NFIS II’s four strategic priorities unpacked
MBABANE – To ensure a cohesive approach towards the national financial inclusion vision, four strategic priorities are proposed under the National Financial Inclusion Strategy (NFIS) II.
This new strategy was launched on Thursday night by the Minister of Finance, Neal Rijkenberg, at the Happy Valley Hotel and Casino.
These strategic priorities have been developed with a view of creating a vibrant financial ecosystem that can result in the achievement of the vision, enabling everyone to contribute positively to the country’s economic growth and fair distribution of wealth, in line with the country’s aspirations outlined in Eswatini’s National Development Plan (NDP).
The Eswatini NDP 2023/2024 – 2027/28 outlines the country’s desire to be among the ‘top 10 per cent of the medium human development group of countries founded on sustainable economic development, social justice and political stability’. The goal of the NDP is to attain transformation of the economy and people’s lives in Eswatini.
The first priority of the NFIS II is on the productivity and resilience in the agriculture and micro, small and medium enterprises (MSMEs) sectors. This priority area entails helping the country’s farmers and entrepreneurs to be more productive, growth-oriented and resilient in the face of various shocks that may arise.
OPTIONS
Specifically, there is a need to widen options for MSMEs and farmers to access finance and other financial services that support productivity and resilience, and to address issues of risk, given that MSMEs are generally considered risky borrowers by lending institutions.
The financial sector will also need to work with other stakeholders such as responsible line ministries, to address attitudes and entrenched practices that hold the sector back.
Critical issues include the lack of entrepreneurial culture, fear of formalisation, lack of awareness and linkages to markets, and limited skills of MSMEs and farmers.
The second strategic priority is on inclusive and innovative financial products
and services for all. The financial sector reach has grown over the years, and access to financial services now stands at 87 per cent, with significant usage of various products such as bank accounts and mobile money services.
The focus of this pillar is to strengthen
the financial sector to a level where it effectively responds to the developmental needs of the nation. This can be achieved by strengthening the country’s digital financial ecosystem, to enhance the effectiveness and efficiencies in financial institutions.
Such improvements enable these institutions to expand their reach and to cost-effectively over new types of products and services that serve the needs of customers, including access to basic service.
Such diversification may also result in increased use of mobile money as a savings instrument, productive credit, formal savings for emergency use (including medical), medical insurance, credit for cleaner energy solutions, and insurance products that protect households against shocks.
The third strategic priority is on financial capability and protection of consumers and MSMEs.
LITERACY
It was noted earlier that financial literacy and consumer protection support increased and sustained access and usage of financial services and products. By ensuring customers have the knowledge, understanding, skills and confidence to make financial decisions and take actions that are appropriate to their circumstances, financial literacy contributes to increased personal and household savings and investments, responsible borrowing and enhanced access and usage of credit. As such, financial literacy is vital to the achievement of the objectives in this strategy.
The last fourth strategic priority is for an enabling environment for implementing financial inclusion interventions. The effective implementation of the NFIS II requires improvements to the coordination structures.
A significant challenge experienced during the implementation of NFIS I was the inadequate coordination among stakeholders, resulting in much of the work being centred in the Centre for Finacial Inclusion (CFI), despite the action plan stipulating responsibilities for specific stakeholders.
It is, therefore, necessary for the Financial Inclusion Technical Working Group to assume the role of coordinating and following up on implementation activities, with support from the CFI, which serves as its Secretariat.