Financial inclusion is a critical enabler in enhancing the quality of life of households and individuals, especially low-income households, as well as raising the productive capacity of micro, small and medium enterprises (MSMEs), Dr Kameshnee Naidoo, Global Programme Advisor Financial Inclusion for United Nations Capital Development Fund (UNCDF), has said.
The goal of financial inclusion is to increase economic and social inclusion by supporting people's needs and activities in the real economy. In this way, financial inclusion increases people's ability to obtain and sustain opportunities and helps to improve livelihoods.
Speaking on "The Role of Inclusive Growth for Financial Inclusion and the Need for Multi-stakeholder Partnerships" during the annual Southern African Development Community (SADC) Regional Financial Inclusion Forum in Johannesburg, South Africa, Dr Naidoo said Making Access Possible (MAP) version of financial inclusion puts livelihoods at the centre, recognising that having bank accounts is not enough by itself. The financial inclusion strategies are helped by the Support to Improving the Investment and Business Environment in the SADC Region (SIBE) Programme, which is supported by the European Union.
Dr Naidoo said the new MAP refreshers have been deliberate in positioning financial inclusion as a critical enabler of inclusive growth. The aim is to tackle the interdependent relationships between economic exclusion and poverty, environmental degradation, vulnerability, gender inequality and social exclusion. MAP links financial inclusion and the UN Sustainable Development Goals (SDGs)in tangible ways to align these with the objectives of inclusive growth.
"Let me put this a bit differently and make it tangible, if financial inclusion is the arteries, and finance the blood that flows through them, then increased financial inclusion means improved delivery of vital life blood to the healthy body that is society and communities. Financial inclusion is a mechanism that the financial sector uses to engage, interact and transact with low-income households in a bid to include them in the financial system," said Mr Naidoo.
Mr Bhushan Jomadhar, Financial Expert, Eastern and Southern Africa Anti-money Laundering Group (ESAAMLG) Secretariat, spoke about the need to strengthen mechanisms to combat money laundering and financing terrorism. He emphasised the need for effective laws and regulations to curb the financial vices and ensure that there are frameworks which result in desired outcomes.
Meaningful financial investigations are not always carried out properly due to a lack of capacity for financial investigations, and where assets have been confiscated, the mechanisms to manage such assets are lacking. Terrorism financing is also not well understood, he said, and jurisdictions focus on the act of terrorism rather than the financing of terrorism itself.
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Mr Jomadhar said these gaps are a concern to ESAAMLG and most countries where evaluations have been completed are now being put under the international co-operation review group programme where they need to report frequently and under enhanced scrutiny by the Financial Action Task Force.
Speaking on the way forward on financial inclusion in SADC, Mr Sadwick Mtonakutha, Director Finance, Investment and Customs Directorate, SADC Secretariat, said most Member States have developed or are developing their second or third National Financial Inclusion Strategies and SADC is finalising the successor to the Financial Inclusion Strategy. He said there are instruments available at a regional and country level which include a simplified trade regime to cater for informal cross-border traders and a framework under the Committee for Central Bank Governors (CCBG) for payments, and that these policies and strategies should speak to each other.
Mr Brendan Pearce, Chief Executive Officer, FinMark Trust, said fewer countries in SADC had financial inclusion strategies in 2015, but there is now a marked improvement as financial inclusion is now a regional policy objective and there are regional financial inclusion strategies. SADC had transitioned from basic financial inclusion focused on account ownership to financial inclusion's impact on people's jobs, lives, economic growth, and livelihoods.
