(KPL ) The World Bank Group, the UN Capital Development Fund and the Bank of Lao PDR are promoting innovative payment systems, including mobile banking, to provide entrepreneurs in rural areas an access to finance, in support of private sector growth and poverty reduction.
A summit on innovative payment systems and inclusive finance was held in Vientiane Capital on May 7 where its participants representing government bodies, domestic and international financial institutes, and mobile network operators learned from experts and exchange ideas on how to build an inclusive financial system using innovative retail payment mechanisms, such as agent-based models and mobile money.
At the summit held in the presence of Vice Governor of the Bank of the Lao PDR Sonexay Sitphasay, and Country Manager of the World Bank Keiko Miwa, the IFC, the World Bank, and the UN Capital Development Fund, the UN's capital investment agency, expressed their support for the Bank of Lao PDR in its effects to develop and strengthen the financial system in the country, particularly the development of national payments system, which would allow for greater financial inclusion.
Payment flows in the Lao PDR are diverse and largely facilitated by physical transfer of cash in person or by other physical means. Commercial banks in the country have limited outreach, which about 2.5 commercial bank branches per 100,000 adult.
"Demands for modern banking services are growing,"said Mr. Aimillios Chatzinikolaou, IFC Resident Representative. "Improved and efficient payment methods for household and in particular for small and medium enterprises, can improve the conditions for the private sector to do business in the Lao PDR, eventually contributing to more jobs and sustained economic growth".
IFC and the World Bank support the Bank of Lao PDR in the development of national payment systems through the First Initiative; a multi-donor trust fund managed by the World Bank.
The fund specifically supports the following three areas: development of a legal and regulatory framework for a national payment system, a development plan and a roadmap for introduction of innovative retail payment mechanisms in the Lao PDR.
"Financial sector deveopment is a key contributor to the development of the overall economy," said Keiko Miwa, Country Manager of the World Bank in Laos. "Safe and efficient payment services is essential to smooth functioning of the economy and expansion of financial inclusion."
This week's event builds on a research conducted recently by the IFC, the World Bank, and the UN Capital Development Fund on payment flows in the Lao PDR. The research identified and evaluated the potential for key types of payments, such as public and private retail payment innovations, such as mobile money.
"The idea for the summit came from stakeholders, including local banks and mobile network operators, who wanted to learn about payment and financial products that reach the mass market from international experts," noted Tillman Bruett, manager of UN Capital Development Fund for branchless and mobile banking.
At the event, representative from the private sectors in Cambodia and the banking sector in Papua New Guinea shared their experiences on how to reach unbanked citizens with appropriate business models using innovative products, technology and new distribution channels, such as agents and low-cost branches.