Bank of Zambia (BoZ) Governor Dr. Denny Kalyalya emphasised the importance of financial inclusion in tackling poverty at the start of the 14th Financial Inclusion Strategy Peer Learning Group (FISPLG) and 12th SME Finance Working Group (SMEFWG) Meetings in Livingstone.

In his opening remarks, Dr. Kalyalya warned that without appropriate policy interventions that boost access to financial services, vulnerable segments of society will remain trapped in a “vicious cycle of poverty”.

“Without access to financial services, it is difficult for people to meet their basic social and economic needs,” he said. “Access to financial services is an enabler for achieving the goal of inclusive societies where citizens partake in the socio-economic development of their countries”.

More than 100 representatives from member institutions are taking part in the event, which is co-hosted by BoZ and the Alliance for Financial Inclusion (AFI). It will run from 1-4 April.

Governor Kalyalya also highlighted the importance of SMEs, explaining that they are disproportionately affected by market and policy failures. For host nation Zambia, this holds particular significance with estimates that SMEs make up more than 80 percent of the economy.

“Financial inclusion strategy that does not give adequate attention to the SME sector is unlikely to succeed,” he stressed. “An effective SME strategy should result in the formulation of policies that take into account the challenges of the SMEs from both the demand and supply sides, changes in regulations, markets and technologies that occur within and across borders.”

AFI’s Deputy Executive Director Norbert Mumba supported the governor’s words, saying that SMEs had “become one of the pillars for a holistic inclusion”.

“As we develop the MSMEs [micro, small and medium enterprises], the spillover goes beyond enterprises, to include employment, export and overall economic trajectory.”

Later in the day, members took part in convergence sessions, during which they explored the challenges posed by advancing financial inclusion in rural areas and the informal economy. According to the International Labour Organization (ILO), 93 percent of the world’s informal employment is in emerging and developing countries.

“Both [rural finance and the informal economy] cater to the need of good policy reforms driven by overarching national financial inclusion strategies (NFIS) that by design, address challenges for entrepreneurs to register their businesses and ensure effective financial service outreach in the rural areas of our jurisdictions,” AFI’s Mumba said.

In the coming days, the working groups will focus on their individual thematic topics and cross-cutting topics, such as financial inclusion for youth and green technology. There will also be presentations of guideline notes on facilitating a smart policy framework for MSME access to financing and subgroup deliverables. The BoZ will also hold a session – along with the Central Bank of Egypt – detailing efforts made to enhance women’s financial inclusion nationwide.

Since joining the network in 2010, BoZ has been active in developing evidence-based gender initiatives, including analysis of the barriers faced by female smallholder farmers in accessing financial services. Most recently, AFI has assisted BoZ in creating a comprehensive national sex-disaggregated data framework to better understand women’s access to and usage of financial services. Some 40.3 percent of women in Zambia had access to bank accounts in 2017, compared with 51.7 percent of men, the World Bank said. Both figures are above the 36.9 percent and 48.4 percent respective averages for Sub-Saharan Africa. BoZ Deputy Governor Dr. Tukiya Kankasa Mabula serves as Chair of AFI Committee for Gender and Women’s Financial Inclusion.

Governor Kalyalya ended his speech by expressing his hopes for the working groups.

“While the two working groups have made significant strides in addressing matters within their respective thematic areas, there is much more to be done to make the lives of people in our societies better,” he said.

‘We expect the outcomes of these meetings to bring us closer to the attainment of the mandates of the working groups and our financial inclusion goals.”

Working groups are key to developing knowledge that can be turned into guidelines or knowledge products to help members in the implementation and development of policy regulations for financial inclusion. AFI has six working groups: FIS, SMEF, Consumer Empowerment and Market Conduct (CEMC), Digital Financial Services (DFS), Financial Inclusion Data (FID) and Global Standards Proportionality (GPS) working group. Each meets officially twice a year – at a standalone event and then ahead of the AFI Global Policy Forum (GPF) – but continue to develop outputs throughout the year.

About Bank of Zambia (BoZ)

Since joining the network in 2010, the BoZ has been an active member of the AFI network. Based in the country’s capital of Lusaka, the central bank’s NFIS commits the institution to nearly doubling the rate of formal financial inclusion to 70 percent by 2022 from 38 percent in 2017.

About Financial Inclusion Strategy Peer Learning Group (FISPLG)

FISPLG is a peer learning group that supports countries in developing and implementing financial inclusion strategies. It guides members by promoting a unified vision and shared goals among public and private stakeholders. It facilitates peer reviews of draft strategies and action plans, develops joint guidance on national strategies and supports the capacity of members to develop and implement financial inclusion strategies, including by connecting them with expert stakeholders.

About SME Finance (SMEF) Working Group

The working group provides a unique forum for policymakers to discuss, innovate and create smart policies that help SMEs access finance and formal financial services. Created in 2013, SMEF focuses on conducting internal surveys and developing knowledge products that measure SME access to finance. Its outcomes shed light on different policies solutions and lessons learned from the national implementation of direct interventions and programs. As such, the SMEF Working Group provides a platform to discuss the challenges and opportunities in this niche field.

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