The 2009 AFI Global Policy Forum

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Press Release

More than 60 Countries Form New Global Alliance to Increase Access to Financial Services

The Alliance for Financial Inclusion brings together central banks and other partners, representing nearly 70 percent of the world’s unbanked. The global network will develop and implement policies to reach millions across the developing world by expanding access to financial services.

NAIROBI, Kenya, Sept. 14 -- Nearly 100 central bankers and other financial policymakers gathered here today for the official launch of the Alliance for Financial Inclusion (AFI), a coalition of countries from the developing world committed to making savings accounts, insurance, and other financial services available to millions of people living on less than $2 a day.

Research has shown that better access to financial services can fuel economic growth by raising national income via increased savings and investments in poor households as well as in small and medium enterprises. This access also enhances financial stability by injecting formal savings into the system, diversifying the capital base, and providing stability during global downturns. Yet, an estimated 2.5 billion people – over half the world’s adult population – do not have access to savings accounts and other financial services.

AFI’s global network will enable developing countries to share knowledge so they can more effectively develop and implement policies designed to expand access to financial services. While many of the smartest policies to expand financial access have come from developing countries – such as mobile phone money transfer services in Kenya and agent banking in Brazil – knowledge of these solutions is scattered in pockets around the globe.

“The unique aspect of AFI is that it puts us members in the driver’s seat to identify and create solutions to increase the availability and choices of financial services in our own countries,” said Tarisa Watanagase, governor of the Bank of Thailand and AFI member. “Since we understand our countries’ circumstances better than outside organizations, AFI creates an exceptional forum for us to share policies that work and learn from other policymakers about solutions that work for them.”

AFI members gathered in Nairobi this week for the Global Policy Forum, a three-day meeting marking the coalition’s first-annual conference. Conclusions drawn at the forum will inform financial sector reforms, which members can consider for implementation in their nations. The Right Honourable Raila Odinga, Prime Minister of the Republic of Kenya, will open the conference, followed by presentations by governors and high-ranking representatives from central banks around the world. AFI members have chosen to focus on six policy areas to increase financial inclusion for their respective countries: agent banking, diversification of financial products and providers, state bank reforms, financial identity, consumer protection and mobile phone banking.

“In Kenya we have pioneered innovative solutions like M-Pesa, a system of money transfer via mobile phones, that other countries can borrow and learn from,” said Njuguna Ndung'u, governor of the Central Bank of Kenya and AFI member. “In the same way we share a solution that has worked for us, we are looking to the AFI network to help introduce us to our next big idea, such as using agency models for financial service delivery.”

Based in Bangkok, Thailand, AFI is managed on behalf of its members by the German development organization Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) GmbH and supported with a $35 million grant from the Bill & Melinda Gates Foundation.

“AFI’s peer-to-peer knowledge exchange model is playing a key role in amplifying policy solutions that work,” said Alfred Hannig, executive director of AFI. “The most realistic and successful solutions for including poor people in the formal financial system are being innovated among our members in developing countries.”

This grant is part of the Gates Foundation’s Financial Services for the Poor initiative, which is working with a wide range of public and private partners to harness technology and innovation to make safe places to save and other financial services accessible to poor people in the developing world.

“The demand for financial services – especially savings – is enormous in the developing world,” said Bob Christen, director of Financial Services for the Poor at the Bill & Melinda Gates Foundation. “AFI will help foster the spread of new and innovative efforts to deliver these services to the doorsteps of the poor so they can manage life’s risks and take advantage of life’s opportunities.”

Associated Press / The New York Times

Gates Foundation Helps Bring Banking to the Poor

By THE ASSOCIATED PRESS
Published: September 21, 2009
Filed at 5:06 a.m. ET

SEATTLE (AP) -- The Bill & Melinda Gates Foundation, best known for its work combating malaria, AIDS and other diseases, this week announced an effort to bring banking, including savings accounts, to the poor.

It may be hard to understand how savings is even an issue for the people who live on less than $2 a day, said Bob Christen, who directs the Gates Foundation's financial services initiative. However, access to a safe place to store money is a top priority of poor people around the world, he said.

That's why the world's richest charitable foundation announced a $35 million grant to help facilitate agent banking services already being developed in Africa, Asia and South and Central America.

Christen said the Gates grant will provide assistance to numerous organizations through the Alliance for Financial Inclusion, whose efforts are historic in the world of banking, and will help people climb out of poverty, save for their children's education, build their businesses and plan for the future.

The ideas for bringing savings accounts, insurance and other financial services to the poor include transferring money by way of mobile phones and setting up banking kiosks in markets and post offices.

The Gates Foundation has invested a total of $350 million so far in other financial services for the poor, including micro-credit, which involves small loans for poor entrepreneurs.

Christen says savings accounts are a more basic need of many people. An estimated 2.5 billion people -- more than half the world's adult population -- do not have access to savings accounts and other financial services.

People are forced to buy and pawn jewelry or make other poor investments to keep their money safe.

Foundation research identified this as an area that is not getting investment dollars and turned its attention in this direction.

''It became very obvious that the single service that is least developed that most people need is savings,'' Christen said. ''People really want to be able to save in a safer place.''

