Wanted: banking for all

Sep 28 2012 08:51
*Mzwandile Jacks

THREE hundred and fifty delegates from 70 countries met in Cape Town this week at the Global Policy Forum (GPF) to see whether they could do a better job in providing financial services to the poor throughout the world.

This, I feel, is a highly significant gathering and I hope the results of the meeting will not be dismal, with participants failing to agree on important commitments.

I also hope the gathering won't set yet another set of aspirational targets that will mean little if countries decide to disregard them.

Let us talk about the gathering itself first. This was GPF's fourth meeting and was hosted by South Africa's National Treasury and the Alliance for Finance Inclusion (AFI), a global network of financial policymakers from developing and emerging countries. AFI was founded in 2008.

The first two meetings did not lead to any tangible commitments, prompting many to think it was another talk shop.

But last year the forum - held in Mexico - launched the Maya Declaration, which was the first set of global measurable financial inclusion commitments by developing and emerging countries.

This year's GPF will try to demonstrate commitment to financial inclusion with Cape Town additions to the Maya Declaration. Countries have been given an opportunity to commit to outcomes that will lead to real change.

AFI says financial inclusion is about ensuring that low income households have greater access to financial services, and encouraging financial institutions to provide these services at affordable prices.

According to AFI, access to appropriate and affordable banking, credit, saving and insurance services help the poor to raise and protect their standard of living.

It adds that increasing access to formal financial services for individuals, households and small, micro and medium enterprises (SMMEs) has substantial benefits for the economy, including job creation and increasing productive economic capacity, leading to the empowerment of disadvantaged groups.

I want to state upfront that South Africa still has a long way to go in financial inclusion. Granted, a lot of work of has been done in South Africa, but last year the country had a little more than 9 million financially excluded adults.

Finance Minister Pravin Gordhan told delegates at the meeting this week that because of the low-cost Mzansi account, more than 3 million people opened bank accounts in SA.

This, he said, meant that the percentage of the population with access to financial services rose to 63% in 2011 from 47% in 2008.

But I fear using the Mzansi account as a sign of financial inclusion is not a true reflection of what is happening on the ground; it is well known that most of these accounts are lying dormant with account holders failing to use them.

South Africa cannot claim to have succeeded in financial inclusion when people are unable to use the services that have been made accessible to them. What is the point of having an Mzansi account when you cannot use it?

The Mzansi accounts were mostly opened by shebeen owners, spaza shop owners and many other members of the informally served market.

This market has seen an increase in financial exclusion because people in this market keep money in a safe place at home. If they want funds, they borrow from family and friends.

There is no doubt that the number of financially excluded people could increase next year because of growing concerns around South Africa’s banking fees, which are among the highest in the world.

Lastly, as the world faces another recession many people will lose their jobs and it will be hard for them to be included financially. This is going to affect South Africa and many other countries which participated in this gathering.

Let us hope this meeting come up with clever strategies around financial inclusion this afternoon when the gathering comes to an end. It should also bear the emerging global recession in mind.

 - Fin24

*Mzwandile Jacks is a freelance journalist.

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