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National Financial Inclusion 1
Why it is needed,What it will achieve,
And how you can participate?
NATIONALFINANCIAL INCLUSION
S T R A T E G YAccess for ALL
National Financial Inclusion 1
• Financial inclusion enables the underbanked to better undertake and grow business activities, save safely inthefinancialsector,managerisksandbuildfinancialsecurity.• Ultimately,financialinclusionhelpstopromoteeconomicgrowthandreducepovertyandincome inequality.• FinancialinclusionwillcontributetoJamaica’stransformationfromamiddleincomecountrytoonewhich affordsitscitizenshighstandardsofliving.
• ANationalFinancialInclusionStrategy(NFIS)supportsJamaica’seconomicgrowthagenda.• TheStrategysupportsJamaica’sgoalforsustainableprosperity,asoutlinedintheVision2030-National DevelopmentPlan,whichaimstomakeJamaica“theplaceofchoicetolive,work,raisefamiliesanddo business”.• ANFIScanserveasapowerfultooltocoordinate,deepenandacceleratenationaleffortstoreachhigher levelsoffinancialinclusion.• TheNFISestablishesasetoffinancialinclusionobjectives,arangeofpublicandprivatesectoractions toachievethoseobjectivesandacoordinationstructureandM&Esystemtoensurethattheseactions areimplemented.• Over30countriesarenowintheprocessofdesigningorhavelaunchedaNationalFinancialInclusionStrategy.
• Relianceoncashremainshigh,while the usage of accounts and of electronic transactions instrumentsislow,inpartduetotheirperceivedhighcostandinconvenience.
Example:65% of wage earners receive their wages in cash. 23% of account holders do not make any
deposits or withdrawals into their accounts (Global Findex)
• Householdslacksuitableandaccessiblesavings,affordableinsuranceandretirement products,andstruggletobefinanciallyresilient.
Example:Only 30% of Jamaicans save through a regulated financial institution (Global Findex)
• Toomanypeopleandbusinessesdonothaveaccesstoformalcredit and alternative financinginstrumentsthatspecificallymeettheirneeds.
Example:11% of Jamaican adults and 27% of SMEs access formal credit (Global Findex, Enterprise Surveys)
• Alargeshareofthepopulationdoesnothaveconfidencethatthefinancialsystemwill servetheirneedsandmostJamaicansdonotunderstandthebasicsofpersonalfinance.
Example:Half of the Jamaican population does not have confidence in the financial system
(Gallup World Poll)
Why Financial inclusion in Jamaica?
Why a national Financial inclusion strategy?
What are the challengesthat We Face today?
Over the last few years, much has been done to make Jamaica more financially inclusive, but many challenges remain:
National Financial Inclusion 2
The National Financial Inclusion Strategy (NFIS) sets forth an ambitious agenda of reforms structured around four main pillars and a cross-cutting foundation:
•The‘Financial Access and Usage’ pillarsupportsreformsthatwouldfacilitateincreasedusageofelectronicpayments,expansionofagents,digitizationofgovernmentpaymentsanddevelopmentoffinancialproductsthatchannelremittanceproceedsinaccounts/cards.
•The‘Financial Resilience’pillarsupportsreformsthatwould contribute to increased usage of savings, insurance andretirementaccountsforthelow-incomesegment.
•The‘Financing for Growth’ pillarfocusesonthreesectorsthathavesignificantpotentialforcontributiontothedevelopmentofoureconomyandthewell-beingoftheJamaicanpopulation:
→ MSMEFinance:ThegoalistoincreaseaccesstofinancetoMSMEsthroughrevampingthecreditguaranteescheme,developingalternativefinancinginstruments,suchasleasing,factoringandventurecapitaland providingcapacity-buildingtoMSMEs. → AgricultureFinance:Thegoalistostrengthenfinancialinstitutionsthatlendtoagriculture,providetechnical assistancetofarmersandagro-processorsandpromoteinvestmentsinagriculturetomitigaterisks. → HousingFinance:Thegoalistodeployappropriateproductstoextendhousingfinancetolow-incomeand informalsegments,strengthenmortgageinsuranceandenhancefundingoffinancialinstitutionsthatlend tothissegment.
•The‘Responsible Finance’ pillarsupportsmeasuresthatwouldresultinenhanceddisclosure,adequatebusinesspracticesandbetterinformedconsumersthatcanresolveconflictsinanefficientandlowcostmanner.
•The ‘Supporting Infrastructure’foundationsupportsmeasuresthatwouldreviewandrevisetheAML/CFTframeworktoensureanadequatebalancebetweenfinancialinclusionandintegrity,adoptaregulatoryframeworkforcreditunionsandMFIs,furtherstrengthencreditreportingandsecuredtransactions,evaluatemeasurestoreduceinformality,encouragelandtitlingandexpandfinancialinclusiondatacollectionefforts.
In order to achieve this agenda, we have :•SetupaNationalFinancialInclusionCounciltocoordinatestakeholdersandholdeachoneaccountable.•Activatethesequencedandtime-boundroadmapofprioritizedactionswithassignedresponsibilities.•ThroughtheFinancialInclusionSteeringCommitteeandtechnicalandsecretariatSystematicallymonitorprogress andevaluatetheeffectivenessandimpactofkeyreforms.
Why a national Financial inclusion strategy?
National Financial Inclusion 3
FinancialAccessandUsage
FinancialResilience
FinancingforGrowth
AccessPointsandPaymentsInfrastructure
Frameanaccesspolicytofacilitateafairandopenpaymentsinfrastructure
BOJ
BasicAccounts Evaluate,designandimplementapolicyframeworkforopeningtransactionaccountswithgradedKYCrequirements.
