“Financial Services required for covering basic needs”-Princess Maxima

Microfinance Focus, Sep 24, 2010: H.R.H. Princess Máxima of the Netherlands, the UN Secretary-General’s Special Advocate for Inclusive Finance for Development spoke about the significance of Financial Inclusion in achieving development goals on a side-event ‘Financial Inclusion: A Path to the Millennium Development Goals’ during the MDG Summit 2010 on September 22 in New York.

Drawing attention of the gathering to the fact that none of the 8 Millennium Development Goals mentions financial inclusion, Princess Maxima said, “This is because financial inclusion is a cross-cutting issue.   Financial inclusion is not an end in itself; it is a means to an end. Financial inclusion helps the development of private sector. It helps create income. It generates jobs. It also protects people against unforeseen shocks, helps them manage cash flow, which we have learned is very important and build assets over time”.

“Having an inclusive financial infrastructure is as important to an economy as roads are. Without payment systems, for example, the private and public sector cannot operate.  Financial inclusion is also what will help a small enterprise thrive by providing the right credit to help it to grow, employ more people and increase productivity” she added.

Highlighting the importance of savings for the poor people, she said, “More than credit, we need savings. A safe place to save is, in my mind, the single most important financial service that poor people need. A study in Western Kenya revealed that poor women entrepreneurs who had access to a savings account had 40% higher productive investment than entrepreneurs who did not. These women also spent 37% more on personal items and 13% more on daily food. And when someone in their family got sick, they did not need to liquidate their inventories”. She also lauded the efforts of Kashf Foundation for starting the first savings programme for poor households in Pakistan and congratulated its Promoter Ms. Roshaneh Zafar.

In order to make financial inclusion possible, Princess Maxima feels that right policies and environment for this to take place in a sustainable way is required. “I have to say that lately more attention has been given to this issue. The G20 has shown leadership in making this a priority and has brought many organizations together. Also, new organizations such as the Alliance for Financial Inclusion, for example, has provided a very effective platform for regulators and supervisors to exchange ideas, share best practices and learn from each other. Even standard setting bodies such as FATF have become involved realizing that financial inclusion is complementary to financial integrity”.

Speaking of the new innovations taking place that will permit delivering financial product at scale and low cost, she gave example of M-Kesho in Kenya, where M-Pesa (Safaricom) and Equity Bank have come together to offer millions of clients money transfer and saving services that are affordable. “Similarly, in Brazil, stores and post offices serve now as banking outlets, multiplying the outreach of the banks where previously branches did not exist.  This has led to more than ten million people getting access to financial services”, she added.

Emphasizing on finding ways of using the tool of financial services to help cover the basic needs that will bring about the developmental benefits, Princess Maxima sighted few life-changing examples.  “In Tanzania, health insurance was provided to entrepreneurs, by two organizations working together, PharmAccess and Pride Africa. These people had, for the first time, the security that they could walk to a doctor knowing that they could afford it. In Rwanda, I visited a multi-partner initiative that provided credit for biogas digesters that gave farmers gas for safe cooking and also better fertilizers for their land”.

Further she highlighted the Mexican government’s Oportunidades initiative which has promoted conditional cash transfers for school attendance and preventive health care with success and another example from Bangladesh, where credit is given for water filters that take the arsenic out of their drinking water.

She felt that these examples provide us with information of what is possible when combining financial services with specific basic needs like shelter, education, health, food security, etc.  These are the needs that we have to help fulfill.  We need to do it in a sustainable way and so that as many people as possible can afford it.  This means that these initiatives need to be scalable.

Inspiring people for more action, she said, “Donors, different government ministries, private sector and NGOs should all work together to attain this cross-sector gain. We should all be looking at funding promising pilots that can be sustainable and scalable after the initial testing, learning and adjusting. The challenges that we face are multi-faceted.  Our solutions must be too. Let us build upon the successes booked so far in financial inclusion, to give people the opportunity they deserve”.

Concluding her views at the MDG Summit, Princess Maxima spoke of her dream of one day reading a global inventory of all the pilots that have combined financial services with provision of basic needs, and seeing how others learned from those pilots, focused their investments and created the change we need.

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