Pacific Islands Regional Initiative 2nd Forum’s Opening Remarks by Norbert Mumba

Opening remarks by Mr. Norbert Mumba, Deputy Executive Director at the Alliance for Financial Inclusion (AFI), as prepared for delivery at the 2nd Pacific Islands Regional Initiative (PIRI) Forum on 2–3 June 2016 in Port Vila, Vanuatu.

Honorable Deputy Prime Minister of the Republic of Vanuatu, Mr. Joe Natuman,

Distinguished Governor of the Reserve Bank of Vanuatu, Mr. Simeon M. Athy,

Distinguished Governor of the Central Bank of the Solomon Islands and Chair of the Pacific Islands Regional Initiative, Mr. Denton Rarawa,

Distinguished Governors and Deputy Governors,

Regional Advisor and Program Manager of the Pacific Financial Inclusion Programme, Mr. Mark Flaming,

AFI Members and Partners,

Ladies and Gentlemen:

Good morning, bonjour and olsem wanem yu-fala. I think that covers salutations and greetings in all three of the official languages of Vanuatu — I apologize if my pronunciation in Bislama needs more work.

On behalf of the entire AFI network, I offer our sincere gratitude to Governor Athy and his staff at the Reserve Bank of Vanuatu, along with the nation’s authorities, for welcoming all of us here to Port Vila. I want to especially recognize the Honorable Deputy Prime Minister for his support of AFI, PIRI and financial inclusion.

One year ago, we convened in Timor-Leste to officially launch the Pacific Islands Regional Initiative, coming together with the goal to ensure that all Pacific Islanders will one day be able to access basic financial services. I am profoundly humbled to be standing here this morning — in the nation of Vanuatu — finding myself again in the presence of so many willing and capable advocates for financial inclusion in the Pacific region.

Yet our presence here is bittersweet, because it is also a reminder of who is not here. Please permit me to briefly recognize the absence of our friend and colleague Reuben Summerlin, whose passing in the months after the conclusion of that inaugural PIRI forum was terrible and unexpected. Reuben was a force for financial inclusion in the Pacific, an important and charismatic member of our PIRI family, and continues to be remembered for his passion and advocacy for the poor as well as his work on the global financial inclusion agenda. He is greatly missed.

Ladies and Gentlemen,

To those not born in this region, you will no doubt notice that the people of the Pacific Islands are amazing in their ability to turn to and help one another. There is an evident natural inclination toward goodwill that has enabled the people here to realize that until we reach every person who remains unbanked or underserved, the fair and just society we seek and crave — one that offers an equality of opportunity to all — will allude our grasp.

The desire to take into our hands a greater control of our destiny is one of the driving forces behind PIRI. The launch of this initiative established a long-term program with a common vision to ensure financial services are widely accessed throughout a region with one of the highest unbanked rates globally.

PIRI members implement a peer-learning and knowledge-sharing approach to a variety of financial inclusion policy areas highly relevant for all small-island nations in the Pacific. And we do mean all small-island nations; not only nations with members of the Alliance for Financial Inclusion. PIRI leaders shoulder a responsibility for the entire Pacific region, supporting countries without entities properly equipped to handle financial inclusion issues. Our mission is to create and foster conditions that lead to the financial empowerment of all Pacific Islanders.

To accomplish this mission will require an increased focus on small and medium enterprises. SMEs assume a substantial role in overall economic growth, employment and job creation, as well as in addressing inequality and poverty reduction. It is in recognition of this importance that PIRI is holding this week’s meeting under an overarching theme intended to heighten focus on SME finance and financial inclusion in the Pacific.

Lack of access to finance is widely reported as one of the main barriers to growth for SMEs: 50 percent of formal small and medium enterprises do not have access to formal credit. If we include the informal sector, then approximately 70 percent of all micro, small and medium enterprises in developing and emerging markets lack access to credit.

As policymakers and financial regulators, we have important roles to play in creating a more enabling environment to support the growth of SMEs. We must embrace those roles and capitalize on the opportunities in front of us.

For instance, AFI members participated in work by the G20 Global Partnership for Financial Inclusion which focused on the state of SME finance policies and has documented successful policy approaches in both G20 and non-G20 countries. These examples contain relevant lessons that can be shared and exchanged, as well as become fundamentals to build upon.

The AFI network has also demonstrated a strong commitment to improve SME finance through specific, measurable commitments under the Maya Declaration — an AFI initiative to unlock the economic and social potential of the 2 billion unbanked around the globe.

In fact, AFI members unanimously approved the adoption of Maputo Accord at the 2015 Global Policy Forum to officially include SME finance as a recognized policy priority within the Maya Declaration. The Accord acknowledged the important role SMEs have in driving employment, economic development and innovation. And it continued to show the Maya Declaration is the world’s premier cross-cutting global initiative for financial inclusion.

PIRI members in particular have embraced the Maya Declaration as a means to prioritize SME finance. We have seen:

· The National Reserve Bank of Tonga outline a target to develop and improve access to finance by 20 percent over the next five years, focusing on SMEs in the agricultural, fishery and tourism sectors, as well as SMEs for women and youth. Policies and regulations for SME finance will also be developed over the course of the next year;

· The Banco Central de Timor-Leste completed a study of SME finance in 2014, and is currently exploring how to best establish a credit guarantee scheme;

· And, the Bank of Papua New Guinea committed to prioritize the SME sector within its national economic strategy, while establishing several women’s banks to direct credit to women entrepreneurs.

Overall, more than 30 AFI members committed to develop specific measurable and quantifiable targets for SME finance as a part of their Maya Declaration commitments.

