Monday, March 23, 2015

IMTFI at UNCTAD's Expert Meeting on the Impact of Access to Financial Services (Part 2)

United Nations, Geneva, Switzerland (Photo by Ndunge Kiiti)
By IMTFI researcher Ndunge Kiiti

Day 2: Business models and remittances
The sessions on Day 2 focused on innovative business strategies and extensively on remittances.  Presenters shared business models from Brazil, Nigeria, Bangladesh, and Canada, whilst representatives from numerous global institutions, including the International Monetary Fund (IMF) and the International Labour Organization (ILO), provided strong arguments about how remittances intersect with financial inclusion, especially the importance of literacy and education. It was sobering to realize how much is transacted in remittances to developing countries: $436 billion in 2014 and $540 billion by 2016, according to the World Bank (2014). In many countries, remittances are such a key part of economic growth. It was no wonder these two sessions raised a lot of issues… and passion. The passion was not only evident from the speakers but it was seen through the UN translators that were interpreting all the sessions in all UN languages-English, French, Spanish, Chinese, Russian, and Arabic.

First, the units of analysis seemed to be the individual and families when discussing remittances within the diaspora. Again, I had numerous questions—some of them similar to the day before. What about associations and networks within the diaspora that are often sending remittances back to their countries? In terms of financial inclusion, what should a literacy curriculum look like? What does it entail? What are the support systems that build on the training or education? How do we differentiate ‘marketing/advertising’ of financial products and services versus education? Is there generally sufficient commitment to invest the resources needed to ensure sound education, especially those that benefit marginalized communities? Beyond the education-related questions, transactional costs of remittances and their most impactful use were extensively debated. It was also during this session that there was a call for a transformation or a ‘revolution’ of the private sector from a more profit-driven model to a more social responsibility model. The role of Small and Medium Size Enterprises (SMEs) within the business model was also discussed.

Day 3:  The need for regulatory reform as new technologies emerge
The final day highlighted how new technologies could strengthen access to financial services and shed some light on trade agreements and regulatory reform as defined both in the private and public sector. Emphasis was on how inclusion must have a socio-economic perspective not only based on supply and demand. These sessions continued to raise many aspects in relation to financial inclusion: cost of new products; ecosystems; partnerships—traditional and non-traditional; interaction with banks; financial transparency; consumer protection; financial service levels vs. platforms; criteria for lending licenses; capacity building of service providers; financial vs. social costs; cultural aspects; gender issues; and many others. 

The conclusion was more of a charge to everyone present. There is a need to focus on the Basel Agreement to ensure international banking regulations that promote financial inclusion. Programs and policies must be sensitive to socio-cultural issues ensuring contextualization. Global partnerships that facilitate harmonization and standards especially through coherent policies and programs must be encouraged. Overall, we must all find ways in which we commit to making financial inclusion a reality rather than a theoretical concept in our research, programs, and policies, which is also a key emphasis in all of IMTFI’s work.  

Summing Up
So, what did I really get out of the conference? A wealth of information, knowledge, and networks—new relationships for future partnerships. But also a key lesson: IMTFI must continue to be present in these types of settings and forums. The research that IMTFI supports  enriches these global conversations. Why? Our research emphasizes the importance of qualitative work. It contributes many practical and relevant aspects to the dialogue, guiding policy and practice to promote financial inclusion. Additionally, these forums enrich and empower IMTFI and its researchers by providing current knowledge through diverse participants from around the globe.

To read Part 1 of this post, click here. You can also read Ndunge's UNCTAD reports here: Defining Empowerment and Vinya wa Aka.

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