The ‘Call to Action’ at FDC’s Annual APEC Policy-Setting Dialogue
At the end of June over 40 senior central bank and finance officials and senior industry experts convened in Tokyo at the Asian Development Bank Institute for FDC’s annual policy setting dialogue on economic, financial and social inclusion as part of its APEC Business Advisory Council work.
Central to the theme of this year’s dialogue was to identify tangible actions that policy makers and governments can take to accelerate the pace and impact of inclusiveness efforts and initiatives. The outcomes of the dialogue define the progressive policies, necessary reforms, robust strategies and pragmatic plans that can and will deliver the inclusion imperative. The key recommendations are provided to the Finance Ministers at the Finance Ministers Meeting as part of the annual Finance Ministers Process of the APEC calendar.
Context of the dialogue
As context for the dialogue, FDC cited its previous reports and recommendations which included but are not limited to the following imperatives:
- Leverage of supply chain finance electronic platforms – making these more accessible to the MSME sectors, improving the conditions for KYC and cross border credit data sharing, which will enable broader based inclusion in the opportunities presented by upswings in trade conditions.
- Understanding the opportunity of distributed ledger technologies, which to be effective will need greater cross border collaboration to achieve the required benefits of scalability but where technical and data collection and protection standards are vital.
- Unique digital identity that will facilitate and accelerate inclusion but also will see the collection of data at the level of the unique consumer – data which does not exist widely today and obviously data that is essential to the understanding of real inclusion and to protect against the alarming trends showing over- indebtedness of the poor. It is evidenced across the region that the number of debt cycles and the number of multiple concurrent loans is increasing and is not well constrained by existing regulation.
- Reducing cost and friction in cross-border trade and remittances, and strengthening AML and anti-fraud protocols and processes.
- Maintaining an increased focus on Agrifinance and the need for more effective coordination across the value chain including in digital innovations to protect yield and quality and secure food supply.
- Creating the right measurement frameworks that represent an international standard and increasing the focus on other elements of the ecosystem such as education and literacy are key dependencies in the roadmap towards greater financial inclusion and as a corollary, economic growth and social inclusion.
- Women make a vital contribution to inclusive and equitable growth and they play an instrumental role in furthering the economic inclusiveness of their families and communities. They do so whilst managing the real obstacles they face because of their gender and the various cultural, religious, biological, sexual and economic influences and impacts on their independence, safety and survival. No dialogue can leave unaddressed that a ‘A Call to Action’ for this demographic is vital to all our hopes of achieving inclusive societies.
- Regulators should seek to adopt a framework for defining economic and financial inclusion that includes all of its key dimensions including but not limited to access, usage and quality of financial services.
Key points of the dialogue
In this year’s dialogue, we wanted to pick up this point in particular – a framework for inclusion that includes all of its key dimensions. We are all well aware that the dimensions of Access, Affordability and Usefulness of financial products and services is vital to financial inclusion; financial literacy is a critical success factor; financial capability essential; and the array of financial services on offer to poor consumers must go beyond microcredit to include a more valuable portfolio of financial instruments such as savings, insurances, pensions, and affordable remittances. Further, consumer protections are not only an ethical prerequisite in responsible distribution of financial instruments but vital to ensuring that a trust landscape is built, protected and preserved.
But if we are to address economic, financial and social inclusion in all its key dimensions, we need to elevate the debate and tackle the real impact that comes in broadening the definition, and work to incorporate policy and practice that is outcomes-based in terms of improving the lives of the poor who today are under-served at all points of an inclusiveness spectrum. Hence, this year’s forum took the dialogue to the next step, and looked at inclusion in all its key dimensions.
If we agree with the adage that “a rising tide will lift all boats”, then a deeper focus on programs and policies that increase the participation of people who are poor, who are part of the informal economy, to build productive assets and portfolios of financial securities is vital. As a corollary, breaking the reliance on continuous credit cycles at high interest rates can be only be achieved by more strategic interventions governed and regulated by the state that encourage and incentivise inclusiveness schemes, the development of gateway products, removal or reduction of processes that are barriers to inclusion, and providing pathways to investments that build long term prosperity for the region’s poor.
The economic growth and social inclusion imperative – more growth with greater equity – across all economies would therefore be assisted by policy, structural reforms and programs that can bring to life financial inclusion and its benefits, such as:
- aiding the poor to participate in a spectrum of financial instruments that build greater and inter-generational financial security
- enabling the poor to participate in ‘real’ or formal economy opportunities as represented by employment, wage growth, superannuation, pension schemes
- providing opportunity for the poor to accumulate productive assets
- promoting greater investment in the Nano-MSME sector.
The world is a fast moving place and we have the tools, the resources, the know-how and the capacity to tackle these complex issues. The solutions are available or at least knowable. The Inclusion Imperative – it’s a call to action. The recommendations from the 2018 dialogue will be provided to the APEC Finance Ministers in October 2018 and published thereafter.