Low income households, small businesses priority for financial inclusion

While the country is hailed as 3rd globally with the “most conducive environment for financial inclusion,” access to finance though is still considered a major hurdle for MSMEs

MANILA, Philippines – Expanding financial inclusion to reach the most vulnerable low income households and small enterprises – that’s the goal of the Philippine government as it officially opened the 2015 Asia-Pacific Forum on Financial Inclusion on Tuesday, March 3, in Tagaytay City.

The forum, with the theme, “Developing the Lending Infrastructure for Financial Inclusion,” will push the progress made by the Asia Pacific Economic Cooperation (APEC) Finance Ministers’ Process (FMP) to build inclusive financial systems.

Financial inclusion or inclusive financing involves the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society.

According to the Bangko Sentral ng Pilipinas (BSP), financial inclusion is a state where there is effective access to a wide range of financial services for all Filipinos.

In his opening remarks, Finance Undersecretary Gil Beltran said, “we come together representing different economies with one shared goal: expanding financial inclusion to reach the most vulnerable low income households and small enterprises. We will learn from each other, from each of our differences.”

The forum will discuss legal, policy, and regulatory frameworks to expand access to finance for the poor and small enterprises, consistent with the overall theme of the Philippines’ hosting of the APEC meetings this year, “Building Inclusive Economies, Building a Better World.”

Improving customer centricity and risk management in digital finance, as well as addressing the asymmetric information problem in financial inclusion with credit information systems are among the key topics to be discussed in the forum.

The forum will also examine how financial inclusion can further accelerate the growth of small businesses and enterprises with more access to credit.

Financial inclusion for accelerated growth

APEC member economies, together with the private sector and the multilateral organizations, will also explore the possibility of a pathfinder initiative to support the acceleration of reforms in participating economies where reforms have already been introduced.

The forum’s participants include experts from international organizations; capacity-building agencies; leading representatives from the banking, consumer finance, microfinance, credit bureaus, and credit reference centers; and legal experts.

Contributions from experts in the Asia Pacific Financial Forum (APFF) Lending Infrastructure and Trade and Supply Chain Finance Work Streams are also expected.

Concluding the forum will be the reports on the outcomes of the various sessions and agreement among participants to progress initiatives and proposals to the APEC finance ministers.

A report of the forum will be drafted, reviewed by participants, published and made available both online and in hard copy to a wide variety of relevant audiences: APEC leaders; finance and other ministers; senior finance and other officials; regulators; experts in international and academic organizations; and industry and opinion leaders.

Enabling people

In his welcome remarks, Finance Secretary Cesar V. Purisima said the country’s work on financial inclusion is based on the idea that the more people are enabled to freely participate in our economies, the better off the country will be.

“We have a better fighting chance against poverty when those at the furthest margins of our economies have more access to finance,” Purisima said.

“We will leverage 21st century tools to solve problems we long should have left in the past century. Today, we work toward a world where households and small businesses are empowered with the access to credit and finance they need to advance,” Beltran added.

The Philippines is the top country in East and South Asia, and third in the world with the “most conducive environment for financial inclusion,” according to the Economist Intelligence Unit in December 2014.

Based on EIU’s maiden edition of the “Global Microscope on the Enabling Environment for Financial Inclusion,” the Philippines, with a score of 79 out of 100, bested 11 other countries in Asia included in the report.

Access to finance, though, is considered a major hurdle for micro, small, and medium enterprises (MSMEs). Thus, the expansion of non-bank financial institutions in the Philippines will be key in MSMEs once the country integrates with its Association of Southeast Asian Nations (ASEAN) neighbors in 2015. – Rappler.com

Feature markup photo from the Department of Finance

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