Griselda Santos l July 22, 2022 l The Manila Times
FINANCIAL inclusion emerged as a global priority in the late 2000s. To be financially included means having access to a wide range of useful and affordable financial products. Over the years, credible studies have shown that financial inclusion can reduce poverty and lower income inequality if complemented with financial literacy and responsible financial management.
Pre-pandemic, the Philippines was making strides through the National Strategy for Financial Inclusion (NSFI) framework. It ranked second in Asia and eighth globally in enabling policies promoting financial inclusion. Much of the credit should be given to the Bangko Sentral ng Pilipinas (BSP), the agency delegated to implement the NSFI. Based on a 2019 BSP survey, there was a good uptake on financial services among Filipinos, resulting in at least a 20-percent increase in formal accounts, formal credit, insurance and investment ownership.
More than two years into the pandemic, it seems all the gains in financial inclusion were erased by the impact of Covid-19. Seven in 10 Filipino adults remain financially excluded, equivalent to around 50 million Filipinos. This begs the questions: Are we approaching financial inclusion with the right framework in the right context? Can financial inclusion lead to inclusive growth and financial resilience?
Several facets such as resilience, savings and consumer protection have taken a new meaning as a result of the ongoing pandemic. It warrants the need to redefine and revisit the context and meaning of financial inclusion.
Typhoon “Odette” in 2021 reminded us that the country faced even greater challenges than others in the midst of the pandemic. It once again put our vulnerability to test. As the second-costliest typhoon to hit the Philippine archipelago, Odette caused P51.8 billion in damage and around 402 lives lost. With at least 20 typhoons encountered each year in the Philippines, it is sad to see the same, familiar devastating results emerge, accompanied by the same assuring statement that Filipinos are resilient.
Generally, being resilient is good but to use it in the context of a devastation that repeatedly happens without moving forward with lessons that can prevent the next one is bad. Resilience in this context connotes lack of accountability, i.e., providing assurance without accountability. So, who is accountable?
Resilience is not simply about one’s ability to bounce back. In the context of financial inclusion, it is beyond physical resilience and is not just about having savings or insurance. To lead to sustainable and inclusive growth, it entails a shift in mindset for all who think that inclusion is merely the government’s task or a corporate social responsibility. We are all accountable to strengthen the resilience of every Filipino.
Savings, an important aspect of financial inclusion, has also taken a different context in the pandemic. Traditionally, we view savings as having extra money after spending, which in the context of financial inclusion refers to necessary spending. Having something in excess is unimaginable today, especially for the 50 million Filipinos who are financially excluded. Savings ought to take a new meaning, i.e., to instill the discipline to consistently set aside for each basic need. It is the capability to afford to pay for every necessity periodically to sustain the family.
With the pandemic fast-tracking digital transformation, consumer protection is another facet of financial inclusion that should be taken in a different context. A couple of times, I have encountered people with stacks of ATM cards withdrawing money. In social media, many people freely share their personal information. Consumer protection in the digital age is not just about protecting a consumer’s physical and financial assets. It ought to extend to educating every Filipino on the importance of their personal data, which they should protect with the same level of care as their physical assets.
This year, the BSP enhanced the NSFI framework after recognizing that financial inclusion needed to take a new meaning. The six-year blueprint expanded the desired outcomes to four strategic objectives: promoting inclusive digital finance; improving financial health and resilience; increasing access to finance for the agriculture and MSME sectors; and reducing disparities in financial inclusion.
Both metrics to measure performance against its desired outcomes and private sector participation were expanded. Among those invited to participate were the Financial Executives Institute of the Philippines (Finex) and Water.org, an NGO (nongovernmental organization) co-founded by Gary White and Matt Damon, that provides market-driven financial solutions to the global water crisis.
It is hopeful to see the BSP’s enhanced approach reiterating the joint accountability of public and private sectors to promote greater financial inclusion. The NSFI vision says it all: financial inclusion is a journey with the end goal of inclusive growth and financial resilience.
*** The author is the chairman of the Finex financial inclusion committee and former executive director of Fintech Alliance Philippines. The opinion expressed here does not necessarily reflect the views of these institutions and The Manila Times.