Myanmar Pushes Financial Inclusion to Reduce Poverty
Myanmar, August, 07 2018 -
The financial sector is expected to focus on giving low-income individuals access to affordable financial services as a means to reduce poverty, as adult access to formal service has increased by 18 percent over the past five years.
Stakeholders of the financial sector, including government officials, private sector players and development agencies discussed the findings of a nationwide financial sector diagnostic, Making Access Possible (MAP), at a workshop yesterday. The event, which seeks to update the country’s strategy for financial inclusion, was held in Yangon’s Pan Pacific Hotel and organised by the Financial Regulatory Department (FRD) and supported by United Nations Capital Development Fund (UNCDF) and the DaNa Facility, which is funded by the UK’s Department for International Development.
Making Access Possible (MAP) is an initiative to develop a national financial inclusion roadmap that identifies key drivers and recommended action. It operates through a partnership between the DaNa Facility, UNCDF Myanmar and the FRD.
Based on a survey of 5,500 rural and urban households, the 2018 diagnostic found that adults with access to at least one formal financial product increased from 30pc in 2013 to 48pc in 2018, an almost two thirds increase in financial inclusion, against a target set in 2014 of 40pc. This implies that over 6 million more adults have access to formal financial services now than in 2013, while adults with more than one formal financial product also increased to 17pc. In addition, sole reliance on informal financial services dropped by 30pc from 10 million to 7 million adults over the past five years. This increase in access to formal financial services means that people across Myanmar are increasingly able to save, invest and prosper through their use of formal finance services.
Consequently, Myanmar’s formal financial sector has broadened owing to increased private bank depositors, as well as on robust growth in the microfinance and cooperative sectors.
Stakeholders at the workshop deliberated on a proposed strategy for the 2018-22 national roadmap for financial inclusion, which seeks to empower low-income individuals by improving their access to affordable financial services.
The FRD’s director general U Zaw Naing highlighted the need for inclusive and equitable financial services across the country. “While financial sector growth is encouraging, it is of little value unless it makes a meaningful and lasting difference at the personal level nationwide,” he remarked at the event. Meanwhile, the Central Bank of Myanmar’s director general Daw Than Than Swe challenged the financial community to “redouble its efforts to expand and deepen financial services” in order to overcome the “entrenched traditional informal financial practices that conspire to limit our nation’s economic potential.”
Peter Brimble, senior technical adviser for Private Sector Development at the DaNa Facility, told The Myanmar Times that Nay Pyi Taw has placed an emphasis on tackling poverty through inclusion.
“Financial inclusion is a critical element of inclusive growth, and the workshop brought together a broad range of participants to review the MAP refresh findings and forge a framework to enhance financial inclusion in Myanmar.
“The government expressed strong commitment to the reforms required to enhance access to finance across the country, especially for the poor and disadvantaged,” he explained.
Paul Luchtenburg from UNCDF in Myanmar noted that the improvements in financial inclusion result from “the government’s leadership complemented by the work of development partners and other stakeholders.” Moreover, Daw Yu Yu Naing, DFID’s private sector development adviser in Myanmar, stressed the importance of inclusion for growth. “If we want to bring new economic opportunities and prosperity to communities and groups across this country, then increasing access to appropriate, competitive and well-regulated financial products and services is a critical objective,” she observed.
What is financial inclusion?
Two billion adults in total - more than half of the world’s working adults - are still excluded from formal financial services, according to the United United Nations Capital Development Fund.
The exclusion is the most acute among low-income populations in emerging and developing economies, including Myanmar. Bringing people on board to the formal economy is a critical contribution to poverty reduction, resolving inequality and facilitating inclusive growth.
Financial inclusion means that individuals and businesses can access and use a selection of affordable and responsibly-provided financial services offered in a soundly regulated environment. There is evidence that increased levels of financial inclusion – through the extension of savings, credit, insurance and payment services – contributes substantially to sustainable economic growth.