RBM tackles financial inclusion hurdles
Low penetration of cellphones and mobile money agents in rural areas have been cited as some of the challenges hindering the full achievement of financial inclusion, the Reserve Bank of Malawi (RBM) has said.
In its national payments system annual report 2012, the RBM has also mentioned low financial literacy and awareness, lack of interconnectivity or integrated national switch through which mobile network operators can integrate with commercial banks’ payment systems and high relative cost of financial services are some of the challenges.
With the 2008 Finscope Survey showing that a paltry 19 percent of Malawian adult population banked and that 55 percent of Malawians are financially excluded, the challenges are a wake-up call for commercial banks to jack up their penetration levels.
But the RBM, in its pursuit to address the challenges, has started implementing what it calls broader approaches to enhance financial inclusion through the promotion of retail payments services delivery, consumer education and data measurement.
“Most of the approaches are best summarised under the Maya Declaration through which the RBM committed to taking specific actions to enhance financial inclusion in Malawi,” reads the report.
The Maya Declaration is a statement of common principles regarding the development of financial inclusion policy made by a group of developing nation regulatory institutions during the Alliance for Financial Inclusion’s (AFI) 2011 Global Policy Forum held in Mexico.
At the meeting, AFI member institutions declared measurable set of commitments to unlock the economic and social potential of the 2.5 billion poorest people through greater financial inclusion.
Some of the activities being carried out in line with the Maya Declaration, according to the RBM include the collection of financial inclusion data, development of a transparent pricing strategy and national financial literacy and consumer education strategy.
On the collection of financial inclusion data, RBM said in 2012, it finalised the development of a template for collecting basic supply side data on financial inclusion which is based on AFI’s core financial inclusion indicators.
“The template has since been shared with all banks for their comments before the RBM formally starts collecting the supply-side core indicators on financial inclusion from all banks,” said the report.
Regarding the development of a transparent pricing strategy, the RBM has issued a directive on disclosures to all banks requiring them to publish their charges and tariffs on various products and services, for the public to make informed decisions.
The RBM has also embedded provisions for transparency, disclosure and truth-in lending in the directive published in June 2012 for non-deposit taking microfinance institutions.
Meanwhile, the RBM has completed a pilot survey of national financial literacy and consumer education and it is also undertaking a baseline survey and desk review for financial capability.
