Pacific Islands Regional Initiative (PIRI) High-Level Forum
Wednesday, 5 June 2019
Honiara, Solomon Islands
Opening Remarks from Norbert Mumba, AFI Deputy Executive Director
Mr. Denton Rarawa, Governor, Central Bank of Solomon Islands
Mr. Simeon Athy, Governor, Reserve Bank of Vanuatu and Chairman of PIRI
Ladies and Gentlemen,
Halo olaketa! Welcome to Paradise!!
Good morning and a very warm welcome to you all to this beautiful Solomon Islands.
Ladies and gentlemen allow me to express my utmost gratitude to Mr. Denton Rarawa, Governor of Central Bank of Solomon Islands and his wonderful team at the Central Bank of Solomon Islands for their endless support and excellent arrangements in hosting and organizing this Pacific Islands Regional Initiative (PIRI) event.
It is an honor attending this PIRI high-level forum on ‘Advancing Green Finance Through Youth Inclusion’. And a pleasure being back in the Pacific.
The Central Bank of Solomon Islands has been a principal member of the Alliance for Financial Inclusion (AFI) since 2009 and has been actively participating in working groups and regional initiatives on topics such as financial inclusion data, SME financing and consumer protection. The Regional Initiatives in AFI are the core component of our Network as they help our members to effectively address regional specific policy interventions to enhance financial inclusion.
Permit me to start my remarks by stating the obvious; the focus on Inclusive Green Finance here in the Pacific is crucial, but in no way less important is the need to put forward opportunities that advance and deepen the inclusion of its youth, women and most vulnerable.
This is one of the regions where climate change is truly felt in the everyday life of people. According to the World Risk Index 2018, five Pacific Island countries are among the top 20 most at-risk countries in the world. We see the effects of climate change deplete resources, devastate lives, and hold back the posterity of its youths. Alarming also, is the non-abating future weather and climate predictions which raises the question; How do we advance the promise of green finance and protect our most vulnerable and youths?
While I might not have direct answers to this singular important question, let me provide some context I hope will guide our discussions in the coming days as we learn as peers and share insights on how to tackle this commonplace challenge.
Inclusive Green Finance – Disaster Preparedness and Response
Ladies and gentlemen, as you know increased extreme weather events is a reality witnessed in the past years, we have seen:
- Cyclone Winston hitting Fiji in 2016, impacting the country both economically and socially and
- Tropical cyclone Pam, having devastating impacts in Vanuatu in 2015
These were not the only extreme weather events in the past years and it is predicted that there will be more and intensified events in the years to come.
The Pacific is not only experiencing extreme weather events, but we can also see rising sea levels that will lead to vulnerabilities in the coastal communities and devastating agricultural land.
As you have witnessed, the effects and consequences are far reaching, and those hardest hits are those at the bottom of the economic pyramid. Those without savings, credit or insurance are in a vulnerable position and their resilience means the resilience of the whole society. Financial inclusion can change this, it can build resilience and it can enable mitigation.
Technology: The bridge to new waves of inclusion
Moreover, I believe everyone will agree with me that technology, specifically, digital financial technology and the mobile can serve as catalyst to simplifying access, deepening usage and ensuring the quality and relevance of financial services to the underserved and unbanked.
As Pacific Island Countries (PICs) build and encourage technology infrastructure development and the global marginal cost of owning a mobile phone drops, opportunities for purposeful and relevant innovations to serve these markets are presented. AFI with its Pacific Islands Regional Initiatives (PIRI) technical sub-group members are in the process of finalizing the Regional Regulatory Sandbox.
The regulatory sandbox is intended to present the pacific and other small island jurisdictions as a singular and vibrant market encouraging the entry of solution providers and innovators, hence, bringing the cost of innovation down, reducing barriers to entry, and allowing regulators collect important insights before deciding if further regulatory action is necessary.
We believe this will present new thinking around how technology can be leveraged to promote green finance in areas such as micro-insurance, Agri-tech, digital credit for individuals and MSMEs and also the introduction of smart environment monitoring and sensory technologies with applications in agriculture, insurance and disaster response, recovery, and resilience management.
De-risking in the Pacific: Stemming the Tide
Apart from that, de-risking is having a major impact on payment systems for remittances. It is estimated that about 25 percent of all global corresponding banking relationships have declined since 2009. 28 percent of money transfer operators (MTOs) around the world can no longer operate, and the number of cross-border payments for countries identified as high-risk jurisdictions has declined by 10 percent.
In the Pacific, we have recorded examples where the closure of correspondent banking accounts of MTOs has had devastating consequences for families who rely heavily on remittances for their household income and financing their small to medium businesses. While the consequence of de-risking is driving transactions into the informal market and encouraging the spread of the informal economy, increasing financial exclusion, slowing or halting innovation, and ultimately increasing the risks of money laundering and terrorism financing that it was meant to mitigate, what therefore, can we as policy makers and regulators do to stem this tide and reverse the negative unintended consequences on financial inclusion?.
Gender considerations and its linkages to Green Financial Inclusion
Ladies and gentlemen, in the financial inclusion space, bridging the gender-gap through inclusiveness of more women remains a challenge due to the culturally ingrained norms, gender-insensitive policies and the fluidity of the societal perspective towards women which resulted in most women being marginalized from actively participating in economic activities or engaging in decision making.
We believe connecting women through the communities and interventions around MSMEs financing and other gender equality and empowerment for the vulnerable would yield greater economic growth and sustainable development in the Pacific.
These are the context I hope sets the stage for our discussion for the next few days and shape the realities of the future we all envisage, but in the midst of this, I want to congratulate you, Your Excellencies, for taking action at an early stage.
As financial regulators, coming together and starting to put in place policies aimed at individuals to build resilience to climate change, but also enable mitigation of climate change, this is commendable. And you have not stopped there, you have been instrumental in making sure that Inclusive Green Finance is now a topic across the network. You have as a region spearheaded and inspired the work on Inclusive Green Finance starting to take shape amongst the members of AFI, across the globe.
Right here and right now, this region can take the agenda even further. By focusing on Disaster Preparedness and Response, you can deepen the knowledge in the network and implement policies that protect the most vulnerable. This is a very welcome way forward.
For the younger generation climate change is even more important than for us. They will inherit what we leave behind and continue living with this planet. And they care. Just one week ago, we have seen hundreds of thousands of young people showing their support for ambitious climate action, protesting in 130 countries worldwide.
We see young people not only being the leaders of tomorrow, but they are here, today, sharing their ideas and their leadership. And having this dialogue and learning from their reality and their priorities is crucial.
Looking at how we as a network can advance the financial inclusion of young people is important. Of the global population more than half are under the age of 30 and in the Pacific Island, an estimation of 55 percent of its population is below 24 years old, this is a huge untapped resource that should be financially included to maximize their potential contribution to our common development. But also included to make sure our future is greener. Making sure that inclusive green finance is also targeted at young people can be a way forward and I very much welcome this opportunity to work with Your Excellencies on these pressing topics.
With that, I conclude my speech and extend invitation to this year’s AFI Global Policy Forum in Kigali, Rwanda from 11 – 13 September 2019. Under the theme " Using Technology for Inclusion of Women and Youth" we are now working closely with National Bank of Rwanda to create a milestone event.
Your Excellencies, from the Alliance for Financial Inclusion I want to thank you for your commitment and for your forward-looking leadership.