90% deprived of financial services

By GYNNIE KERRO

A “FINANCIAL inclusion day” is planned for later this year, following a 2008 World Bank report which found out that only 8% of the population of PNG has access to financial services while a whopping 90% are “financially excluded”, The National reports.
 The Consultative Implementation and Monitoring Council’s informal economy committee, realising the seriousness of the problem, held a meeting yesterday to start planning for the day.
According to a CIMC concept paper presented at the committee meeting yesterday, PNG ranked at the bottom of the table among Asia-Pacific countries, when it came to “financial inclusion”.
“Some degree of financial exclusion exists in all countries, even wealthy ones, but PNG is at the bottom of the league table among countries in the Asia-Pacific region,” it said.
“Even allowing for the relatively low population densities and rugged topography that make the provision of any services difficult in PNG, the country has performed very poorly in providing access to formal financial services for its people.
“Only about 8% of its population is ‘financially included’, or 92% excluded.
“This compares unfavourably with other Pacific countries, for example, the Solomon Islands (15%), Samoa (19%) and Fiji (39%).
“In Asia, levels of inclusion range from 98% (Singapore) to 1.2% (Pakistan).
“PNG’s level of financial inclusion was actually higher in the 1980s, when there were many more bank branches and agencies than it is today.”
The paper said the National Informal Economy Policy 2011-15 aimed to have the informal economy grow in size and in the diversity and quality of the goods and services it produced.
“The policy nominates two ‘arms’ for action to achieve these goals: the first is ‘financial inclusion’, or giving people access to formal financial services,” it said.
“Only 8% of its people are ‘financially included’ at present, making PNG one of the worst-performing countries in this important indicator of development.
“The policy identifies six ‘roads to financial inclusion’ for PNG.
“Most of these rely on private sector investment in the financial and telecommunications systems.
“This investment will be forthcoming over time if government can provide the enabling policy and regulatory environment for it to occur.”
The paper noted that there had been a big improvement in this area, given the reforms undertaken within the telecommunications industry.
“Competition was introduced in the form of the arrival of Digicel PNG and the rollout of their services of innovative products in partnership with existing service providers such as PNG Power (EasiPay), commercial banks and financial entities (mobile and SMS banking), Eda Ranu (water vending system) and Post PNG (Salim Moni Kwik).
“Nevertheless, the knowledge gap is an ongoing problem that is preventing ordinary Papua New Guineans to have access to these products that are provided.”
“This is an area that service providers and the government will need to work in partnership through providing financial literacy training, introducing financial literacy curriculum into the schools, and through regular awareness.”