PFIP’s journey to reach over 2 million Pacific islanders
The Pacific Financial Inclusion Programme (PFIP) has helped over 2 million Pacific Islanders access formal financial services.
Launched in 2008, PFIP is jointly administered by the UN Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP) and receives funding from the Australian Government, the European Union and the New Zealand Government. PFIP operates in Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu, a region of 10 million people scattered over 2,000 islands.
PFIP’s objective is to increase the number of low-income Pacific Islanders who adopt formal financial services. PFIP achieves this objective by supporting financial service providers (FSPs) to innovate with products and services for mass market customers, supporting governments to create an enabling policy environment for financial innovation, and empowering consumers.
PFIP has funded 44 projects with financial service providers who have innovated with technology and products, enrolling over two million customers in services such as agency banking, mobile wallets, micro insurance, micro loans, remittances and savings groups. This figure represents one in four adults of the six countries in which PFIP operates. Women account for 976,216 of the total clients enrolled, representing significant progress in reducing the gender gap that exists in the Pacific.
At the same time, PFIP works with financial regulators in the region to develop an enabling environment for financial innovation. Through PFIP’s support, regulators are creating “regulatory sandboxes” for new technologies, channels, and financial products development. Collectively, they pioneered the first regional working group of the global Alliance for Financial Inclusion (AFI). The Reserve Bank of Fiji hosted the AFI Global Policy Forum in 2016, an indication of international recognition for the leadership of the region’s regulators in financial inclusion. This work has led policy makers to elevate financial inclusion as a national development priority. As a result, six countries have made international commitments to financial inclusion: the Alliance for Financial Inclusion 2011 Maya Declaration and the 2020 Money Pacific Goals. Five countries have also developed national financial inclusion strategies.
Governments have also started digitizing government-to-person (G2P) payments to bring more of the population into the formal financial system. In Fiji, PFIP assisted the Fijian Government with a ground-breaking platform for distributing social welfare payments, marking a shift from voucher-based payments to electronic transfer to a bank account, benefiting approximately 23,000 recipients (2013). The new payment system is more efficient, secure, and has provided recipients with a secure place to save.
PFIP has championed financial literacy and education campaigns with national school systems, financial service providers, and empowerment programs. PFIP was instrumental in integrating financial education (FinEd) within the Fijian national school curriculum. Now reaching approximately 197,000 students annually, the award-winning project was conceptualised, developed and implemented with hands-on PFIP support. PFIP has since worked with the governments of PNG, Solomon Islands and Samoa to scope similar integrated curriculum approaches. Solomon Islands now has a FinEd curriculum, and a pilot project for technical and vocational students is currently underway in the PNG Highlands.
Finally, to assist central banks and FSPs to better understand and innovate in specific markets, PFIP has undertaken studies including important nationally representative consumer surveys, financial competency surveys, Digital Financial Services (DFS) Assessments, microinsurance demand assessments, financial diaries, and micro pension as well as promoting knowledge sharing through events such as the biennial Pacific Microfinance Week.
PFIP has also partnered with BIMA to pioneer mobile microinsurance in the region, with implementations underway in five Pacific countries. By December 2016 PFIP’s support led to 500,000 Papua New Guineans and almost 24,000 Fijians gaining access to health and/or life insurance. BIMA works through a mobile network and sells policies through agents and a call centers based in the two countries. Following on from the success of PNG and Fiji, BIMA has plans to expand its operations to three other Pacific Island Countries through its call centre in Fiji.
Closing the gender gap in access to financial services is important to the programme. Recognizing that women make up half of the potential client base for financial services providers, PFIP works with grantees to ensure greater financial access to women through product design and messaging, with specific gender targets to be met. Additionally, PFIP has supported gender-sensitive financial education and mobile phone literacy training to improve financial empowerment of women.
In 2017, PFIP launched micro pension projects in Fiji and the Solomon Islands. The projects tested viability and demand for the product. By December 2017, the project in the Solomon Islands proved that there was a clear demand for a pension product with over 1,000 Solomon Islanders signing up to the product. The Solomon Islands National Provident Fund (SINPF) noted that 2,500 deposits were made over the six-month recruitment period and averaged SBD $169 per deposit, also proving usage. More than 50% of the account holders had deposited at least once with the most frequent depositor saving 15 times into the account. Notably, one woman deposited SBD $50,000 on her second transaction. In June 2018, SINPF and PFIP announced a nationwide roll out of a micro pension product. This was the first of PFIP’s projects employing an Innovation Model (Learn, Test, Scale) to reach scale. A similar project is currently being tested in Fiji and possibly Papua New Guinea. Results from all three countries could help form the future of micro pensions in other pacific island nations.
PFIP also partnered with the Russian-Federation funded UNDP administered Regional Disaster Resilience in the Pacific Small Island Developing States (RESPAC) Programme to set up an Inclusive Insurance Innovation Lab to conduct research, test concepts, design and prototype insurance products, to help Pacific Islanders address natural disaster risks. This partnership has led to 12,500 sugarcane farmers and 300 dairy farmers gaining bundled micro-insurance cover for the first time.
All of our work makes a difference in the daily lives of Pacific Islanders. In the Solomon Islands, mobile banking has become part of everyday life on the streets and markets. Eight years ago, many Solomon Islanders would have to wait for weeks on end for a ship ride that could cost a months’ worth of income to access one of the few banking branches in urban centers. Today, close to 200,000 accounts across the country are linked to digital banking. Customers can conduct their banking transactions through simple SMS applications and through EFTPOS machines located at convenient centers or through about 200 bank merchants.
The next generation of PFIP projects will focus on designing better financial services to meet the needs of low income customers, and scaling successful models with commercial partners.