By Lee C. Chipongian
The Philippines’ financial inclusion program and agenda is considered the third most successful in the world, according to a report of the “Global Microscope on the Enabling Environment for Financial Inclusion.”
The central bank released the report on its website yesterday, announcing that as a global leader in financial inclusion, the country is third in the world as “having a conducive environment for financial inclusion.” The Philippines and India are tied in the third slot while Columbia and Peru leads.
The report, which also provides global trends and recent challenges in financial inclusion, is prepared by The Economist Intelligence Unit. “From 2009 to 2013, it focused on assessing the microfinance business environment of countries. In all these years, the Philippines was consistently ranked as having one of the best regulatory frameworks for microfinance. Starting 2014, the Global Microscope evolved to assess the regulatory environment for financial inclusion across 55 countries,” said the Bangko Sentral ng Pilipinas (BSP).
The Philippines were ranked high because it has consistently performed well across all indicators used in the report such as government support for financial inclusion, regulatory and supervisory capacity, regulations on credit, deposit, microinsurance, and branches and agents. The country also ranked better compared with others in implementing requirements for non-regulated lenders, electronic payments, existence of credit reporting systems, market conduct rules, and dispute resolution mechanisms for financial consumers. Also in terms of regulation of insurance for low income population, digital financial services, and consumer protection.
The BSP noted that the report recognized positive changes in the financial inclusion landscape of the Philippines since 2015. These include the signing into law of Republic Act No. 10693 or the Microfinance NGOs Act which aims to strengthen non-government organizations (NGOs) engaged in microfinance operations for the poor, and Republic Act No. 10846 which amends the Charter of the Philippine Deposit Insurance Corp. to strengthen its institutional and governance framework. They also cited the revised reporting rules for cooperatives issued by the Cooperative Development Authority.
BSP Governor Amando M. Tetangco Jr. said earlier that there is a more focused agenda on all central banks’ financial inclusion programs and an improved way of measuring its impact on regulators.
Tetangco said that while financial inclusion has been studied, reviewed and discussed in many forums, there are more “cutting-edge” issues to tackle.
Financial inclusion has gained prominence as a global policy agenda as it complements other policy initiatives on reducing poverty, addressing inequality, and promoting financial stability and integrity.
The BSP said 36.4 percent of municipalities remain unbanked, and while 43.2 percent of Filipinos are considred savers, majority of them put savings at home or about 68.3 percent of those who saves.
About 47.1 percent Filipinos have loans and BSP said that most of them or 72 percent of those who borrow, sourced it from informal means – these are family, friends and informal lenders.
The same challenge is being faced by small, medium enterprises where only 30.5 percemt of SMEs have a loan or line of credit from a bank, said the BSP.
The BSP as government’s main promoter of financial inclusion has been increasing access as well as the “effective usage of financial products and services ensure that individuals, households and firms can be productive economic agents towards inclusive growth.”