PRESS CONFERENCE ON BEST PRACTICES FOR INCLUSIVE FINANCE

 

An Advisors Group, which had been formed to promote financial inclusion, had released a series of key messages designed to remove the obstacles that prevent poor people from opening a bank account, taking a loan or buying insurance to protect their crops, correspondents were told at a Headquarters press conference this afternoon.

Briefing journalists on best practices for expanding access to finance for the poor were Richard Weingarten, Executive Secretary of the United Nations Capital Development Fund, and Donna Childs, Senior Policy Advisor, United Nations Advisors Group on Inclusive Financial Sectors.

Directed at Governments, regulators, development partners and the private sector, the messages had been formulated by the United Nations Advisors Group on Inclusive Financial Sectors that had been established following the International Year of Microcredit (2005) and began its work in June 2006.  Its purpose was to increase global access of poor and low-income households and micro- and small enterprises to a broad range of financial products and services; and raise public awareness about financial inclusion as a critical tool for poverty reduction, employment generation and gender equity in poor developing nations.  The Group also sought to place inclusive finance on the global development agenda.  It advised and guided the United Nations system on those issues and encouraged institutions and stakeholders at regional and local levels to participate.

Mr. Weingarten said that the Group’s 25 members represented United Nations organizations, including the Department of Economic and Social Affairs (DESA), the United Nations Development Programme (UNDP), the United Nations Capital Development Fund and the International Telecommunications Union; the Bretton Woods institutions; development partners; Governments; central banks; private sector institutions; a wide variety of microfinance institutions and financial service providers; and several reputable academic institutions from around the world.  Three meetings of the Group had already been concluded, and the fourth was scheduled for the end of this month in Nairobi, Kenya.

Emphasizing the importance of financial services as an important development tool, he said that only 5 per cent of low-income households around the world had access to financial services, with most of such access provided by the informal sector, rather than the formal banking system.  Nearly three billion people around the world lacked access to basic financial services, including some 103 million out of the 110 million poorest people in China, and some 900 million of the 1.1 billion people in India.  Only 30 million people had access to financial services in sub-Saharan Africa, out of a population of almost 744 million.  He also emphasized the differences in access between the rich and poor countries, saying that while 99 per cent of the population of Denmark had access to a bank account, less than 6 per cent of people in the United Republic of Tanzania had such access.  The number of loans per 1,000 people stood at 648 in Austria, as compared to six in Uganda.

Access to financial services was very important for the achievement of the Millennium Development Goals, he said.  It enabled the poor to increase their income and reduce their vulnerability.  The financial sector facilitated the exchange of goods and services and contributed to employment and income growth by allowing people to mobilize savings.  Another advantage of access to financial services was illustrated by the fact that poor households with access to financial services sent their children to school in much larger numbers, and those children stayed in school longer.  Financial services also empowered women by increasing their income and productivity, improving their access to markets, and strengthening their decision-making power.

Over 100 countries had participated in the activities associated with the International Year of Microcredit in 2005, which was sponsored by the United Nations Capital Development Fund, he continued.  More than 60 national committees were established to promote microfinance and broader access to financial services for the poor.  Significant momentum had been built around the world to make a broad range of financial services available to poor and low-income people, as well as micro- and small enterprises.  An inspiring partnership was built among microfinance institutions, development agencies, the United Nations, the Bretton Woods institutions and a wide variety of development partners.  The outcome of the Year included the publication of a book on building an inclusive financial sector for development by DESA, UNDP and the Fund, and a comprehensive report by the Fund summarizing all the activities for the Year.  

Ms. Childs provided some specifics about the work of the Group, saying that financial inclusion had been confirmed as part of the UNDP corporate strategy in the Programme’s Strategic Plan 2008-2011.  Programmes involving access to financial products and services had been included in United Nations Development Assistance Frameworks and Country Programme Action Plans beginning in 2008.  In addition, the Advisors Group was developing a framework for training United Nations Resident Coordinators, UNDP Resident Representatives and Country Directors on issues of inclusive financing.  Another key outcome that the Group was committing to deliver by the end of 2008 was to support a sustainable framework that would be established to gather data to measure financial access across countries over a multi-year period.

The Group was also developing a handbook on private sector engagement, and was involved in five country studies on engagement of commercial banks to expand access to finance, she continued.  In 2008, three multi-stakeholder conferences would be held in Latin America, Asia and Eastern Europe, to expand on what could be done to deliver and expand access to financial services.  The Group would also make available online a sustainable knowledge management and sharing platform –- an important source for information going forward.  And finally, the Group was involved in ongoing advocacy work to expand access to financial services.

She also alerted correspondents to several upcoming events, including the Group of Eight Summit in Helligendamm, Germany, next week.  The German Government had proposed a regional microcredit fund for access to finance in Africa, which the Advisors Group had been actively advocating.  Several news and media events would also be held around the launch and dissemination of the Handbook for engaging the private sector in June 2008 and the Group’s five case studies.  Also of interest would be the follow-up to the International Conference on Financing for Development, to be held in Doha in the second half of 2008, and the launch of the Advisors Group Synthesis Report in December 2008, providing a comprehensive report on the impact of the Group’s activities.

Asked how the Advisors Group and the Fund operated in such locations as the Occupied Palestinian Territory, Mr. Weingarten said that the Group did not provide programmatic support, but there were microfinance institutions that worked in the Arab States, and there were also some that tried to operate in the Palestinian territories.  Work within the Palestinian Authority itself was carried out through the Fund’s Bureau for the Arab States, which was very interested in microfinance activities.

To a question about the selection of Advisors Group’s members, he said that people and institutions were selected on the basis of their knowledge, expertise and participation in inclusive financing and microfinance issues.  Such institutions as the Deutsche Bank had been very progressive in their microfinance activities and active in international capital markets.  With respect to screening the financial institutions to look at their broader lending practices, he said that it was not something that the Advisors Group had been asked to do.

To a question about the Group’s activities in western Africa, he said that the Group had not scheduled a meeting on Africa, because at the same time the Group was formed, a meeting on inclusive financing had been held in Dakar, Senegal.  The event was co-sponsored by the Fund and UNDP.  Some 300 people participated in the conference, some 90 per cent of them from Africa.  A steering committee was established after the conference to follow-up on the issues involved.  At the Nairobi meeting, that committee would present the results of its work to the Advisors Group.  As for the Fund, it worked only in the least developed countries, including those of sub-Saharan Africa.

Responding to a question about financial services offered in Eastern European countries, he said that the countries of that region did not belong to the list of least developed countries, and the Fund did not work there.  On the other hand, UNDP had microfinance programmes there.  Services varied from country to country, depending on the needs.

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For information media • not an official record