Members of AFI’s Pacific Island Regional Initiatives (PIRI) are making significant strides towards digital financial services, buoyed by efforts to promote the world-first regional regulatory sandbox, technical experts said during a webinar on 29 June 2020.

Bank of Papua New Guinea Assistant Governor Ellison Pidik, in opening the PIRI Experts Group of Financial Inclusion Policy (EGFIP) meeting, reiterated how digital platforms had created opportunities to continue vital work in accelerating financial inclusion across the Pacific.

As chair of PIRI EGFIP, Assistant Governor Pidik reiterated “the importance of interacting and maintaining focus while embracing the ‘new normal’ and protocols that have been brought about by COVID-19, in order to stay focused and extend financial inclusion in our various jurisdictions”.

Congratulating the expert group on their “exceptional” work in leading the development of the world’s first regional regulatory sandbox was AFI Deputy Executive Director Norbert Mumba, who described it as a “catalyst to deliver the gains of inclusive financial technology (FinTech) in the region”.

“The global pandemic that we’re facing today has taught us that efforts to establish this regional sandbox were indeed timely and if we leverage it, we’ll be able to develop solutions for our populations, especially for the Pacific, where digital channels are the way forward,” he said.

All eight members of PIRI’s Experts Group of Financial Inclusion Policy (EGFIP) attended the two-day virtual event: Banco Central de Timor-Leste, Bank of Papua New Guinea, Central Bank of Samoa, Central Bank of Seychelles, Central Bank of Solomon Islands, National Reserve Bank of Tonga, Reserve Bank of Fiji and Reserve Bank of Vanuatu. From outside the group, Banque de la République d’Haïti attended as an observer.

Echoing support for sustained financial inclusion efforts was Banco Central de Timor-Leste Deputy Governor Nur-Aini Alkatiri, who shared some of her institution’s recent relevant initiatives. Among them were steps to modernize the national payment system, promote the development of micro, small and medium-sized enterprise (MSME) and implement customer-focused COVID-19 policy responses.

Deputy Governor Alkatiri added that the central bank was driving efforts to promote financial literacy through financial education programs and children’s saving accounts.

“We signed a memorandum of understanding with the Ministry of Education to improve the financial literacy program in elementary schools,” she said, noting that more than 5,000 students had since taken part in the program.

Citing the network’s commitments to halve the financial inclusion gender gap by the end of 2021, Reserve Bank of Fiji Deputy Governor Esala Masitabua told participants that “the implementation of the Denarau Action Plan will have a transformative impact on the lives of the previously financially excluded women, as well as enhance the usage and quality of financial services for those already banked but who still face gender-specific barriers to their delivery”.

Fiji’s central bank is one of three PIRI members that shared plans to update existing national financial inclusion strategies (NFIS) that are due to expire at the end of 2020.

Central Bank of Samoa’s Lanna Lome-Ieremia stated that the central bank had already begun efforts to review its current strategy and was progressing the development of a new NFIS. She added that the improvement of NFIS data continued to be a focal area, especially gender disaggregated data, and that the central bank was working on promoting financial education at primary and secondary school levels.

Similarly, Linda Folia from the Central Bank of Solomon Islands said that a review of the country’s second NFIS was being undertaken to gauge progress and gaps in implementation. Under the new draft, Folia said that the central bank would look to AFI for assistance in developing a roadmap that focuses on gender.

In parallel with the development of its latest NFIS, the government was looking to develop a national digital economy strategy following the recent arrival of an undersea high-speed internet cable that connects the archipelago with Australia and Papua New Guinea.

Bank of Papua New Guinea was also targeting digital innovation following the recent unveiling of a national sandbox, aimed at providing an innovative and safe space for controlled live tests of new financial products and services prior to commercial deployment.

The central bank joined calls from other PIRI members to support the regional regulatory sandbox by posting the guidelines, published in March, onto their institution’s website and through relevant social media channels.

According to Bank of Papua New Guinea’s George Awap, the regulator was also promoting greater financial education with the development of a financial education handbook, as well as looking to conduct a survey that assesses the impact of COVID-19 on small businesses.

Reserve Bank of Vanuatu’s Jossiana Peter highlighted MSMEs, stating that the central bank was undertaking mapping of financial access points and had secured a grant from AFI to develop a business registry and MSME finance framework. Supporting financial literacy, she added that the central bank had conducted a stock take of financial literacy modules to develop of standard guideline for trainers.

Central Bank of Seychelles Liz Julienne brought up her bank’s focus on digital finance with the establishment of an internal working group on innovative digital financial services, in line with its upcoming national FinTech strategy. The central bank, she said, was working on several deliverables in FinTech, payment systems and consumer protection and market conduct, nothing that many were being developed in collaboration with AFI.

She explained that the central bank was pushing for “having inclusive green financing in line with environmental changes,” before adding that the arrival of COVID-19 offered a pressing reminder of the need to be prepared for future crises.

Underscoring challenges amid the ongoing pandemic, National Reserve Bank of Tonga’s Tevita Vahai noted that while restrictions were impeding broader financial inclusion progress, the central bank was continuing to develop its NFIS. He added that measures had been put in place ahead of the pandemic that were ensuring significant amounts of data continued to be collected, including on gender and the location of users.

Vahai said that the central bank had recently signed a grant agreement with AFI on the implementation of the regional sandbox.

Visa leads training on digital technologies

Day two saw global payment solutions firm Visa, a strategic partner in AFI’s Public Private Dialogue (PPD) platform, lead training on the use of digital technologies to support economic recovery in the Pacific Islands. Sessions covered topics such as the impact of COVID-19 on consumer behaviour and payment ecosystem development in the Pacific Island, as well as practical next steps particularly those that support recovery among vulnerable populations, including women, youths, small businesses, tourism and other key sectors.

“COVID has made it clear to everyone that digital is the new rule,” Visa’s Amina Tirana said as she opened the day’s sessions, encouraging participants to consider just how far digital services have progressed in areas such as “access to opportunities, commerce, family, jobs, business continuity for governments”.

In doing so, she urged PIRI members to keep in mind how technological innovations can be harnessed to build resilience among MSMEs, help governments and companies grow, ensure equitable progress in business and communities, benefit both women and men and not leave vulnerable groups behind.

Visa’s continued engagement with PIRI members began at the 2016 AFI Global Policy Forum in Fiji, with training for the regional members kicking off two years later.

The PIRI initiative is partially funded by UK aid from the UK government.