The Gates Foundation is providing an infusion of cash to facilitate the sharing of ideas among the innovators and to make sure the new systems offer a wide range of financial services.

Alfred Hannig, executive director of the Alliance for Financial Inclusion, said banking innovation is happening in developing countries without the foundation's help, but the money will help speed implementation.

The alliance has a goal of reaching 50 million of the world's ''unbanked'' by 2012.

In a phone call from Nairobi, Kenya, where the alliance was hosting a meeting for representatives of 42 countries, Hannig said that plans are being made for a delegation from Kenya to go to Brazil to learn about that country's efforts to bring banking services to small villages along the Amazon River.

''People were waiting for this,'' said Hannig, who works for the German Technical Corporation and is based in Thailand. ''This was very timely. They have been waiting for such a mechanism for such a long time.''

Hannig said 60 percent of the money from the Gates Foundation will be redistributed in smaller grants to groups like the delegation from Kenya to Brazil, and the Bank of Thailand, which wants to measure banking access around the world through a survey.

He predicted that the ideas percolating in Africa, Asia and South and Central America will leap frog existing systems in Europe and the United States.

For example, banking in industrialized nations is paper-based -- people still use checks and cash for most of their financial transactions. The new technologies being tried out in the southern continents will lead to a paperless, cashless system.

To view the article on the New York Times website, click here.

Bloomberg

Alliance on Banking Services for the Poor Starts First Meeting

By Sarah McGregor Sept. 14 (Bloomberg) -- A new alliance that aims to promote financial services for the world’s poor starts its inaugural meeting in Kenya’s capital, Nairobi, today.

The Alliance for Financial Inclusion will bring together central bank officials from 60 countries throughout Asia, Africa, the Middle East and South America at its global policy forum, which runs until Sept. 16.

The forum will look into ways to give 50 million poor people access to financial services over four years. About half the world’s adult population, or 2.5 billion people, don’t have bank accounts and are unable to borrow money from formal financial institutions, according to an AFI press statement released today.

“The most interesting innovations in bringing financial services to the poor have been led by the South,” Bob Christen, Director of Financial Services for the Poor at the Bill and Melinda Gates Foundation, said in a phone interview on Sept. 10.

Gates has donated $35 million to the Bangkok, Thailand- based Alliance and its program to extend low-cost savings accounts, loans, insurance products and remittance mechanisms to the world’s poorest.

At the meeting, Kenya will showcase M-PESA, a pioneering mobile phone money transfer service operated by Safaricom Ltd., 40 percent owned by Vodafone Group Plc. About 7.4 million Kenyans have subscribed to M-PESA, meaning mobile money in Swahili, since it began in 2007.

The service allows customers, even those without bank accounts, to deposit cash with a registered agent for storage on their mobile phone. The balance can be used for electronic money transfers, the payment of bills or even withdrawals.

Brazil will promote its “agent-banking,” model, which has enlisted about 95,000 shopkeepers, pharmacy workers, and post office employees in the country’s poorest regions to offer basic front-teller services on behalf of banks.

“Financial services are important for the poor because it helps them organize, whether it’s to pay for education, health care or finance a small business,” said Christen.

To view the article on the Bloomberg website, click here.

Reuters

AFI seeks finance services for 50 mln poor by 2012

NAIROBI (Reuters) - The Alliance for Financial Inclusion (AFI), a Thailand-based group bringing together 60 countries, aims to take financial services to 50 million people in developing nations by 2012, its director said on Monday.

AFI said an estimated 2.5 billion people, or more than half the world's population, does not have access to savings accounts and other services, excluding them from contributing to growth.

Alfred Hannig said the financial crisis had presented an opportunity to campaigners to create more access to services.

"It will emphasise more the need to mobilise deposits (from the poor) that can cushion for future losses and for future risks," Hannig told Reuters at AFI's first policy forum, which brought together officials from 40 countries in Nairobi.

Hannig said AFI was giving grants worldwide to help recruit new financial sector customers drawn from the rural poor.

"We have two grants in the pipeline and these grants will bring us about 4 million people into the sector in countries such as Indonesia and in Kenya," he said.

Benno Ndulu, governor of the central bank of Tanzania, said mobile phone banking and microfinance institutions would also help towards reaching AFI's goal.

To view the article on the Reuters website, click here.

CNBC

More than 60 Countries Form New Global Alliance to Increase Access to Financial Services --Alliance for Financial Inclusion brings together central banks and others representing nearly 70 percent of world's unbanked; network will develop and implement policies to reach millions across developing world

NAIROBI, Kenya, Sept 14, 2009 /PRNewswire via COMTEX/ -- Nearly 100 central bankers and other financial policymakers gathered here today for the official launch of the Alliance for Financial Inclusion (AFI), a coalition of countries from the developing world committed to making savings accounts, insurance, and other financial services available to millions of people living on less than $2 a day.

Research has shown that better access to financial services can fuel economic growth by raising national income via increased savings and investments in poor households as well as in small and medium enterprises. This access also enhances financial stability by injecting formal savings into the system, diversifying the capital base, and providing stability during global downturns. Yet, an estimated 2.5 billion people - over half the world's adult population - do not have access to savings accounts and other financial services.

