Financial Inclusion Initiative for Latin America and the Caribbean (FILAC)
7th Experts Group on Financial Inclusion Policy Virtual Meeting
Thursday, 16 July 2020
Opening Remarks by Norbert Mumba, Deputy Executive Director, AFI
Ladies and gentlemen,
Warm greetings and welcome everyone to the 7th FILAC EGFIP meeting co-hosted by Centrale Bank van Suriname (CBvS) and the Alliance for Financial Inclusion. I hope everyone is staying safe and well as we gather here virtually as the expert group on financial inclusion policy for the region.
Allow me to start by expressing my gratitude to SUGEF Superintendent Bernardo Alfaro and General Intendent José Armando Fallas for their leadership in driving forward regional financial inclusion in these extraordinary times as the Chair of FILAC. Let me also express AFI’s sincere appreciation to Deputy Governor William Orie who is present with us today together with his staff at Centrale Bank van Suriname for their support and commitment in co-hosting this event.
I wish to also thank everyone for their continued support and time to attend this virtual meeting, considering the new circumstances around how we all live and work, we appreciate the sustained commitment to achieving the financial inclusion objectives of the LAC region and individual member countries.
As you may recall, in March, AFI established a business continuity plan that has since been applied as a response to the consequences of the global spread of the COVID-19 and cancelled physical AFI events. The plan highlighted the adoption and use of virtual meetings and other digital channels, such as this meeting, as an alternative mode of ensuring continuity and achieving deliverables agreed with members.
The pandemic indeed has been rapidly spreading throughout the world and we see a health crisis turn into a dramatic economic crisis caused by the slowdown on local and global demand that has affected exports, remittances, tourism and the MSME. IMF in June has estimated the growth for the LAC region at -9.4 percent in 2020 and most of the countries in the region will be experiencing recession this year. As the region is still witnessing the spread of the virus, IMF predicted that social distancing measures will need to remain for a longer period of time, hence depressing economic activity in the second half of 2020 and leaving the region with heavy losses in employment and retail sales. These can seriously affect some vulnerable segments of the population such as women, youth, MSME and forcibly displaced persons (FDPs).
Having said that, financial inclusion is an impactful policy choice that responds to the economic crisis of this magnitude. Financial inclusion is among the few practical solutions that can have a substantive impact in re-establishing economic resilience of vulnerable groups and catalyzing economic recovery.
Mitigating the impact of this crisis and consolidating the journey for FILAC as the initiative for policy innovation and implementation in the region, requires us to focus our attention on those pain points that can assist the region and the network drive meaningful growth. It is therefore gratifying to see technical experts from the region with an objective and the mission to take the agenda to the next level, primarily focusing on three key areas, which are even more relevant in today’s context of the crisis: SME finance, gender inclusive finance and digital financial services.
Micro, small and medium-sized enterprises (MSMEs) comprise 99.5 percent of the businesses, 60 percent of the employed population, and about 25 percent of the gross domestic product (GDP) in Latin America and the Caribbean (LAC). With subdued growth in many sectors owing to the pandemic, projections are that most countries in the region will suffer economic downturn and MSMEs will suffer the most. It is therefore of utmost importance to support MSME development through the access and usage of formal financial products and services to maintain the stability and health of the economy as well as the well-being of the population.
Financial inclusion, particularly for women and youth is key in mitigating and fostering social & economic recovery from COVID-19 and also advancing our work on increasing access to quality financial services to reduce the financial inclusion gender gap in line with the Denarau Action Plan.
Lastly, financial technology presents far-reaching opportunities to deepen financial inclusion and the adoption of digital technologies is a very important factor for the sustainability of MSMEs. The future of financial inclusion as well as broader recovery from the global emergency will continue to be shaped by technology. While there are obvious benefits, there exist new and emerging risks of technology that are outside the conventional prudential responsibilities of financial regulators, I would therefore like to encourage colleagues and LAC leaders present here today, to discuss and agree on approaches to take forward these remarkable interventions and to generate knowledge products to learn and share experiences and challenges from the region.
We hope that the insights drawn from the deliberations will make clear the need for foster the use of digital payments taking into consideration consumer protection and market conduct frameworks to engender consumer confidence in this time of crisis and beyond.
On this note, I wish to thank you all once again for your participation and will leave you to take forward your deliberations and wish you a fruitful discussion.