Dutch queen backs PH inclusive finance efforts
13 agencies ink financial inclusion strategy agreement
THE PHILIPPINES has found an unlikely champion for efforts to get more of the population into the formal economy. She is an Argentina-born former economist and banker, working in several major cities such as New York and Brussels. She traces her roots to Portuguese nobility. And in 2013, she was crowned Queen Maxima of the Netherlands.
Visiting the Philippines this week, Queen Maxima lent her support for the Philippine government’s National Strategy for Financial Inclusion (NSFI)—a partnership of 13 state agencies—which was launched yesterday.
Queen Maxima, the United Nations’ chief advocate for financial inclusion and development, stressed the need for emerging countries like the Philippines to expand the reach of banks to a wider base.
“It’s a means to an end… We have evidence that says financial inclusion is not only pro-growth but also pro-poor,” she said in a speech in Manila. “It reduces the gap between the rich and the poor,” she added.
On Wednesday, 13 government agencies, led by the Bangko Sentral ng Pilipinas, signed a memorandum of understanding (MOU) that formalized the creation of NSFI, the roadmap toward a financial industry that reaches more people.
Despite receiving global acclaim for regulatory innovations that aim to advance the cause of financial inclusion, the Philippines still lags behind most of its neighbors. Amajority of Filipinos still lack bank accounts—the most formal type of financial service.
BSP Governor Amando M. Tetangco Jr. said a recent survey showed most Filipinos simply did not have the money to spare for saving. “(About) 65 percent of unbanked adults cited lack of money as the main reason for not having a bank account,” Tetangco said.
The cliché of people hiding cash under their beds still rings true in the Philippines, Tetangco said. Of those who save money, seven in 10 keep their cash at home.
Lending behavior showed a similar trend of preference for informal institutions and mistrust for formal channels. Results of the BSP’s National Baseline Survey on Financial Inclusion (also published on Wednesday) showed that about half of adult Filipinos borrow money on a regular basis.
For those who borrow, the main sources of financing were informal lenders—such as family, relatives and friends. About 62 percent of loans came from these sources, while 10 percent came from other informal lenders such as pawnshops or loan sharks.
Banks as source of borrowing stood at 4.4 percent, lower than the percentage of adults who borrow from loosely-regulated lending and financing companies (12 percent) and cooperatives (10.5 percent).
The survey also showed—literally—the lengths most Filipinos go through to get to banks and other financial institutions. The most typical means of reaching an access point is through public transportation, either via three-wheeled or four-wheeled vehicles.
Some access points such as cooperatives and e-money agents are most commonly reached by walking only. On the average, it takes 21 minutes to go to the nearest access point. In terms of cost, the average roundtrip fare to reach an access point is P43.