Key Messages of the Advisors Group

In March, the UN Advisors Group on Inclusive Financial Sectors released “Five Key Messages for Four Key Audiences”: statements of best practices for expanding access to finance for the poor targeted at governments, regulators, development partners and the private sector.

For Governments

Inclusive financial sectors require building and supporting permanent, local financial institutions and embracing new technologies and systems that deliver a diverse range of financial products and services to the poor.
Governments' vision for a well-functioning financial system should include access for all citizens to a broad range of financial products and services including savings, credit, insurance, and money transfers.
The role of government is to create a helpful policy environment: broadening access while protecting consumers. When the government itself provides financial services, politics almost always limits access.
Governments should refrain from imposing interest rate ceilings, as they may limit credit expansion and shift the cost burden to hidden fees. The best policy of governments to lower interest rates is to promote transparent prices and an open, competitive market.
Broadening access to financial services is an important policy goal, but will not in and of itself eliminate poverty.

For Regulators

Financial inclusion should be a major objective of financial regulation. The role of regulators is to establish environments that allow a diverse range of institutions to provide a wide variety of financial products and services.
Regulators must be flexible in their approach; they must mitigate risks, without limiting access to financial services.
Regulators must assure appropriate supervision of both financial services providers and their supporting industries, such as telecommunications.
Regulators must exercise caution that anti-money laundering and related regulations do not block access to financial transfers that are critical for poor people.
Broad-based access to financial services requires an enabling regulatory environment for telecommunications and technology infrastructures.

For the Private Sector

Providing financial products and services to poor people represents a large business opportunity for the private sector. Providers of financial products and services should use their strengths to develop a range of products that better serve the needs of the poor.
The private sector has an important role to play in expanding access to financial services for poor people.
Private sector participants in inclusive financial sectors should include not only direct providers of financial products and services, such as banks, insurers and money transfer companies, but also telecommunications, technology, credit bureaus, retailers and other companies that support the financial services industry.
For the private sector to realize the market opportunity of expanding access to financial services, it must be engaged in establishing appropriate enabling environments.
The private sector can expand access to financial services in many ways. These include providing capital; building infrastructure; developing new products, services and technologies; and improving human and institutional capacity.

For Development Partners

For development partners, quality of funding for inclusive finance is at least as important as quantity. Good funding requires technical expertise and appropriate funding instruments.
The key bottleneck for development partners supporting inclusive finance is the shortage of strong institutions and managers.
Development assistance for inclusive finance should complement private sector activities, not compete with them.
Better information on the performance of development partner investment portfolios is essential. What is not measured cannot be managed.
For development partners, both an effective division of labor and coordination of efforts are needed for maximum efficiency and impact of development assistance to inclusive finance.

The GSB Work Spaces are related to Bank's consulting engagements with Reflected Knowledge. This is not an official or unofficial website of Government Savings Bank. Access is restricted to authorized personnel only except as determined by GSB. ©2005-2008 Government Savings Bank and Steve Barth. All rights reserved.