LAC leaders look to digital & women for sustainable recovery

Regulators must leverage digital and other strategic opportunities to foster an inclusive and gender transformative post-COVID-19 recovery, leaders from AFI’s Financial Inclusion Initiative for Latin America and the Caribbean (FILAC) said on 9 June.

Speaking at an annual roundtable event, high-level representatives from Latin America and the Caribbean (LAC) noted that as the pandemic extended into its second year, digital means continued to offer alternative modes for countries to achieve their financial inclusion goals and reach worst-impacted groups, including women and small businesses.

Dustin Santos, manager of studies at Comision Nacional de Bancos y Seguros (CNBS) in Honduras, which co-hosted the virtual event with AFI, said that it was crucial for his fellow policymakers to take advantage of new opportunities presented by the crisis, particularly in disruptive technologies that were challenging traditional processes.

“The financial system needs to speed up its digital transformation to reach all customers and keep growing,” he said, urging the network’s regulators and supervisors to embrace innovation by better understanding and contextualizing its risks and potential benefits.

Speaking on behalf of the commission’s president, Ethel Deras, Santos said that COVID-19 had hit Latin America especially hard with the closure of around three million companies, leading to significant loss of jobs, incomes and savings capacity.

This, he added, had fast-tracked widespread recognition of financial inclusion as a “necessary condition to leave the recession and recover the pathway for growth that many countries have lost”.

CNBS joined the AFI network in 2013 and has been an active member ever since with eight Maya Declaration targets, including to develop a national strategy for financial education. AFI members are encouraged to use the Maya Declaration to establish measurable financial inclusion commitments and updating their progress via the AFI Data Portal.

Roughly 50 percent of Honduran adults had access to at least one deposit account in 2019 compared with 45 percent two years earlier amid national efforts to, among others, expand financial education and financial infrastructure.

As the outgoing chair of FILAC, Rocio Aguilar, the superintendent at Superintendencia General de Entidades Financieras acknowledged the regional initiative’s members for adapting their financial systems to provide new ways for alleviating poverty.

She also introduced Governor Jean Baden Dubois of Banque de la République d’Haïti (BRH) as FILAC’s new chair for the next two years, who described his appointment as an “honor” before adding that he would use it to promote sustainable growth and poverty reduction by generating more knowledge for financial inclusion policies in the region.

Some 30 senior representatives from 10 member institutions across the region attended the event, including from Ruth Arregui, the superintendent at Superintendencia de Bancos, AFI’s newest member in LAC and its second from Ecuador.

The roundtable event also saw Arregui elected as the new vice chair of FILAC. Marking the occasion, she said that it was a “privilege to access this position … there will be a commitment and permanent work for FILAC”, adding that working alongside BRH would be enhanced by their shared visions, strategies and experiences.

Like Arregui, more than half of the leaders attending the virtual event were women, a significance that drew attention to FILAC’s relatively high number of women in top positions and bucked global trends where national regulators tend to be dominated by men.

Acknowledging this and the importance of women leaders in fulfilling the commitments outlined in the Denarau Action Plan, AFI Executive Director Dr. Alfred Hannig said that “it is essential to leverage this leadership to foster the development of financial inclusion agenda for women in the region”.

Further aiding in closing the gender gap, he said, were LAC countries that had developed demand-side surveys for monitor financial inclusion progress. Surveys that were fully disaggregated, he added, were acting as critical instruments in building national strategies and supporting specific action plans to measure the levels of access, usage and quality of financial services among women and other vulnerable groups.

“The availability of sex-disaggregated data in the financial system, financial inclusion and education strategies with a gender perspective, are some of the major achievements in the region, which has fostered a positive environment for women’s financial inclusion,” he said. “This experience highlights the region as a potential leader on the gender financial inclusion agenda within the AFI network, and this expertise could be transferred to other regions of the network in order to generate further knowledge and enhance the visibility of these efforts in LAC”.

During their discussions, LAC leaders called attention to many pressing topics including the need to establish taxonomy on green finance and advance the understanding and generation of analytical frameworks and regulatory policy strategies with a focus on vulnerable groups, especially for people with disabilities. Among the milestone updates, representatives from CNBS and Banco Central del Paraguay noted progress in reviewing their national financial inclusion strategies (NFIS). Meanwhile, in Peru, a strategic plan was recently approved containing 30 measures and five strategic objectives, as defined in a financial inclusion policy.

Gender was also a core component of a subsequent public-private dialogue session that highlighted access to quality financial education and business management education as a key to helping micro, small and medium enterprises (MSMEs) gain a greater understanding of the financing landscape and strategies to grow their businesses in a sustainable manner.

This, participants said, was especially crucial for informal women-owned MSMEs, who often lacked knowledge of available funding schemes and shouldered a disproportionate burden of unpaid care and domestic work. To this end, many participants encouraged the involvement of the private sector to widen financial inclusion efforts and reach out to MSMEs in a more effective and efficient manner.

Participants also mentioned some significant challenges that were impacting financial inclusion of women-led MSMEs, such as access to credit, financial and business education as well as the importance on onboarding the informal sector into the formal financial system to enhance opportunities for economic growth. Many also underscored the role of technology in bridging the financial gap, especially for MSMEs operating at hard-to-reach areas.

The CNBS-AFI meetings were held over two days, and kicked off with members of FILAC’s Experts Group on Financial Inclusion Policy meeting to present updates on regional deliverables and workplan, including ways to accelerate the implementation of the Sharm El Sheik Accord and the Denarau Action Plan in the LAC region. Eleven members from 10 countries participated in the session, which saw a review of initiatives undertaken last year and priority policies in 2021 that require AFI’s support.

In line with their regional priorities, members expressed interest in developing several topics for 2021-2022, including on migrants, remittances, virtual currencies, onboarding of the informal sector, integrating gender as a policy objective in an NFIS and inclusive green finance.

FILAC is a regional initiative that aims to be the driving force for advancing financial inclusion in Latin American and Caribbean countries. Launched in 2016 with support from Canada’s International Development Research Center, it comprises 11 AFI member institutions, including regulators and policymakers in the Bahamas, Costa Rica, Ecuador, El Salvador, Haiti, Honduras, Mexico, Paraguay, Peru and Suriname.