actions that AFI members can take to address financial inclusion and climate change issues;
(2) share experiences on how to best utilize the AFI network for knowledge building and peer learning and;
(3) explore options for related strategic alliances and partnerships at the global level.
In closing, I urge all the participants to make the best of this learning and networking opportunity. I am certain that will be able to achieve our three objectives over the next two days.
I also wish to invite you all, and in particular our overseas visitors, to take the opportunity to see a bit of our beautiful country whilst you are here. Do enjoy our local hospitality, and I wish you all a fruitful and successful conference.