GovernmentPaymentsDesignastrategytoshiftgovernmentpayments,includingdirectbenefittransferschemes,wagesandsupplierpayments,fromchequestoretailelectronicpaymentproducts
MOFPS,AGD,MLSS
RemittancesReviewandrevisetheregulatoryframeworktofacilitatethedevelopmentoffinancialproductslinkedtoremittances,includingremittance-basedpaymentcards
BOJ
AgricultureFinance
EvaluateoptionsforstrengtheningorrestructuringtheNPCBandenhancetheregulationandsupervisionoftheNPCB MICAS
Supportbanks,creditunions,NPCBandMFIstodeveloplendingprogrammestosustainablyservetheagriculturalsector
Interestedprivateentities,MICAS
Promotetheprivatefinancingofrisk-copinginvestments(waterharvesting,ponds,greenhouses) MICAS
HousingFinance,MEGAjC
Designanddeployhousingfinancesolutionsforlowerandinformalincomehouseholds,e.g.housingmicrofinance NHT,OPM
ReviewandstrengthenNHT’sroleinprovidingliquiditytolenders,including credit unions NHT
Assessthesizeandoperationsofthemortgageinsurancefundanddetermineneedforresources JMB
MSMEFinance
RevampthePCGschemetoprovideadequateincentivesforlenderstoparticipate
DBJReview/revisethelegal,regulatory,andtaxframeworkforassignmentofreceivables (Factoring)
Review/revisethelegislativeframeworkand/ordevelopleasinglawasnecessary
Developthelegal,regulatoryframeworkandinfrastructureforthedevelopmentofventurecapital DBJ,FSC
Key actions
Theme ProposedAction ImplementingEntitiesPrimaryentities
Savings,Insurance,Pensions
Developalegalandregulatoryframeworkformicro-insurance FSC
Promotethedevelopmentanduseofmoresavingsproducts,inclusiveofcommitmentsavingsproducts,torespondtotheneedsofthelow-incomepopulation.
BOJ
Promotearetirementproductforlow-incomeandinformallyemployed,withlowfeesandeasycontributionsandafocusonpaymentsinfrastructure,productdesignandeligibility.
MOFPS
National Financial Inclusion 4
ResponsibleFinance
SupportingInfrastructure
ConsumerProtection
EnsuretheappropriatelegalframeworkandmechanismsformarketconductsupervisionofDTIs,creditunionsandmicrofinanceinstitutions
BOJ,FSCStrengthenFSC’scapacityformarketconductsupervisionoftheinsurance,pensionandsecuritiessectors
StrengthenFSC’sexistingcomplaintshandlinganddisputeresolutionmechanisms FSC
Compileandwidelydisseminateinformationperiodicallyonfeesandcharges levied by banks and nonbanks
BOJ,CACEstablishanindependentdisputeresolutionschemeforconsumersofDTIs,creditunionsandmicrofinanceinstitutions
FinancialCapability DevelopacomprehensiveNationalFinancialLiteracyActionPlan MOEYI,MOFPS,BOJ,FSC,CAC,JDIC
AML/CFT ReviewandreviseAML/CFTframeworktoensureanadequatebalancebetweenfinancialinclusionandfinancialintegrity
MinistryofNationalSecurity,FSC,MOFPS,BOJ
Enablingregulatoryandsupervisoryframework AdopttheMicro-CreditActandtheCreditUnionRegulations BOJ,MOFPS,MICAS
FinancialSector’sfinancialinclusionplans
EncourageDTIsandotherfinancialinstitutionstodevelopindividualfinancialinclusionplans BOJ
Informality Undertakeanassessmentofmeasuresneededtoreduceinformality MICAS
Landregistrationandtitling Acceleratelandtitlingeffortsandmeasurestofacilitatetheuseoflandtenure rights and other agricultural assets as collateral
OPM,Municipalities,MOFPS
SecuredTransactions Review and enhance as necessary collateral registry regulationsCollateralregistry(CompaniesOfficeofJamaica),MICAS
Theme ProposedAction ImplementingEntitiesPrimaryentities
National Financial Inclusion 5
Adiagrammaticpresentationofthegovernanceframeworkfor implementingtheaction items in theNationalFinancialInclusionStrategyinJamaicaisshownabove.
National Financial Inclusion Council
The Minister of Finance and the Public Service hasestablishedaNationalFinancialInclusionCouncil,towhichthe Financial Inclusion Steering Committee (“FISC”) willreport semi-annually on the implementation of the actionitems in the National Financial Inclusion Strategy. TheMinister will chair this Council, which includes the headsof the ministries, departments and agencies which aremembersoftheFISC.TheFISCischairedbytheGovernorofBankofJamaica.
Stakeholder Advisory Group
Asoutlinedinthechartabove,aStakeholderAdvisoryGroupwillbeformedtofacilitateconsultationwithrepresentativesoftheprivatesectorandcivilsociety.Thisstructurewillensuregreater accountability for the implementation of the actionitems,whilesecuringbroad-basedsupport for thestrategyfrom the non-governmental sector. Selected members oftheStakeholderAdvisoryGroupwillattendthemeetingsoftheCouncilattheinvitationofthechairoftheStakeholderAdvisoryGroup,followingdiscussionswiththeCouncil.
TherewillbeperiodicreportingonthestatusofimplementationoftheactionitemsundertheStrategyandtheachievementoftheintendedgoals.Forfurtherinformation,pleasecontactthe technical secretariat at [email protected], orat932-4145.
Figure 1 - Governance Framework for Financial Inclusion
National Financial Inclusion 6
NATIONALFINANCIAL INCLUSION
S T R A T E G YAccess for ALL