AFI's global network will enable developing countries to share knowledge so they can more effectively develop and implement policies designed to expand access to financial services. While many of the smartest policies to expand financial access have come from developing countries - such as mobile phone money transfer services in Kenya and agent banking in Brazil - knowledge of these solutions is scattered in pockets around the globe.

"The unique aspect of AFI is that it puts us members in the driver's seat to identify and create solutions to increase the availability and choices of financial services in our own countries," said Tarisa Watanagase, governor of the Bank of Thailand and AFI member. "Since we understand our countries' circumstances better than outside organizations, AFI creates an exceptional forum for us to share policies that work and learn from other policymakers about solutions that work for them." AFI members gathered in Nairobi this week for the Global Policy Forum, a three-day meeting marking the coalition's first-annual conference. Conclusions drawn at the forum will inform financial sector reforms, which members can consider for implementation in their nations.

The Right Honourable Raila Odinga, Prime Minister of the Republic of Kenya, will open the conference, followed by presentations by governors and high-ranking representatives from central banks around the world.

AFI members have chosen to focus on six policy areas to increase financial inclusion for their respective countries: agent banking, diversification of financial products and providers, state bank reforms, financial identity, consumer protection and mobile phone banking.

"In Kenya we have pioneered innovative solutions like M-Pesa, a system of money transfer via mobile phones, that other countries can borrow and learn from," said Njuguna Ndung'u, governor of the Central Bank of Kenya and AFI member.

"In the same way we share a solution that has worked for us, we are looking to the AFI network to help introduce us to our next big idea, such as using agency models for financial service delivery." Based in Bangkok, Thailand, AFI is managed on behalf of its members by the German development organization Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) GmbH and supported with a $35 million grant from the Bill & Melinda Gates Foundation.

"AFI's peer-to-peer knowledge exchange model is playing a key role in amplifying policy solutions that work," said Alfred Hannig, executive director of AFI. "The most realistic and successful solutions for including poor people in the formal financial system are being innovated among our members in developing countries." This grant is part of the Gates Foundation's Financial Services for the Poor initiative, which is working with a wide range of public and private partners to harness technology and innovation to make safe places to save and other financial services accessible to poor people in the developing world.

"The demand for financial services - especially savings - is enormous in the developing world," said Bob Christen, director of Financial Services for the Poor at the Bill & Melinda Gates Foundation. "AFI will help foster the spread of new and innovative efforts to deliver these services to the doorsteps of the poor so they can manage life's risks and take advantage of life's opportunities." About AFI The Alliance for Financial Inclusion (AFI) is a global network of central banks and other policymaking bodies in over 60 developing countries. AFI provides its members with a learning platform for peer to peer knowledge exchange on financial inclusion policies that work, and grants to help implement them.

To view the article on the CNBC website, click here.

Business Daily Africa

Let's Introduce More People to Financial Services

When the G-20 leaders meet in Pittsburgh, recovery and reform of global financial systems will be key agenda. They will discuss new regulatory regimes and cooperation to jumpstart global economic growth, trade and investment.

For half the world's population, however, decisions taken at the G-20 will have little or no effect. This is because more than 2.5 billion people around the world have no access to formal financial services, such as bank accounts, savings accounts, credit, or insurance.

About 95 per cent of these are in developing countries, most on less than $2 a day.

This gap is a significant barrier to economic growth. Expanding financial services to the world's poorest would increase savings and, in turn, provide new funds for investments in agriculture and small and medium enterprises, which is critical in creating jobs.

Some of the smartest policies to expand financial access have come from poor countries, such as mobile phone banking in Kenya and the Philippines, agent banking in Brazil and Peru, and state bank reforms in Indonesia and Thailand. Unfortunately, knowledge of these programmes is yet to be widely shared.

That is beginning to change. This week, leaders from developing countries met in Nairobi to launch the Alliance for Financial Inclusion (AFI), a global network of central banks, finance ministries, development agencies and other policymakers to identify, create and share solutions to bring the world's poorest into the circle.

The first key task will be to bring financial services to 50 million people who earn less than $2 a day -- equivalent to the population of South Africa -- by 2012.

The opportunities created by the rapid expansion of mobile telephony are promising. It is estimated that by 2012, the number of people around the world without a bank account but with a mobile phone will hit 1.7 billion.

In Kenya, a mobile phone money transfer service called M-Pesa launched just over two years ago has attracted more than 7.4 million registered customers by July 2009, or 19 per cent of Kenya's total population of about 39 million, and over 12,000 agents with a transactions value of almost 20 per cent of GDP every month.

Bringing the world's poorest into the financial services sector faces a myriad of challenges. We need to ensure that people are not exploited as happened with pyramid schemes in Kenya. AFI members will explore these challenges as they work to bring banking, savings and insurance to more of the world's poor.

We must help foster the spread of new and innovative ideas and initiatives to deliver these services to the world's poor to take advantage of its opportunities.

To view the article on the Business Daily Africa website, click here.