Mr. Simeon Malachi Athy – Governor, Reserve Bank of Vanuatu, Opening Remarks at the RBV Symposium on:‘‘Enhancing Financial Inclusion for a more Equitable, Inclusive and Sustainable Economic Development in Vanuatu’’

May 17, 2017

 

RBV Symposium on:‘‘Enhancing Financial Inclusion for a more Equitable, Inclusive and Sustainable Economic Development in Vanuatu’’

Warwick Hotel, Port Vila:  May 17, 2017

The Honorable Ham Lini Vanuaroroa, the Acting Prime Minister of the Republic of Vanuatu;

The Honorable Ronald Warsal, the Acting Deputy Prime Minister;

The Honorable Jean Pierre Nirua, the Acting Minister of Finance and Economic Management;

Honorable Ministers;

Honorable Alatoi Ishmael Kalsakau, Leader of Opposition;

The Honorable John Sala, Member for Malekula Constituency; Member, Parliamentary Committee on Economic Policies;

Honorable Members of Parliament;

Mr. Peter Tari, Deputy Governor, Reserve Bank of Vanuatu and staff of the Reserve Bank of Vanuatu;

Development Partners;

Mr. Eliki Boletawa, Head of Policy Programs and Regional Initiatives, Alliance for Financial Inclusion;

Mr. Krishnan Narasimhan, Deputy Programme Manager, Pacific Financial Inclusion Programme;

Representatives of Provincial Councils;

Representatives of Women;

Representatives of Youth;

Representatives of business houses;

Members of Bankers Association of Vanuatu;

Members of the insurance companies in Vanuatu;

Distinguished Ladies and gentlemen,

 

Introductory Remarks

 

It is a great privilege and honor for me to welcome all of you to the 2nd Economic Symposium of the Reserve Bank of Vanuatu (RBV). I feel distinct pleasure in seeing familiar pioneers of financial inclusion, and new faces gathered in this room today.

Let me also take this opportunity to welcome our distinguished speakers, guests and all participants who have traveled from abroad and from the provinces to join us here today in Port Vila for this important event. The Reserve Bank of Vanuatu is indeed honored to host you all here today for this one day symposium event.

Financial Inclusion – catalyst for a more sustainable and inclusive economic development

Financial Inclusion is certainly an agenda of national importance and needs to be given greater focus in anticipation of possible tough challenges ahead. Financial Inclusion supports development, contributes to an efficient financial system and enables all members of the community, especially the marginalized and the poor, to improve their livelihoods and thus empowering them to effectively contribute to the economy.

The issue at stake, promoting the inclusion of people’s economic activity into our financial system has profound consequences. It goes beyond the narrow financial agenda of allowing for a better spreading of risks within a country and across countries, which contributes to financial stability.

It goes beyond the broader economic agenda of allowing a wider range of people, especially those on low incomes, and limited access to financial services, which adds to economic growth. In fact, financial inclusion is fundamental to our social agenda of reducing income inequality and alleviating poverty. Financial Inclusion is crucial to achieving inclusive growth which is a pre-requisite for sustainable economic growth and development.

In recent years we are also witnessing changes in the landscape of central banking in many developing countries and especially in our region. Whilst many central banks have traditionally focused on such core policy objectives of price stability and sufficient foreign reserves, more and more have now taken additional lead roles in advocating financial inclusion initiatives in their respective countries; building towards an inclusive financial system that recognizes and makes available different types of financial services and products that are not only accessible but also affordable and appropriate for their citizens.

Financial Inclusion Developments by RBV

Honorable Ministers, Members of Parliament, Ladies and Gentlemen, please allow me to give you a quick update on financial inclusion developments that the Reserve Bank has undertaken in the last year.

