Data, green & MSMEs top landmark financial inclusion policy dialogue agenda

Sustainability of data, green finance and micro, small and medium enterprises (MSMEs) pose significant opportunities and challenges to regulators seeking to maintain financial inclusion gains in a post-COVID-19 recovery, leaders said during inaugural discussions at AFI’s first-ever Policy Leadership Dialogue on 28 September.

Held over three days, the high-level event designed exclusively for the heads of financial regulators in the AFI network, centered on the systematic, effective and coordinated COVID-19 policy responses implemented by AFI members to shield most vulnerable groups from the economic fallout of the pandemic.

First Lady of Costa Rica, Claudia Vanessa Dobles Camargo, delivered her first keynote address to AFI leaders, where she outlined life-changing developments recently undertaken in her country that were mitigating COVID-19-related impacts on vulnerable groups, including youth, women and populations living in rural areas.

She drew focus to ways out of the ongoing pandemic, including by creating mechanisms and protocols that address both financial inclusion and climate change, including a look at greener investments.

Her speech also centered on the importance of reaching last mile groups through financial literacy programs and the expansion of digital systems through the implementation of innovative financial and mobile technologies.

“We cannot go backwards,” she said, before adding that it was “very important that we keep going forward with financial inclusion … the pandemic is an opportunity to bring the informal into the formal economy.”

The one-of-a-kind event coincided with the 10^th anniversary of member institutions adopting the Maya Declaration and the fifth anniversary of the adoption of the Denarau Action Plan, which commits members to halving the financial inclusion gender gap by 2021.

Expressing his continued support for greater women’s empowerment was Central Bank of Jordan Governor Ziad Fariz, who emphasized the need to the enhance access to finance among women-owned small business.

Governor Fariz also offered insight into various programs being implemented in Jordan to help revive its economy and restore inclusive growth. He noted that heavy investment through the country’s three-year national financial inclusion strategy had significantly lifted financial inclusion rates in Jordan.

“Financial inclusion has become a strategic priority to the global policy agenda given its positive impact on economic growth, poverty reduction, reduced income inequality and enhanced financial stability,” said Governor Fariz, adding that the central bank was encouraging growth in small business through the provision of credit lines and loan guarantees.

Reinforcing a long-standing commitment to the network, Governor Fariz also expressed the central bank’s readiness to co-host the network’s next flagship event, the AFI Global Policy Forum (GPF), in 2022. While the pandemic has postponed the annual gathering for the past two years, the network remains hopeful that global travel restrictions will ease sufficiently next year.

Complementing Governor Fariz, AFI Executive Director Dr. Alfred Hannig opened the leaders’ event by reminding participants of the “role that financial inclusion can play in mitigating crisis, alleviating poverty and supporting economic growth and financial stability.”

He highlighted three important lessons from the AFI network and beyond that are contributing towards a post-pandemic recovery and rebuilding: how crisis management preparedness is instrumental in mitigating the severity of the pandemic on financial inclusion; that polylateral collaboration is imperative for effective policy responses that alleviate the effects of a crisis on financial inclusion, and; that the mandate of financial policymakers and regulators is continuing to expand, allowing them to respond to contemporary challenges.

In support of the event as championing AFI’s successful peer learning model, he added that the exchange of critical insight supports a stronger and more resilient long-term recovery from crises that leave no one behind.

“With financial inclusion high on the 2030 Sustainable Development Agenda, we are also holding this leadership dialogue to harness ideas and insight from you and together shape our sustainable and inclusive future,” Dr. Hannig said.

Parallel sessions assist disproportionately affected

Day one also saw participants take part in parallel sessions on critical topics facing financial inclusion, particularly ways to assist groups disproportionately affected by the COVID-19 pandemic.

Distinguished speakers gathered to speak on measures that members had put in place to support the financing of MSMEs, including lowering interest rates, ensuring greater liquidity and enhancing the use of digital platforms. Given that MSMEs are large employers of women, panelists highlighted the importance of developing gender-sensitive policies.

Chuchi Fonacier, deputy governor at Bangko Sentral ng Pilipinas and chair of AFI’s Global Standards and Policy Committee, acted as theme setter for the session that saw discussions led by Dr. Tukiya Kankasa-Mabula, former deputy governor at Bank of Zambia, Prof. Florens D. A. M. Luoga, governor at Bank of Tanzania, Dr. Margarita Hernández Naranjo, superintendente at Superintendencia de Economía Popular y Solidaria and Sima Kamil, deputy governor at State Bank of Pakistan.

Separately, former governor of the Central Bank of Kenya, Prof. Njuguna S. Ndung’u, moderated a popular session on the importance of data in financial inclusion policy design and implementation. Panelists highlighted the need for policymakers to understand technology as enabler of financial inclusion, the potential of big data and importance of creating standards so that data can be analyzed more effectively and comparatively.

Among the impressive speakers’ lineup were National Bank of Rwanda Governor John Rwangombwa, Palestine Monetary Authority Governor Dr. Feras Milhem, Superintendencia de Banca, Seguros y AFP del Perú Deputy Superintendent Mariela Zaldivar, National Bank of Cambodia Deputy Governor Neav Chanthana and Bank of Ghana Deputy Governor Elsie Addo Awadzi, who is also chairs AFI’s Gender Inclusive Finance Committee.

Another virtual session saw high-level members share their knowledge and experiences on achieving an inclusive green recovery. Panelists drew focus on having a holistic view of inclusive green finance by outlining its three main pillars as sustainability, financial technology and financial inclusion. They also noted the importance of green finance, sustainability risk management and support for small business towards strengthening local economies.

University of Luxembourg’s ADA Chair in Financial Law, Prof. Dr. Dirk Zetzsche moderated the sessions, with participation from Bank Al-Maghrib Governor Abdellatif Jouahri, Central Bank of Nigeria Deputy Governor Aisha Ahmad, Bangladesh Bank Deputy Governor Abu Farah Md. Nasser and Central Bank of Seychelles First Governor Christophe Edmond.

The final two days of the event will see multi-stakeholder dialogue on central bank digital currencies and financial inclusion as well as dialogue between private and public sector stakeholders on COVID-19 recovery. Participants will also reflect and integrate contemporary financial regulation into financial inclusion, inclusive and sustainable economic recovery, rebuilding by, among others, exploring the role of central banks and regulators in addressing socioeconomic challenges and inequalities that have been exacerbated by the pandemic.