Speech by Princess Máxima, UN Secretary-General’s Special Advocate for Inclusive Finance for Development
New York, 22 September 2010
'Financial Inclusion: A Path to the Millennium Development Goals'. Side-Event during the MDG Summit 2010.
President Lobo, Prime Minister Balkenende, Madam Secretary, Your Excellencies, Ladies and gentlemen,
We are all gathered in NY to discuss how to achieve the Millennium Development Goals by 2015. There are 8 development goals, but none of them mentions financial inclusion. This is because financial inclusion is a cross-cutting issue. Financial inclusion is not an end in itself; it is a means to an end.
Financial inclusion helps the development of private sector. It helps create income. It generates jobs. It also protects people against unforeseen shocks, helps them manage cash flow (which we have learned is very important) and build assets over time. Having an inclusive financial infrastructure is as important to an economy as roads are. Without payment systems, for example, the private and public sector cannot operate. In Tanzania, I was told that a teacher must sometimes leave her work for two weeks in order to get her salary from the nearest bank branch. Two weeks. She should be at school teaching children. Financial inclusion is also what will help a small enterprise thrive by providing the right credit to help it to grow, employ more people and increase productivity.
But more than credit, we need savings. A safe place to save is, in my mind, the single most important financial service that poor people need. A study in Western Kenya revealed that poor women entrepreneurs who had access to a savings account had 40% higher productive investment than entrepreneurs who did not. These women also spent 37% more on personal items and 13% more on daily food. And when someone in their family got sick, they did not need to liquidate their inventories.
We have here today Roshaneh Zafar of Kashf Foundation. I think it would be great to hear from you how and why you started your first savings programme for poor households in Pakistan.
So what is financial inclusion?
Financial inclusion is more than 'microcredit' or 'microfinance.' Financial inclusion is universal access, at a reasonable cost, to a range of financial services for everyone needing them, provided by a diversity of sound and sustainable institutions. Financial inclusion recognizes that people and businesses require a range of financial services in addition to credit-savings, payment services, remittances, insurance, just to name a few.
It also recognizes that not only individuals need these services, but small and medium sized enterprises do as well. Actually, we need financing across the whole value chain.
Finally, these services must be provided in a way that is transparent, responsible and can benefit clients. It is about providing clients what they need and can afford and where clients are financially educated to take the right decision.
In order to make financial inclusion possible, we need the right policies and environment for this to take place in a sustainable way. I have to say that lately more attention has been given to this issue. The G20 has shown leadership in making this a priority and has brought many organizations together. Also, new organizations such as the Alliance for Financial Inclusion, for example, has provided a very effective platform for regulators and supervisors to exchange ideas, share best practices and learn from each other. Even standard setting bodies such as FATF has become involved realizing that financial inclusion is complementary to financial integrity. These are just a few examples of developments that are very promising.
What is also very exciting is that there are new innovations taking place that will permit us to deliver financial product at scale and low cost. One promising example of this is M-Kesho in Kenya, where M-Pesa (Safaricom) and Equity Bank have come together to offer millions of clients money transfer and saving services that are affordable. I am happy that Betty Mwangi is here to tell the story. Similarly, in Brazil, as Secretary Clinton mentioned, stores and post offices serve now as banking outlets, multiplying the outreach of the banks where previously branches did not exist. This has led to more than ten million people getting access to financial services.
All of these encouraging developments, together with strong leadership and commitment from the countries where it has to happen, as explained by President Lobo, will hopefully be translated in making universal access to financial services a reality.
This is great news. We are advancing. But we need to do more.
And this is the reason why we are here today. Because we have to ask ourselves this question: How can we use this powerful tool of financial services to help cover the basic needs that will bring about the developmental benefits that we are all looking for? I have witnessed life-changing examples. In Tanzania, health insurance was provided to entrepreneurs, by two organizations working together, PharmAccess and Pride Africa. These people had, for the first time, the security that they could walk to a doctor knowing that they could afford it. In Rwanda, I visited a multi-partner initiative that provided credit for biogas digesters that gave farmers gas for safe cooking and also better fertilizers for their land. In Mexico, the government's Oportunidades initiative has promoted conditional cash transfers for school attendance and preventive health care with success. I would like to hear from the representative of Mexico, Max Henderson, how something so simple as payments, can change people's lives and certainly improve government efficiency. Another example is Bangladesh, where credit is given for water filters that takes the arsenic out of their drinking water.
And these are just a few examples. But these examples provide us with information of what is possible when combining financial services with specific basic needs. Shelter, education, health, food security, etc. These are the needs that we have to help fulfill. We need to do it in a sustainable way and so that as many people as possible can afford it. Which means that these initiatives need to be scalable. Because as the Founder of BRAC Fazle Abed has said, "Small is beautiful, but big is necessary."
How do we get there? Just look around you. Your partners are sitting next to you.
Donors, different government ministries, private sector and NGOs should all work together to attain this cross-sectorial gain. We should all be looking at funding promising pilots that can be sustainable and scalable after the initial testing, learning and adjusting. The challenges that we face are multi-faceted. Our solutions must be too. Let us build upon the successes booked so far in financial inclusion, to give people the opportunity they deserve.
That is why I am so happy to see these panelists here today, so that we learn more from them and get inspired! I am also excited about the innovative remittances program that has been announced by you today. You know, I dream of one day reading a global inventory of all the pilots that have combined financial services with provision of basic needs, and seeing how others learned from those pilots, focused their investments and created the change we need.
Thank you very much for coming and I hope we all leave this room inspired for more action.