Ladies and Gentlemen,

We have made great strides in advancing financial inclusion in recent years. But if the progress of a society is measured by the degree of progress which women have achieved, we have much work ahead of us as advocates for inclusive finance.

Data suggests the gender gap persists — with levels of inclusion varying widely across nations. According to the most recent Findex Report, only 37 percent of women in developing economies are banked, compared to 46 percent of men. Women still lag in access and usage of financial products and services.

There are steep economic costs to excluding women from participation in the economy — particularly women entrepreneurs and women-owned enterprises. We can no longer afford to have women relegated to the margins of society. PIRI members, we must work toward bridging this gap.

With over one billion unbanked women globally, AFI members are in a strong position to support and enhance women’s financial inclusion. The urgency of the issue prompted the AFI Board of Directors to approve the establishment of a High-Level Committee on Gender and Women’s Financial Inclusion. This committee will provide leadership and drive initiatives to accelerate women’s financial inclusion.

High-level representatives from our network’s various regions come together to form this committee, including from Africa, Asia and MENA. Central banks from Tanzania, Zambia, Lesotho, Rwanda, Indonesia, Cambodia and Egypt have been selected to join.

And as recently as April, AFI held the high-level conference “Bridging the Gap: Commitments and Actions for Women’s Financial Inclusion” in Tanzania. It was here the AFI network witnessed a significant milestone with the endorsement of the “Zero Draft AFI Action Plan for Gender and Women’s Financial Inclusion”. The Action Plan will be presented to all AFI members for adoption and implementation at the Annual General Meeting ahead of the 2016 Global Policy Forum in Fiji.

Meanwhile, it’s important to note, three of the first institutions in the AFI network to incorporate access to finance for women in their official Maya Declaration commitments hail from the Pacific region, including Vanuatu, Papua New Guinea and Solomon Islands.

These activities reflect the commitment of our network to identify and implement concrete actions to close the gender gap and reduce the number of unbanked women globally.

I would also like to take this opportunity to strongly encourage AFI members to integrate efforts to increase financial inclusion both for SMEs and for women in your specific commitments to the Maya Declaration, in alignment with the pertinent policy areas of your working groups. Doing so heightens support for policy implementation at the national level, and allows members to tap into the practical medium- and long-term peer advisory features available in AFI working groups.

This will better enable the working groups to hold members responsible and accountable to one another, as well as work together to meet and deliver on the hope inherent in each Maya Declaration commitment.

In fact, I can think of no better place to announce new Maya Declaration commitments incorporating women’s finance and SME finance than the aforementioned 2016 Global Policy Forum. The GPF will once again convene over 400 high-level financial policymakers and stakeholders from the public and private sector. It continues to be the most important annual forum on financial inclusion, providing a unique platform for AFI members to promote policy successes and share ideas about the future.

Ladies and Gentlemen,

The lessons and knowledge we share and exchange here in Vanuatu will further reinforce the importance of a regional approach in the Pacific — where our national identities remain singular but our regional fortunes are shared.

PIRI is emblematic of the ongoing paradigm shift toward this new form of peer-to-peer dialogue inherent in the AFI network. Our model prompted the international community to re-examine its entire methodology to achieving inclusive and sustainable development. The success of the AFI approach is why the United Nations General Assembly singled AFI out in the Addis Ababa Action Agenda. It is why the UN named the Alliance for Financial Inclusion as the ideal partner for facilitating financial inclusion peer-learning and experience-sharing among nations and regions. And it is why they stated the full implementation of the Agenda is paramount for the realization of the UN’s Sustainable Development Goals.

Following our forum in Timor-Leste last year, we can see firsthand the real-world impact of this successful peer-to-peer approach from our work in PIRI.

PIRI members have channeled insights on the de-risking issue to inform a global agenda on proportionate regulations in line with the Dili Consensus. The AFI network takes the issue of de-risking with deep concern, and over the past 12 months, we have continued our efforts to help address its impact and search for practical answers.

There were a series of dedicated de-risking discussions held during the 2015 Global Policy Forum in Maputo. Additionally, AFI and the G-24 conducted a qualitative study to gather evidence on de-risking impacts and its potential solutions.

The World Bank has also conducted surveys on behalf of the G20 Global Partnership for Financial Inclusion. Findings show that access to financial services for local and regional banks and remittance providers is contracting in some countries and regions. Correspondent banking businesses such as check clearing, international money transfers and trade finance are being affected. Several other bodies, including the Financial Services Board, Financial Action Task Force, Institute of International Finance, Commonwealth Secretariat, IMF and the European Banking Federation have also undertaken analyses.

Ladies and Gentlemen,

I would like to conclude these remarks with a message of optimism and opportunity.

Pacific Islanders share a common bond. This has allowed PIRI to forge a strong foundation since our launch one year ago. In the on-going search for solutions to so many similar obstacles across our great nations, it is imperative we stand united as one Pacific.

As we move forward, we must continue to lead by building pillars of inclusive and sustainable social and economic development. We do this, in part, by embracing key topics — such as SME finance, gender and de-risking — as well as by examining new opportunities and challenges.

At this precise moment, we have a once-in-a-generation chance to influence the development priorities of our Pacific region, and our future. I implore you, share your knowledge with all those willing to listen; and soak up as many lessons from others as you can.

If we work together, we can create the inclusive future we all envision — for all women and all men. Where every Pacific Islander has access to financial services; where every Pacific Islander possesses the tools they need to build better lives; and where every Pacific Islander has the ability to realize their full potential.

Thank you.