The transformation of AFI’s Pacific Islands Working Group (PIWG) into the Pacific Islands Regional Initiative (PIRI) is now complete.

AFI officially launched its newest regional initiative 6-8 May 2015 in Dili at an event co-hosted by Banco Central de Timor-Leste (BCTL) and supported by the Pacific Financial Inclusion Programme (PFIP). PIRI members recognized that continuity was required to better address the unique constraints to increasing financial inclusion in the Pacific. Establishing this regional initiative now provides a long-term opportunity for member institutions to share a common vision, while working toward ensuring financial services are widely accessed throughout the region.

In a demonstration of the political commitment for the agenda of PIRI, Prime Minister of Timor-Leste, His Excellency Rui Maria de Araújo, delivered the meeting’s keynote address. Also in attendance were: Governor of BCTL Abraão de Vasconcelos, Governor at the Central Bank of Solomon Islands (CBSI) Denton Rarawa, Governor at the Central Bank of Samoa (CBS) Atalina Ainuu-Enari, Governor at the National Reserve Bank of Tonga (NRBT) Sione Kioa, Deputy Governor at the Reserve Bank of Vanuatu (RBV) Peter Tari, Assistant Governor at Bank of Papua New Guinea Ellison Pidik, Chief Manager at the Reserve Bank of Fiji (RBF) Vereimi Levula, and AFI Deputy Executive Director Norbert Mumba.

“Timor-Leste is honored to hold the first meeting of this important initiative and to host so many senior central bankers from throughout the Pacific … I look forward to the outcomes of this meeting and I urge you to work together towards a joint vision to make financial inclusion a reality,” said Prime Minister Araújo. “I urge you all to reach agreement on concrete steps towards financial inclusion outcomes that provide for cost effective services to the people of our region.”

Members of PIRI include BCTL, CBSI, CBS, RBF, RBV, NRBT, and BPNG. The governors from each of these institutions importantly endorsed and agreed on the broad vision, mission, objectives and financial inclusion policy areas for the initiative outlined in the Dili Consensus.

Despite the remarkable contributions to financial inclusion made by the Pacific Islands Working Group, the region continues to have one of the highest rates of financial exclusion worldwide, and a sustained commitment is required to address this challenge. This conclusion led to the decision at the 2014 Global Policy Forum (GPF) in Trinidad and Tobago that PIWG would be converted into a long-term regional initiative in order to build capacity and identify activities the group could accomplish together to advance evidence-based financial inclusion policies in the region.

The initiative also recognizes the high level of active participation from the governors of the group’s seven member institutions, and provides a platform where the regions leaders can convene to discuss global financial inclusion innovations and strategies, creating tools that can be tailored to other island nations.

“The establishment of this regional initiative is an ambitious and progressive effort undertaken within the AFI Network to enhance conditions that will lead to the financial empowerment of all Pacific Islanders,” stated Governor Abraão.

To create the conditions necessary to achieve financial empowerment in the short and medium term unbanked citizens in the Pacific Islands, PIRI will focus on the following objectives:

• Remove policy barriers to improve access;
• Utilize technology for financial service provision and access;
• Empower and protect through financial literacy and education;
• Collaborate with stakeholders to advance financial inclusion in the region, and;
• Utilize data for smart policymaking and monitoring.

Evidence-based policies will be at the heart of PIRI’s efforts to address problems of financial exclusion. Members are continuing to build a comprehensive database on financial inclusion in their nations, and will heed particular attention to gathering the demand-side data needed supplement supply-side data being collected and analyzed by the central banks.

PIRI recognizes that digital financial services and innovations are especially critical, and focused on the importance of innovative new technology-based agent banking for the region in particular to expand financial services to remote islands and populations. Members highlighted numerous issues in agent banking that need resolution, and highlighted agent locations, type of services, and the issue of inactive agents as high priority issues.

The meeting’s participants acknowledged the significance of unlocking the growth potential of small and medium-sized enterprises (SMEs) not only for employment generation but also for advancing financial inclusion in the Pacific. The central banks will aim to continue the implementation of policies that remove hurdles SMEs face in using formal financial services at reasonable costs. As a result of the less-developed nature of financial infrastructure across the region, there is a need to develop it as early as possible to address the twin problems of risks and transaction costs that lending institutions continue to face. Therefore, policymakers in PIRI will work to strengthen on-going efforts in building robust credit information systems, effective collateral regimes and secured transactions systems. The efforts will also include initiatives to develop a credible database on SMEs in the Pacific Islands, as well as a reexamination of prudential regulations with a view toward minimizing or eliminating any biases against SMEs.

PIRI emphasized the vital role the private sector has in the advancement of financial inclusion overall, and particularly in the Pacific Islands. In this context members announced they would strengthen efforts to engage with the private sector at a regional level by leveraging, among other things, AFI’s Public-Private Dialogue (PPD) Platform to have focused conversations, share technical expertise on key financial inclusion issues, develop more informed policy, and encourage innovation and investment.

“PIRI members have taken their first, formal steps together as an official regional initiative to work on how to best integrate supportive financial inclusion policies that allow for a larger and more enabling framework of regulations,” said Mr. Mumba. “These are important initial steps that possess the potential to benefit all members across the broader AFI Network.”

PIRI members intend to formally convene at least twice annually, and will next meet 1-4 September at the 2015 GPF in Maputo, Mozambique.