> Posted by Sonja E. Kelly, Fellow, CFI
Financial Inclusion 2020 (FI2020) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.
Tuesday marked a historic day for Peru: the country launched its National Financial Inclusion Strategy. While Peru has been lauded in the past for its environment for financial inclusion, its public-private sector partnerships, and its leadership in conversations on international banking standards, this national strategy elevates Peru’s commitment to financial inclusion to a new level. In particular, we want to celebrate the strategy’s commitments to consumer protection, financial literacy, and the inclusion of vulnerable people.
Analysis of the World Bank Global Findex this year revealed that countries that have a national strategy (not merely a commitment or stand-alone programs) for financial inclusion saw twice as much bank account access growth in the last three years compared to countries that did not have a national strategy. For Peru, this is great news, as according to the same data source, less than 30 percent of adults in the country had access to an account in 2014.
The path to financial inclusion articulated in the strategy, however, is not focused on access to accounts, making Peru an outlier among its peers that have implemented national strategies. Instead, Peru has oriented its strategy toward improving systems for accessing a range of products and promoting supportive consumer protection, financial education, and attention to the most vulnerable. The national strategy has seven different lines of action:
- Promote electronic payment systems, such as credit and debit cards, e-money, and interbank transfers.
- Boost savings and investment instruments, and ensure their security and trustworthiness.
- Enable people and entrepreneurs to access accurate funding sources.
- Promote insurance packages comprising micro, agricultural, and catastrophe insurance.
- Improve consumer protection to achieve higher levels of trust in the financial system by providing enough and simplified information regarding the services offered by the banking system.
- Financial education programs to boost the people’s banking skills for an accurate decision-making process.
- Promote the social inclusion of groups considered the most vulnerable in society, enhancing their quality of life.
These seven lines of action are bold thesis statements. Instead of following the standard path to financial inclusion which tends to rely on accounts as the bedrock of financial inclusion on which to build use of services and quality of services, Peru is betting that strengthening and creating systems, empowering consumers, and fostering a supportive environment will be more effective to ensuring meaningful inclusion. Indeed the Peruvian Finance Minister, Alonso Segura, declared a few months ago that social inclusion is “the foundation of Peru’s growth,” and increased the budget for social inclusion-related programs by 20 percent.
I think Peru is on to something, and am looking forward to watching the impact of this bold national strategy. Not only does it chart a new path toward financial inclusion, it offers a much more balanced approach than the standard access goals that we typically see in such strategy documents. Furthermore, we know that there are a few very outspoken advocates of financial inclusion within the office of Peru’s Banking Superintendent (SBS Peru) who have a strong commitment to and attention to customers at the base of the economic pyramid.
Congratulations, Peru, on this momentous achievement, and we look forward to learning from you as you implement these bold initiatives.
Image credit: Accion
Have you read?