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Pacific Financial Inclusion Programme Final Evaluation
Commissioning Unit: Fiji
Evaluation Plan: 2018-2022
Evaluation Type: Project
Completion Date: 03/2020
Unit Responsible for providing Management Response: Fiji
Documents Related to overall Management Response:
 
1. Recommendation:

Evaluation Recommendation or Issue 1:

PFIP Phase II has clearly registered success through the support offered to central banks and national governments in establishing the NFIS and the relevant architecture for steering the policy discourse, including working groups to bring together various strands under financial inclusion.

  1. Data management to guide strategic decisions: KIIs with central bank showed that central banks look to PFIP and its team for technical and management guidance. While multi-stakeholder working groups and their coordination may not be entirely under PFIP’s purview, specific guidance around data management that can help guide discussions more proactively within these groups should definitely be considered as part of the next phase of programme design.
  2. Global technical expertise: The evaluators did not come across very strong evidence in the form of regular, nuanced and credible data that is being reported by central banks on a periodic basis for a standardized list of output, outcomes and impact metrics. PFIP can play a critical role in bringing together global best practices, technical advisory and management experience to ensure that the implementation of NFIS is more nimble and data driven.

Continue to support knowledge products like the Demand Side Surveys that have been singularly responsible for establishing credible baselines for countries where PFIP is operational and for offering valuable insights into the informal sector that still remains a grey area for many FSPs and other stakeholders. The next phase should continue to build this database to drive decision making and relevant intervention design for low income segments, particularly in rural areas and especially for women.

Management Response: [Added: 2020/04/08]

Financial Inclusion data collection and reporting has been a challenge faced by all regional Central Banks. PFIP II started addressing this challenge with technical assistance to Central Bank of Solomon Islands, Central Bank of Samoa and Reserve bank of Vanuatu by developing a common generic reporting template to track key indicators aligned to their National Financial Inclusion Strategies, and it assisted the Central Banks in conducting workshops with reporting FSPs. More recently Reserve Bank of Fiji has requested support from PFIP and AFI for another DSS, which is foreseen to take place in 2020. Despite these various types of support from PFIP and other development partners standardization of output, outcomes and impact metrics remains a challenge in the region.

 

Going forward, under the Pacific Digital Economy Programme (PDEP), one of PFIP’s successor programmes, which will focus on the Pacific digital economy, the management aims to put extra focus on supporting the statistics bureaus and central banks in the region to strengthen the capacity of national statistical systems to produce better, more reliable statistics that are internationally comparable. To this extend it seeks to partner with UNCTAD, which is leading the global efforts standardize measuring and data collection for the digital economy.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
1.1. Organize second Demand Side Survey in Fiji by Reserve Bank of Fiji and Fiji Bureau of Statistics with TA support from PFIP
[Added: 2020/04/08] [Last Updated: 2021/01/05]
PFIP 2020/12 Completed Completed History
1.2 Partnership agreement signed between UNCDF and UNCTAD, which covers support to statistics bureaus and central banks as part of PFIP’s successor programme focusing on Pacific digital economy
[Added: 2020/04/08] [Last Updated: 2021/01/05]
PFIP 2020/12 Completed completed History
2. Recommendation:

Bringing payments system to the centre stage: Digital payments and building the ecosystem to support it was one of the key areas of intervention for PFIP- II but not many initiatives have been taken up in this space. It is an important use case in the PICs where technology driven platforms to facilitate transactions can potentially address challenges around geographical dispersion, high operational costs and low quality of infrastructure, among others. Global examples from countries like India have shown that driving the payments ecosystem creates immediate use case and helps onboard consumers to use digital financial services.[1] Developing the payments ecosystem in a context like the Pacific region could be a significant nudge in the direction of creating use cases that will drive access to adoption. The next phase of PFIP should bring the payments ecosystem to the centre stage of its work as one of its key domain areas.

