News
UN Summit 2010: Financial Inclusion - a path to the Millenium Development Goals
Thursday 23 September 2010
Mrs Hillary Clinton, US Secretary of State, opened the meeting stating the importance of financial inculsion. She announced that a Memorandum of Understanding was signed between th USA and the government of Honduras. The MoU was about building remittance investments for development and growth. The president of Honduras, Mr Porfirio Lobo Sosa, was also present. The president indicated tht remittances were now mainly used fro consumption purposes but no leverage was gained from the enormeous amounts that are involved (2.5 billion US $ in 2009). The idea is to introduce investment certificates that allow a certain percentage of the money to be used for investments, always making sure that the money will be accessable upon request to the clients.
Mrs Clinton also said that she has put in a lot of effort in convincing the G20 to put financial inclusion on the agenda. There will be a expert group reporting on tis subject during the next meeting in Korea.
Princess Maxima mentioned that financial services are a cross cutting issue in reaching the MDGs. Universal access to financial services are not a goal as such but should be seen as a means to an end, and therefore deserve attention even thoug it is not an actual MDG. She metioned that access to financial services has shown its added value in stimulating economic activities, job creation and managing family cash flows. But what should bes timulated is access to savings products,she even said that she regards this as more important than credit.
The definition she gives for financial inclusion is, uiversal access to financial services at reasonable cotss and offering a wide range of services to whom that need them by sound and sustainable institutions.
Furthermore, she highlighted that if we want to increase outreach we have to focus on innovation, such as mobile banking, using other points of sale such a postoffices and shops. She also emphasiszed that combining efforts in providing financial services with other programmes that deal with e.g. basic needs will generate extra leverage. She even quoted the founder of BRAC: small is beautiful but big is necessary. And as problems are multifacetted, so should be the solutions.
Then, we got an interesting example from Ms Betty Mwangi, chief officer of the New Products Division of Safaricom in Kenya. She told us about M-Pesa, a money tranfer sysem through te use of mobile phones, it is sms-based and you have to be registered to make use of it. She mentioned that in Kenya 19 % of the people have a bankaccount whereas over 70 % owns or can make use of a mobile phone. Not only are people using this system to transfer money, but they are also using it to save. In the past few months, Safaricom togeher with their partners opened 600.000 bankaccounts necessary to implement this sytem. They have even progressed into using this system for bulk transactions such as salary payments.
Originally, M-Pesa was not meant to be profit oriented, but it turned out that it was. With help of DFID (UK) this project was set up. It now allows people to have access to financial servics without having to travel for miles to collect that salaries and gives people acess to financial services that they would oherwise be deprived of.
Of course at an event as this, only success stories were shared, whereas we know that we have major challenges ahead if we want to reach financial inclusion, especially in rural areas. If you want to know more about the event, or details on M-Pesa, please contact us at info@micro-ned.nl
More information on the event and financial inclusion:
U.S. Secretary of State Clinton's speech
The First Annual Report of the UNSGSA for Inclusive Finance for Development
