The United Nations Development Programme (UNDP) and the UN Capital Development Fund (UNCDF) today launched a new funding facility, inviting financial service providers to develop new ways of enabling low-income and rural Pacific Islanders to access affordable savings, insurance, credit and other financial services.
Implemented through the Pacific Financial Inclusion Programme (PFIP), the UNDP/ UNCDF Financial Inclusion Support Facility is designed to disburse grants to financial service providers—including those from the private sector such as banks, insurance companies and mobile network operators. The facility, totaling US$ five million, was created with funding from Australia, New Zealand and the European Union.
“With access to financial services, poor people can start small businesses, insure against losses, and save in case of illness or disaster,” UNDP Administrator and UNCDF Managing Director, Helen Clark, said at a press briefing in Apia, earlier today. “It is now a well-established fact that giving low-income households access to formal financial services can help reduce poverty and inequality.”
Yet, in many Pacific countries today, less than 10 percent of adults are thought to have access to basic financial services. Challenging geography, poor infrastructure and the high costs associated with delivering services to sparse populations are barriers in a region that spans a third of the earth’s surface. New technology is creating opportunities to transform the financial services industry in the Pacific.
The new Facility will also encourage financial service providers to develop products that particularly benefit rural and low-income women across the Pacific. Evidence suggests that when women are provided with access to finance, the whole household benefits, not just the individual client.
The announcement about the new Facility comes a day ahead of the Small Island Developing States (SIDS) conference, which will be held in Apia from 1 to 4 September.
“The theme of this year's conference is partnerships, and this new facility is a partnership in the truest sense, bringing together the private and public sectors. Being cut out of banks and banking systems is holding people back in the Pacific and both the United Nations and the European Union are determined to help overcome these failings," said Andris Piebalgs, European Commissioner for Development.
“The Central Bank of Samoa’s vision for an inclusive financial system in Samoa is for a sound financial system that best serves all members of society in their pursuit of prosperity,” said Maiava Atalina Emma Ainuu-Enari, Governor of the Central Bank of Samoa. “We look forward to working with all stakeholders, including those in the private sector, to achieve that vision,” the Governor said.
PFIP aims to add one million Pacific Islanders to the formal financial sector by 2019 by spearheading policy and regulatory initiatives, facilitating access to appropriate financial services and delivery channels and by strengthening financial competencies and consumer empowerment. A key component of this programme’s second phase (2014-2018) will be the roll out of a new Financial Inclusion Support Facility.
PFIP operates from the UNDP Pacific Centre in Suva, Fiji and has offices in Solomon Islands and Papua New Guinea. It will open an office in Samoa in early 2015.