 


[1] https://assets.kpmg/content/dam/kpmg/in/pdf/2019/08/Fintech-in-India%E2%80%93Powering-mobile-payments.pdf

Management Response: [Added: 2020/04/08]

The payment ecosystem in the Pacific remains under-developed as compared to other regions in the world and except for PNG, which has only recently launched their REPS payments system, no country in the Pacific has yet deployed fully interoperable payment systems. The World Bank group, in partnership with the Central Banks in the region, has been leading the work in establishing inter-operability and national payment switches. This is still work in progress and present timelines indicate at least 2 to 3 more years for this to be fully completed across the bigger countries in the region. Given that the World Bank group is leading this area of work, PFIP management has been of the opinion that its role should be restricted to advocacy, facilitating partnerships and providing direct support to private sector Financial Service Providers, such as MNOs and banks to develop and launch their own payment services and where possible support interoperability between FSP’s, or use alternative digital platforms to facilitate low value retail payments, such as the use of mobile airtime credits in Solomon Islands. Where possible support could be provided to those partner FSP’s to connect to payments systems as established by the World Bank Group and the central banks across the region. However, this is still not feasible as these have not been commissioned yet, or as in the case of PNG, are in very early stage.

The management acknowledges the need for more emphasis in this area and to that extend this topic will receive specific attention through a dedicated workstream (Open Digital Payment Ecosystem) under the Pacific Digital Economy Programme, one of PFIP’s successor programmes. Activities proposed under this workstream will seek to complement the work of other development partners, such as the World Bank group and will specifically focus on interventions in digital payments that can unlock the Pacific digital economy, such as ‘open banking’ platforms and e-commerce payments aggregation.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
2.1. Market assessment study for regional payments aggregation and Open Banking to support a digital economy in the Pacific
[Added: 2020/04/08] [Last Updated: 2021/01/05]
PFIP 2020/12 Completed completed History
3. Recommendation:

Contextualise agency banking for PICs: Regulations allowing banks and nonbank e-money issuers to appoint agents have been in place for a decade in quite a few countries. These regulations were often inspired by Brazil’s experience dating back as far as the 1970s. In 2006, for example, India first adopted its “business correspondent” (agent) regulations.[1] However, in the PICs, there is still a lot of uncertainty around the selection of agents, criteria thereof, the infrastructure pre-requisites, accountability matrix to consumers, de-risking cash management, especially in countries like PNG where security is an issue. Among the PICs, Fiji has an Agent Banking Guideline that it introduced in 2013, but it has not been updated since and provides very generic guidelines around agent selection and transactions allowed through branchless banking. PFIP’s next phase could focus on studying lessons from some of these global practices around agency banking regulations and help central banks contextualize it for the PICs.

 


[1] https://www.cgap.org/blog/its-time-deregulate-agent-cash-incash-out

Management Response: [Added: 2020/04/08]

Agree with the recommendation.

 

The management acknowledges the need for more support to central banks in this area and to that extend in 2019 it has at the request of the Central Bank of Solomon Islands (CBSI), already done an assessment on the feasibility for an interoperable shared agency network platform (One liquidity, one agent interface), to be utilized by traditional and non-traditional financial service provider. In 2020 this will be followed with additional TA for CBSI to conduct a technology assessments/system audits and prepare technical design elements of the shared agency banking service in Solomon Islands.

 

Additionally, it will develop a KM product to document lessons learned from PFIP’s existing initiatives, looking at the market constraints of PIC versus global best practices around agency banking.

 

Furthermore, this topic will receive specific attention through activities in a dedicated workstream (Enabling Policy and Regulatory Environment) under the Pacific Digital Economy Programme, one of PFIP’s successor programmes. These activities proposed under this workstream will seek to “support capacity building of policy makers and regulators and assist in review and amendments of policies and regulations affecting the Digital Economy”.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
3.1 Conduct a technology assessment/system audit and prepare technical design of shared agency banking network for CBSI in Solomon Islands. 3.2 Develop a KM product with lessons learned from PFIP’s existing initiatives on agency banking, looking at the market constraints of PIC versus global best practices around agency banking.
[Added: 2020/04/08] [Last Updated: 2021/01/05]
PFIP 2020/12 Completed completed History
3.2 Develop a KM product with lessons learned from PFIP’s existing initiatives on agency banking, looking at the market constraints of PIC versus global best practices around agency banking.
[Added: 2020/04/08] [Last Updated: 2021/01/05]
PFIP 2020/12 Completed completed History
3.3 Partnership agreement signed between UNCDF and UNCTAD, which covers capacity building of policy makers and regulators and assist in review and amendments of policies and regulations affecting the Digital Economy.
[Added: 2020/04/08] [Last Updated: 2021/01/05]
PFIP 2020/12 Completed completed History

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