Thursday, March 30, 2023

Standard Chartered Bank reports Financial Inclusion: Reaching the unbanked

Standard Chartered bank says despite the existence of many financial institutions, Botswana is no different to many emerging economies that battle with financial inclusion.

The bank Chief Executive Officer Moatlhodi Lekaukau recently said that the 2009 Finscope report indicates that 48 percent of Batswana have never had a bank account, with the various interventions the figure is coming down but still remains high and above 30 percent.

He said that some institutions have provided channel to contribute positively towards the financial inclusion agenda in Botswana. Lekaukau said that financial inclusion is a key challenge that must be addressed by all.

He stated that Standard Chartered recently released a special report which seeks to carefully look into this subject matter which is titled ‘Financial Inclusion: Reaching the unbanked states that financial inclusion is important.

“It can help individuals cope better with poverty, especially the challenges of irregular income and occasional large bills. It can also pull them out of poverty through improved education and health care,” said Lekaukau.

He added that the report is also important for micro-enterprises; financial inclusion can provide funds for setting up and expanding and for improving risk-management. According to Lekaukau, the report on a macro scale, it can boost economic growth by mobilising savings.

“It can also draw more firms into the formal sector, raising tax revenues and making workers eligible for better protection and benefits,” he said.

Contained in the report is that in most emerging markets access to and use of financial services still lags behind the developed world. The report added that the gains from increasing financial inclusion can be substantial and governments and many financial institutions and others are actively seeking ways to reduce the burden of regulation and overcome challenges of weak governance.

“Progress has been made in some developing countries in addressing some of the key barriers, particularly in SSA, Indonesia and Bangladesh; but more needs to be done. Growth in many emerging markets should help accelerate the uptake of technology which could reduce the cost of transactions,” reads the report.

Information in the report is that banks are constantly looking at new ways to innovate and are keen to participate. It added that new institutional approaches are also being explored and tested, with many countries including Kenya, Brazil and the Philippines pioneering policy and regulatory responses to market innovations that facilitate the delivery of financial services. According to the report new products, such as mobile wallets, pre-paid cards, biometric ATMs and kiosks which enable lower-cost access for rural communities are reaching more users worldwide.

It noted that reforms to improve the legal and regulatory environment, governance and institutional infrastructure, such as coverage of credit bureaus, payment systems have moved to the top of many developing countries’ agendas. The report indicated that this will likely speed up the adoption of new and more attractive financial products and technology, which should help reduce transaction costs and other barriers to financial inclusion.

“Measures to improve financial inclusion are ongoing. There is still much to do, but it is promising that emerging country reforms are starting to bear fruit and should enable them to move many steps closer to greater financial inclusion,” reads the report.


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