The Market Monitor Minding the Nation's Business
By Jerry Maglunog
No less than the queen of one of the world’s earliest monarchies has cited the effective national strategy for financial inclusion of the Philippines.
Queen Maxima of the Netherlands said the country’s drive to make the unbanked sector part of the financial program of the nation- al government is really impressive, because of the untiring efforts of the agency that leads in the drive.
The queen is currently United Nations (UN) Secretary General Ban Ki-moon’s special advocate for inclusive finance for development.
“In my UN role, I have long looked forward to visiting the Philippines. For many years, your country has been a fervent supporter and a model of best practices when it comes to financial inclusion,” Maxima said in her speech delivered at the Bangko Sentral ng Pilipinas’ (BSP) executive lounge on July 1.
The queen thanked other agencies, such as the Department of Finance and the BSP, for understanding early the importance of financial inclusion for the development, prosperity and financial stability of the Philippines.
Maxima defined financial inclusion as a drive that seeks to unlock economic opportunity for all, especially the poor, by expanding access to financial services such as savings accounts, credit, insurance and payment systems.
She said these tools provide a path to empowerment for families and communities through a savings account where families can safely set aside money for tuition or health emergencies; or insurance to protect farmers against drought or floods; also affordable credit to enable small businesses to grow into larger ones; and payment systems that are reliable, convenient and inexpensive, so that people can send or receive money virtually anywhere.
“In the Philippines, this is especially important. Millions of people from the Philippines are earning their livelihoods abroad: in the United States, Saudi Arabia, the United Arab Emirates or other countries.
“They provide a lifeline to their families back home. This country is among the top receivers of remittance flows. They account for 12.5 percent of GDP. But what is more important is that they are helping to make growth and development in the Philippines possible.
In this case, financial inclusion also means maximizing the development impact of these remittances. For households and the nation as a whole,” Maxima said.
The queen said people are seeing around the world access to financial services allows poor households and small entrepreneurs to invest in education, build their businesses, save for retirement and confront unforeseen risks.
This has a positive impact on equitable growth, job creation, and innovation. It helps make communities and nations stronger.
“Despite a supportive regulatory environment here in the Philippines, many citizens still face real challenges in accessing financial services.
“Some live too far away from access points. For others, financial products can be too costly and too complicated. The payments infrastructure is also not suited to the needs of all individual customers and the broader economy.
“As a result of these and other issues, only one-third of Filipinos have an account at a formal financial institution; among the poorest 40 percent of the population that figure drops to one-fifth,” Maxima said.