Towards a Financial Inclusion Roadmap in Myanmar

The 2nd National Conference on Financial Inclusion took place in Nay Pyi Taw, Myanmar, on the 22nd and 23rd of May 2013 in the occasion of the launching by the UN Capital Development Fund (UNCDF) and the UN Development Program (UNDP) of the results of a research from their Making Access to Finance Possible (MAP) project, which surveyed 5,100 people across the country.

The MAP framework has been developed by UNCDF in partnership with FinMark Trust and Centre for Financial Regulation and Inclusion (Cenfri). The study in Myanmar has been funded by UNCDF and the multi-donor LIFT fund. The MAP process was overseen by a national Steering Committee chaired by the Myanmar Microfinance Supervisory Enterprise (MMSE), representing the Ministry of Finance, which provided invaluable guidance and support for the programme.

Around 160 people from the Government, the finance world and the UN participated in the conference to witness the release of some of the key findings of the research. The study shows that only 4% of respondents surveyed (aged 18 and above) have bank savings accounts in their own names; and about 39% of respondents have no access to either regulated or unregulated financial services. However, 31% of respondents have used unregulated and informal services such as money lenders, friends and families to borrow money.

The conference aimed to:

• Present the MAP (Making Access Possible) Study on the status of Financial Inclusion in Myanmar for feedback;

• Highlight key priorities that will serve as building blocks for the Financial Inclusion Roadmap in Myanmar; and

• Receive feedback from delegates, which will be used to finalize the Financial Inclusion road map.

During his speech in the conference, Mr Henri Dommel, Head of the Inclusive Finance practice area in UNCDF highlighted that “Financial Inclusion is the delivery of financial services such as credit, savings, insurance and remittances at affordable costs and on a sustainable basis, so that even disadvantaged and low-income segments of society can have access” thus “Financial Inclusion in practical terms means giving people a new opportunity to improve their own lives”.

In his intervention Mr Christian Hainzl, the team leader of the Local Governance Pillar at UNDP, underlined that “Financial Inclusion should be seen as a means to an end and can serve key policy objectives of the government of Myanmar such as:

• Improve household welfare and reduce poverty, in rural as well as in urban areas;

• Increase agriculture productivity and enhance food security;

• Improve development opportunities for SMEs through access to regulated credit and insurance, and overall

• Enable and fund growth and development through improved levels of formal financial intermediation”.

To reach Financial Inclusion in Myanmar, some challenges need to be overcome. In fact, if on the one hand the local governments have already progressed in extending formal financial services to vulnerable and generally excluded social categories, on the other hand informal money lenders are still the biggest providers in terms of clients; the informal sector portfolio is nearly as large as the commercial banking sector; the availability of capital is limited; the regulatory environment and poor infrastructures constrain the access to financial services.

For these reasons, there is the need of utilizing the information contained in the MAP research as a basis to develop a roadmap in the form of a strategic plan that can assist the Government of Myanmar in elaborating policies and setting out its priorities for promoting Financial Inclusion in the short, medium and long-term.

The 5 priority areas identified so far for the roadmap are:

• Building key institutions;

• Building the financial market;

• Agriculture;

• Micro-small-medium enterprises;

• Low income households.

In this regard, the conference represented an important occasion to discuss and receive feedback on the overall vision of the roadmap as well as on the steps that are needed to turn it into a practical instrument, owned by the Government, to deepen Financial Inclusion in Myanmar in the coming years.