In 2016, RBV was able to accomplish a number of initiatives. The first ever financial inclusion demand side survey was conducted in collaboration with the Alliance for Financial Inclusion, the Pacific Financial Inclusion Programme, the Bankable Frontiers Associates and the Vanuatu National Statistics Office in April – May 2016. RBV hosted the 2nd Pacific Islands Regional Initiative High Level Forum on Financial Inclusion in June, 2016. In September 2016, a high-level delegation comprising two state ministers and senior officials from the government and other government institutions, representatives from the commercial banks, Governor of the Reserve Bank and other senior officials from the Reserve Bank attended the Alliance for Financial Inclusion Global Policy Forum in Nadi, Fiji. And in October – November 2016, RBV conducted its 2nd survey for the year, which was also the first of its kind, known as, the Micro, Small and Medium-sized enterprise survey. I understand we have sessions for presentation of the survey findings later on, so I will not dwell deeper on this.

While we have had some achievements and successes to note, this does not mean in any way that the work has completed. In fact, this is only the first step in the longer journey that we are committed to undertake. And we would like to share them with you and seek your collaboration in this regard.

The theme of this year’s Economic Symposium “Enhancing Financial Inclusion for a more Equitable, Inclusive and Sustainable Economic Development” underlines the need for us to have a better understanding of the interactions between the objectives and effects of financial inclusion, financial stability and integrity. This symposium will also allow us to dialogue collaboratively on issues raised by the two surveys and the need for inputs into policy solutions.

Financial Inclusion is about thinking outside the box, because what is required is beyond the norm. What is required is innovative thinking. Today I invite us all to put on our collective thinking cap and dialogue on issues that will further enhance financial inclusion in our country.

Before I conclude, please allow me to highlight a few issues for possible deliberation over the course of today.  There are many issues to be discussed throughout today, but I wish to mention only three;

  • Monitoring framework

According to international standards, the financial inclusion monitoring framework looks at access, usage and quality indicators.

Financial access points are just the building blocks. What is important is getting our people to understand and use these financial products and services. For example, in Vanuatu now, mobile phones can be used to pay bills or send money to a friend/family which may perhaps be the cheapest channel, however, we still see people lining up at banking counters to do a transaction. While we may ask the question, why is this so; we also need to see the translation to active usage of all these positive developments.

  • The role of non-bank financial institutions

In many countries, non-bank financial institutions are being envisaged for a greater role in increasing financial inclusion and thus to contribute to sustainable economic and social development. This is also the case for Vanuatu as was evident through the surveys that RBV conducted in 2016. Stronger regulation and balance sheet constraints of the banking sector have also led to the rapid expansion of non-bank credit. The question of how to evolve the role of non-bank financial institutions to continue to contribute in a sustainable way to financial inclusion is a complex one. Possible responses may be in the form of strengthening regulation of such institutions or capturing of better information on the activities of non-banks as a basis to inform more targeted policy measures.

  • Financial Education/Financial Literacy

The enhanced role of financial education is not only to encourage greater participation in the mainstream financial system, but also to keep individuals already in the mainstream from being financially excluded in future as a result of changes in the financial landscape. Effective financial education will however, require more innovative approaches, broader partnerships involving government, educators, and non-governmental organizations collaborating with regulators and the financial industry.

Concluding Remarks

Honorable Ministers, Members of Parliament, Distinguished Ladies and Gentlemen, to achieve the common purpose of a greater inclusive financial environment, all stakeholders need to work together; we all need to work together. Because Financial Inclusion not only helps an individual and his/her family, but it can also be a powerful driver of economic growth and change in living standard of a ni- Vanuatu.

Let me conclude by expressing on behalf of the Reserve Bank of Vanuatu our deep gratitude to you all for attending this event. To all our distinguished speakers and resource persons who have travelled from overseas and those within the country to share with us your valuable insights, we thank you. To all participants, I hope this will be a memorable event, and one that will generate new knowledge and new ideas to spur our country’s journey to deeper financial inclusion.

I am sure we all have a role to play in Financial Inclusion and if we all make an effort to play that role well, we can make a difference in the lives of many of our people.

Once again thank you and I wish you all a success in your deliberations.

 

Governor Simeon Athy

Reserve Bank of Vanuatu