How to implement a national financial inclusion strategy

By Peter Olayinka Adeyemi (Data Manager, Central Bank of Nigeria), Cesar Augusto E Villanueva Jr. (Bank Officer, Bangko Sentral ng Pilipinas), Valerie Anne Jill I. Valero (Bank Officer, Bangko Sentral ng Pilipinas) and Taty Azman (Policy Analyst, AFI).

For over a decade, AFI members have propagated a holistic and collaborative mitigation approach to financial inclusion through national strategies that house roadmaps of actions agreed and defined at the national or subnational level, embraced by public and private stakeholders.

The majority of AFI members have developed and implemented national financial inclusion strategies (NFIS) by harnessing digital innovations, hosting forums designed to raise awareness and education and accounting for gender sensitivities when planning activities.

Many of these experiences have been included to create AFI’s Policy Model for National Financial Inclusion Strategy, a milestone document that provides fundamental guidance on the pre-formulation, formulation, implementation, and monitoring and evaluation phases of an NFIS.

AFI’s policy model should be read together with the network’s NFIS toolkit, along with the  report on the current state of NFIS practice, with both knowledge products providing  detailed guidance on developing and implementing an NFIS.

Monitoring & evaluation crucial for NFIS

Despite the potential benefits, NFIS project and program management offices are often faced with challenges when implementing monitoring and evaluation. This can range from limited appreciation and capacity to unclear indicators, issues on data infrastructure for data collection and poor coordination among implementing stakeholders.

Recognizing this, AFI’s Financial Inclusion Data Working Group and the Financial Inclusion Strategy Peer Learning Group jointly created a toolkit on monitoring and evaluating an NFIS. The document outlines key monitoring and evaluation concepts and provides practical guidance to monitor and evaluate the progress and results of an NFIS systematically and efficiently.

Yet risks may still arise even after following practical guidance. It is here that the AFI network’s unique structure of peer learning, knowledge sharing and capacity building come to the fore, providing examples of potential monitoring and evaluation setbacks and how they were resolved.

Monitoring an NFIS entails understanding its importance, establishing institutional mechanisms for its implementation, identifying data sources and agreeing on indicators, baselines, targets and frequencies of monitoring. Meanwhile, evaluation entails realizing the unique purposes served by different types and models of evaluation, agreeing on a scope and intended outcome, planning and implementing an evaluation, and communicating its findings.

Without these steps, it is difficult to accurately measure whether an NFIS is being implemented as planned, if it requires corrective action to ensure intended results or whether actions are helping achieve the desired outcomes.

If the desired outcomes are not being achieved, monitoring can serve as an early warning system for detecting problems during implementation, thereby enabling NFIS managers and implementers to formulate measures that address these problems promptly.

Lessons learnt from Nigeria’s NFIS

Central Bank of Nigeria launched its first NFIS in 2012, followed by the second installment, NFIS2.0, six years later in 2018. Like its predecessor, monitoring and evaluating NFIS2.0 activities faced a myriad of challenges.

Inconsistent record keeping templates were among the biggest hurdles CBN faced. In some cases, stakeholders did not maintain data according to the requirements of monitoring and evaluation officers. Sorting, re-organizing and re-aligning data tables to fit automated data processing systems required additional effort. A lack of automated data collection processes also hindered the data collation and analysis process as some financial service providers – especially those operating in the rural areas – submitted data on spreadsheets.

Coordinating of monitoring and evaluation activities became challenging. Limited understanding of monitoring and evaluation frameworks created additional pressures with stakeholders expected to understand concepts and appreciate the importance of measurements in an NFIS. Finally, an absence of sex-disaggregated data was prevalent among service providers. This undermined the process that determined which gender-related NFIS indicators to track from supply-side data.

Nigeria’s Financial Inclusion Secretariat (FIS) responsible for coordinating stakeholders’ activities in NFIS implementation, took steps to address these challenges.

In addition to embarking on continuous engagement with stakeholders on data management practices, capacity building sessions were held to improve stakeholder capacity on monitoring and evaluation processes. The FIS also engaged with regulatory agencies to adopt end-to-end automation systems for data management process.

Furthermore, a community of practice on sex-disaggregated data was formed that advocated and re-oriented stakeholders to adopt a culture of keeping and reporting sex-disaggregated data. Membership cut across the various subsectors and development partners.

Teamwork advances goals in the Philippines

After the launch of the Philippines’ national strategy for financial inclusion in 2015, it became clear that the path to success would require the country’s entire government structure working together. Soon after, financial inclusion steering committee was formed with the country’s central bank, Bangko Sentral ng Pilipinas (BSP), serving as chair and secretariat. BSP was responsible for monitoring and coordinating developments in the financial inclusion work among the committee members.

Leading to a better understanding of the strategic roles member agencies play in financial inclusion, BSP has been providing technical assistance to the Department of Social Welfare and Development in implementing the account-based distribution of the country’s Social Amelioration Program. The program, which offers financial support to low-income families, has enabled the distribution of cash assistance to newly opened accounts of over 9.9 million beneficiaries.

BSP now also coordinates with the Small Business Corporation to promote digital payments for loan to micro, small and medium enterprises (MSMEs). It also works with the Department of Trade and Industry in its capacity building program for MSMEs transitioning to adopt digital platforms and payment solutions. 

Crossing the finish line together

Despite shortcomings in national-level financial inclusion data, the most crucial indicator of NFIS success is the continuous commitment and willingness of regulators, policymakers and stakeholders to learn from each other and make improvements. AFI continues to harness this demand by creating enabling environments for its member institutions to use its national strategy tools more effectively.

We encourage the use of AFI’s Toolkit on Monitoring and Evaluating a National Financial Inclusion Strategy and Policy Model for National Financial Inclusion Strategy to develop, track and measure the policies appropriate to your country.  As we take this journey towards better financial inclusion, together we will reduce the number of unbanked!