Opening remarks by Alliance for Financial Inclusion Head of Policy Analysis and Capacity Building Robin Newnham at the Central Bank of Kenya-AFI Joint Learning Program on Digital Financial Services. Check quotes against delivery.
*****
Deputy Governor Sheila M’Mbijjewe,
Professor Kinandu Muragu,
AFI members from visiting delegations, colleagues from the Central Bank of Kenya and the Kenyan School of Monetary Studies,
Ladies and Gentlemen:
Good Morning. (HABARI ZA ASUBUHI)
It’s my honour to welcome you on behalf of Dr Alfred Hannig and all of us at the Alliance for Financial Inclusion (AFI) to this Joint Learning Program on Digital Financial Services, co-‐hosted with the Central Bank of Kenya and the Kenya School of Monetary Studies.
It is a particular pleasure for me to be here for the first time in Kenya, a country which – as we have seen already in the opening sessions yesterday -‐ has had real success in promoting financial inclusion in a relatively short period of time, leveraging on innovative technology and an enabling regulatory environment. Indeed, it may be no exaggeration to say that Kenya’s experience of digital financial inclusion has led the whole global community to raise its ambitions for financial inclusion across the world by exposing us to what is possible when key conditions are in place. And the Central Bank of Kenya has been highly active in sharing its experiences and taking leadership roles in the AFI Network:
- CBK hosted the very first AFI Global Policy Forum here in Nairobi in 2009;
- Professor Njuguna N’dungu, former Governor of the CBK, served as AFI’s very first Steering Committee Chair;
- CBK has Chaired and Co-‐Chaired AFI Working Groups, notably the Digital Financial Services Group through Mr. Stephen Mwara;
- Hosted the Leaders’ Roundtable of the African MFS Policy Initiative in Naivasha in 2014, and played a key role in driving the implementation of AFI’s regional initiative in Africa.
We are very pleased to strengthen this partnership further now through hosting this joint learning program and also two training courses on digital financial services to be held here later in the year – “Intermediate DFS” to be held in July; and “new frontiers in DFS” to be held in September. We at AFI are excited by this partnership with CBK and KSMS, and believe these programs can be a vital part of the overall AFI Capacity Building Program in 2016 and beyond.
Capacity Building
Many of you will be aware that earlier this year, on 27th January, AFI achieved legal independence as an international organization headquartered in Malaysia, governed and with core funding from members. As an independent international organization, AFI in the next few years will take on an increasing role as a capacity building institution, based on the clear demand of members for such services and trainings, and encouraged by the international community’s call in the ADDIS ABABA ACTION AGENDA last year for expanding financial inclusion peer learning and capacity building through the AFI Network.
At present the AFI capacity building program features four primary components:
- Firstly. Joint Learning Programs – which offer the opportunity to learn in-‐depth of one country’s experiences. JLPs are hosted this year in Kenya on DFS, Malysia on SME Finance, , Philippines on National Financial Inclusion Strategies; Brazil on agent banking; and Mexico on proportionate regulation and tiered KYC.
- Secondly, Member trainings – which offer a global perspective on a particular topic within financial inclusion, and are hosted currently by Bank Negara Malaysia (covering SME Finance, Consumer Protection & Business Conduct; Financial Inclusion Data & Strategies; and Regulatory Impact Assessments), as well as the DFS trainings here in Nairobi.
- Thirdly, Peer Advisory Service – whereby one member of AFI provides another with dedicated support with a specific policy objective over a 1-‐2 year period. The Central Bank of Brazil is providing such support to the Bank of Tanzania to develop and implement agent banking supervision guidelines.
- Fourthly, we have piloted trainings delivered in collaboration with private sector partners of AFI such as MasterCard, Visa, and GSMA. These trainings have covered areas where private sector partners have specific technical expertise in areas of member demand, for example on cyber-‐ security and digital G2P payments.
We hope you and your colleagues with take part in many of these different activities, and we will appreciate your feedback on the modalities and topics that you would like to see more of in AFI’s training programs as we develop them together.
Digital Financial Services
Capacity building becomes particularly important when we are talking about digital financial services, because we are dealing with a dynamic area where regulators and supervisors need to keep abreast of market developments. There is no doubting the opportunity presented by DFS innovations. To quote Bill Gates at the AFI Global Policy Forum in Trinidad & Tobago in September 2014, “If we were designing a financial system from scratch we would make it a digital one”.
Digital financial services offer consumers the convenience of being able to transact through the mobile handset and eliminate the opportunity cost of travelling to a bank branch. Evidence suggests digital delivery channels can also play a role in addressing the persistent financial inclusion gender gap, a finding acknowledged in the Zero Draft of the AFI’s Action Plan for Gender and Women’s Financial Inclusion adopted in Dar Es Salaam just last week.
At the same time, innovations in DFS present new challenges and risks to be managed in respect of consumer protection and financial education, the need to balance access with robust financial integrity, and challenges with regard to competition and interoperability. As such G20 Finance Ministers and Central Bank Governors earlier this year called for the development of G20 Principles for Digital Financial Inclusion to be finalized under China’s Presidency of the G20 this year.
I would like to conclude by quoting Managing Director of the IMF Christine Lagarde in a keynote address at the IMF & World Bank Spring Meetings three weeks ago. Lagarde remarked that “Financial inclusion is distinctly moving up the reform agenda, both at the international level and in individual countries.” Consequently, “Financial inclusion is an integral part of inclusive growth strategies and should be closely integrated into macroeconomic and financial policies.”
So when we hear the Managing Director of the IMF place Financial Inclusion as a policy goal on a par with Financial Stability and Financial Integrity, and when we hear G20 FMs and CBGs recognize the necessity for digital financial inclusion efforts amongst all its members, there can be no doubting the success of our collective advocacy efforts to raise financial inclusion to the highest levels of discussion in key international economic forums.
But success in advocacy does not translate automatically to success in implementation, where many challenges remain to be tackled if we are to reach the remaining 2 billion people still lacking access to even a basic transactional account. We are confident that that peer learning programs such as this one, and the collective efforts of all of you in this room, will play an important role in capitalising on this momentum and overcoming implementation challenges.
I wish you an enjoyable an informative Joint Learning Program here in Nairobi. ASANTE SANA! Thank you very much.