1 CONTRIBUTION OF THE AFRICAN POSTS TO THE DEVELOPMENT OF FINANCIAL INCLUSION A presentation by Mr. Younouss Djibrine, Secretary General PAN AFRICAN POSTAL UNION
OUTLINE 2 ¨ Introduction ¨ Current situation ¨ Benefits of Financial Inclusion ¨ Contribution of the Post to the development of Financial inclusion ¨ Business models ¨ Initiatives to increase Financial Inclusion ¨ Objectives of the initiatives ¨ Challenges ¨ Key success factors ¨ Way forward ¨ Conclusion
INTRODUCTION 3 ¨ Financial inclusion is the provision of basic financial services to people without access to them in the form of: ¤ Savings; ¤ Payments; ¤ Money transfers; ¤ Insurance; ¤ Credit etc. ¨ About1.5 billion people worldwide are already using financial services provided by Posts. ¨ The postal sector is the second largest contributor to financial inclusion worldwide
CURRENT SITUATION ¨ 80% of the African adult population is un(der)banked; ¨ More than 97% of children have no access to financial services; ¨ More than 60% of the African Governments and/or African financial sector regulators have already shown their commitment to improving financial inclusion; ¨ They are also improving financial inclusion, including financial literacy etc. q There is insufficient infrastructure for access to financial services and financial literacy; q More than 10% of Africa’s adult population uses post offices for payments, savings or other financial services.
CURRENT SITUATION (Cont’d) ¨ INTERNAL( within the post): ü Delayed or low level of modernization & business transformation; ü Continued decline in the demand for conventional postal mail services ; ü Information on the role of postal networks is in most cases not available or partially included in standard reports; ü Furthermore, the quality of data is often poor.
CURRENT SITUATION (Cont’d) ¨ EXTERNAL : ü Lack of/or inadequate policies or regulations; ü Post offices suffer from competition by banks, telecommunications companies ( including mobile) and private operators; ü Access to internet is increasing; ü Migrant remittances flows to Africa amount to more than an estimated USD60 billion/year; ü The post currently accounts for about 3% of migrant remittances.
BENEFITS OF FINANCIAL INCLUSION ¨ Reduction in income inequalities and increases in earning opportunities; ¨ Extends credit facilities to those who do not have adequate finance but have business ideas and zeal to carry entrepreneurial activities resulting in acceleration of growth; ¨ Results in borrowing at low rates of interest; ¨ Reduction in poverty ; ¨ Likely to increase national income ; ¨ Increase in employment and income opportunities ; ¨ Helps in more effective distribution of income ; ¨ Assists in implementation of social security schemes, such as old age pensions, window pensions etc;
CONTRIBUTION OF AFRICAN POSTS TO THE DEVELOPMENT OF FINANCIAL INCLUSION ¨ More than 30,000 postal outlets in Africa which could be used for savings and deposit accounts; ¨ With widespread presence in rural areas, post offices compliment access to infrastructure in semi- urban and rural areas; ¨ Post offices can fill in gaps in the landscape in between banks and microfinance institutions; ¨ Where microfinance services exist in post offices they assist MSMEs with products/services such as credit facilities, savings etc; ¨ Post offices can enhance banking services via different models outlined in the next slide; ¨ Insurance services can also be offered in post offices; ¨ Different forms of money transfers can be offered in post offices; ¨ Cross-border trade can be facilitated via the post.
BUSINNESS MODELS Licensed bank as subsidiary of the post e.g. Algeria, Gabon and South q Africa; A postal financial services division as part of the postal operator e.g. q Comoros & Republic of Congo; An ICT based consumer service network providing agency services q for multiple purposes , including public internet, mail, hybrid mail, bill payment, savings, financial services for many banks, microfinance services and money transfers, e-learning for financial literacy e.g. Huduma Centers in Kenya, Botswana, Uganda and Zambia; Rental or lease of un(der) utilized space to banks and microfinance q institutions e.g. Ghana, Uganda, Zambia and Zimbabwe; African post can partner with other organizations such as Western Union, q money gram, Cash for Africa, Reason Solution, among others. NB: Many variations and mixtures exist on the above models
INITIATIVES TO INCREASE FINANCIAL INCLUSION ¨ The African Postal Financial Services Initiative-A joint initiative launched by; q International Fund for Agricultural Development (IFAD); q European Commission; q World Bank; q The Universal Postal Union (UPU) ¨ Adoption of Resolution L 12 by AU Ministers of Finance on Postal Financial Services in 2014, in Abuja, Nigeria; ¨ PAPU in collaboration with La Poste France implemented a project on international express money order for French speaking countries and Indian Ocean Islands in the 2009-2012 cycle; ¨ An agreement was made in 2014 between Emirates Post and PAPU to facilitate electronic money transfers between member states and Messrs Instant Cash using IFS platform; ¨ Relevant PAPU Administrative Council Resolutions were adopted in Malawi and Sudan in 2014 and 2015, respectively; ¨ Development of IFS by the Postal Technology Centre of the UPU.
OBJECTIVES OF THE INITIATIVES ¨ Reduce the cost of remittances to and within the African continent; ¨ Reduce transaction times of remittances to and within Africa; ¨ Broaden the network of rural locations through which remittances can be picked up; ¨ Deepen the range of financial services provided in rural areas
CHALLENGES ¨ The following challenges, among others, hinder or slow down financial inclusion endeavours: ü Regulatory (inadequate, weak, non-existent, etc.); ü In-availability or unreliable power supply; ü Low levels of connectivity; ü Financial illiteracy; ü High costs/high investments; ü Government intervention in postal USO, including regulated tariffs below cost of service; ü Entry into bilateral agreements.
KEY SUCCESS FACTORS ¨ Institutional Reform ¤ Governments should develop policies which will encourage postal financial services; ¤ Streamline regulatory functions on financial services by setting clear boundaries between Central Banks and Communications regulatory Authorities ¤ Develop corporate structures for the DPO to be able to grow competitive business with good corporate governance, SBUs, improved financial management etc. ¨ Stable energy Sources ¤ Connected to national grid; ¤ Renewable sources of energy such as solar, etc; ¨ Human Resources Issues ¤ Good recruitment policies ¤ Continuous training of staff ¤ Encourage staff development
KEY SUCCESS FACTORS(Cont’d) ¨ Technology ¤ Implementation of advanced technology ( hardware and software) in post offices; ¤ Ensure connectivity via Broadband, Vsat, optic fibre ¨ Marketing ¤ Develop strategies based on business concepts to deliver demand-driven services ¤ Offer a mix of products/ services ¤ Implement financial literacy programmes etc.
WAY FORWARD ¨ Adoption of the use of IFS; ¨ Postal Administrations need to be committed to the cause of Financial Inclusion; ¨ The role of both financial & communications regulators must be clearly defined to avoid conflicting oversight, among others; ¨ Implementation of Resolution L12 On Postal Financial Services- incorporate the resolution in national development plans.
CONCLUSION ¨ The potential of the existing post offices in Africa is being rediscovered with a view to increasing financial inclusion; ¨ Post offices play a diverse and relevant role in promoting financial inclusion but most often they are underestimated; ¨ The position of postal networks and their potential widely differs ¨ Therefore, improvements are needed in: ¤ Institutional settings; ¤ Product portfolio; ¤ Marketing; ¤ Strategic alliances & partnerships: ¤ Interoperable ICT; ¤ Financial Management etc;
THANK YOU FOR YOUR ATTENTION www.upap-papu.org sc@papu.co.tz
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