29th FIDWG & 22nd SMEFWG Meetings – Opening Remarks by Dr. Eliki Boletawa, AFI Director, Policy Programs & Implementation

Buenos dias

It is my great pleasure to welcome you all to the 29^th Financial Inclusion Data and 22^nd SME Finance Working Group Meetings in the beautiful island of Roatán, Honduras. I want to express my deep appreciation to Presidente Sierra and the team from CNBS, the National Banking and Insurance Commission Honduras, for co-hosting these meetings.

CNBS joined AFI more than a decade ago, in 2013. From the outset, this institution has been one of our network’s most active members in promoting financial inclusion. CNBS has made Maya Declaration Commitments relating to financial education, consumer protection, data, strategy, and innovation of digital financial services.

Recently, CNBS produced standard definitions of “Women-led SMEs”, making it possible to capture valuable sex-disaggregated data at national level. CNBS has also launched a financial inclusion portal, which presents sex-disaggregated information, and dynamic dashboards on the progress of financial inclusion in Honduras.

Currently, CNBS is formulating its National Financial Inclusion Strategy (2024 – 2028). The Strategy seeks to integrate the unbanked population into the formal economy, to reduce inequality gaps, and to promote the economic and social development of low-income and vulnerable populations. AFI is privileged to be assisting Honduras on this important task.

CNBS encapsulates the AFI spirit, committed to working for inclusion, and to helping the most vulnerable. We are privileged to have you in our global family.

This week, we welcome over 100 individuals from the AFI network, representing 90 member institutions from 68  countries.

The two topics that bring us together, SME finance and data, are critical to delivering sustainable, stable and inclusive economic development. Micro and Small businesses are the engine of economic growth, job creation and social peace. Worldwide, MSMEs represent around 90% of businesses and 60% of jobs, and contribute 40% to GDP. But despite their importance, MSMEs still face challenges in accessing finance. For formal MSMEs, there is a worldwide credit gap of $1.2 Trillion dollars. If we include informal MSMEs, it stands at $2.6 Trillion dollars. Helping MSMEs access finance will be critical to future economic growth.

The two topics, MSME Finance and Data, are closely linked. Without data, we cannot measure. What we cannot measure, we cannot manage. If we can obtain better data on MSMEs, we can mitigate the issue of information asymmetry between MSMEs and financial institutions. This will enable better access to finance, and lower the costs of financial intermediation. Accurate and reliable data can improve MSMEs’ access to credit and investment capital. It will also contribute to informed policy and regulation.

AFI has long recognized the importance of data. Our Policy Model for MSME Finance includes SME definitions, including microentrepreneurs, credit information and gender-disaggregated data. Both of the working groups represented here contributed to producing our Policy Framework on MSME Data Collection: A Guide for Gender Inclusive Finance.

You probably know the African proverb that states, “if you want to go fast go alone, but if you want to go far, go together”. Stakeholder collaboration is key to ensuring balanced and proportionate policymaking and regulation. This is especially true for MSME finance, where financial regulators need to work with a range of players in the development finance ecosystem. Government development programs, financial service providers, NGOs, and other regulators all need to be mobilized in order to ensure an enabling environment for young entrepreneurs.

AFI plays a key role in catalyzing and coordinating this multi-stakeholder collaboration. Our members regularly engage with the private sector, knowledge partners, donors, and regulators in developed countries. AFI initiatives such as the Public Private Dialogue and the Developing-Developed countries Dialogue support and complement the work being done by AFI working groups.  

11 years ago, the AFI network issued the Sasana Accord, a commitment to developing financial inclusion policies and strategies that produce evidence- and data-based results, accelerate progress, and have a measurable impact. The Maputo Accord issued in 2015, committed our network to supporting access to finance for MSMEs.

So where are we today? Currently, nearly 2/3 of members have MSME-related, measurable Maya Declaration targets. 18 Maya Declaration commitments include targets for both MSME finance and data. 55 member institutions have developed or implemented policy reforms to facilitate MSMEs’ access to finance. In the past three years, 48 policy reforms were introduced by 24 members to enhance access to formal financial services for MSMEs.

Regarding data and measurements, to date, more than two-thirds of members, 63 out of 89, have reported AFI Core Set Data on the AFI Data Portal. However, we have seen a decline in reporting, with only 20% of members inputting data in the past three years. For the AFI Data Portal to deliver real insight, it needs substance. I therefore urge members to reinforce the Portal by inputting data on Maya Commitments, Policies and Data Core Set indicators.

AFI’s Phase IV Strategic Plan, which runs for the next five years, is themed ‘Tangible and sustainable impact’. Our working groups are a precious source of guidance, helping us identify policies and regulations which will have a real impact on the financial livelihoods of millions of families and individuals.

Imagine, for example, how a new regulation and policy to enable biometric identification systems might allow an old woman living in a remote area to receive regular remittances from her children in a cheap and convenient way. Or how innovative regulation could allow small retailers in a handicraft market to receive digital payments or access financing without incurring additional costs. These are just a couple of examples of what we mean by ‘tangible and sustainable impact’.

Delivering policy changes or multi-stakeholder collaboration is no easy task. Sometimes it takes many years and the commitment of multiple players to produce tangible results. However, this is the aim of our Network. This is why we are here today. To share, and to identify solutions to problems. To positively impact the lives of the most vulnerable groups in our societies.

Regarding AFI’s ongoing work as a Network, I want to share with you that we are assessing the possibility of obtaining intergovernmental organization (IGO) status. We have initiated pilot financial inclusion country assessments with two member institutions, work that is being led by our Global Standards Proportionality Working Group.

AFI is only able to pursue ambitious initiatives like these because of the commitment, ownership, and dedication of our working groups. To ensure that knowledge translates into action, I urge our working group members to keep on supporting each other through in-country technical assistance, peer learning, and capacity-building initiatives. The AFI network has ambitious targets. For example, our Denarau Action Plan to halve the gender gap in financial inclusion. Our working groups will be vital in getting us there. And so

I urge all of you to make the most of being here. Please share your thoughts, your reflections and your suggestions. AFI depends on them. AFI depends on you.

Since we are in Central America, it’s appropriate to flag the upcoming 2024 AFI Global Policy Forum, which will be hosted jointly with the Banco Central de Reserva de El Salvador, from 2 to 5 September. This year’s theme, “Innovation for an Inclusive World”, underscores the pivotal role of innovation in advancing financial inclusion.

Finally, I would like to officially share our latest knowledge product, a Survey Report: Islamic Finance and Financial Inclusion: AFI Members’ Perspectives, developed by the SME Finance Working Group (SMEFWG) and its members. Islamic Finance is one of the tools for financial inclusion especially for those who voluntarily exclude of financial system due to religious belief. This survey report provides the presence of Islamic finance in various member countries, the importance and opportunities placed on Islamic finance as a complement to conventional finance, the challenges faced in formulating strategies, and the regulatory frameworks governing Islamic finance.

We want to thank the hard work and commitment from the SMEF Working Group to generate and share this important new knowledge among the AFI Network.

Let me end by thanking you, the working group members, for your participation, and by thanking the organizing team from our co-host, the National Banking and Insurance Commission Honduras, and our AFI colleagues for organizing this meeting.

I’m sure you’ll agree, we are in an exceptional setting. I hope you will have time to explore this beautiful island, stroll along the sandy beaches, and dip your toes in the crystal-clear sea.

I wish you a week full of fruitful deliberations.

Muchas gracias