Financial inclusion strategy peer learning: Proceeding with caution


Participants speak at a meeting in Bangkok.

Participants speak at an AFI FISPLG meeting in Bangkok.


The Alliance for Financial Inclusion’s (AFI) Financial Inclusion Strategy Peer Learning Group (FISPLG) held its second meeting in Bangkok on 6-7 March 2013. There were 106 participants in attendance, including members of the FISPLG and invited guests. Among the participants were 74 policymakers representing 44 institutions from 35 developing and emerging countries. The meeting was a continuation of the conversation FISPLG initiated at its inaugural gathering in Abuja, Nigeria, in October 2012.

Participants demonstrated a keen and serious interest in many of the financial inclusion issues raised at the meeting and the discussions revealed an obvious thirst for peer learning about the financial inclusion strategy process. The issues that attracted attention were as diverse as the institutions represented, but a common thread was the recognition that financial inclusion strategies must be formulated in a systematic, not ad hoc, manner and that financial inclusion deserves a central place on the development policy agenda.

It was refreshing that the participants recognized the vital importance of private sector engagement for implementing successful financial inclusion strategies, and that this view was shared by virtually all participants from the public sector as well. While participants recognized the crucial role of the private sector, they were realistic enough to admit that engagement with this sector was one of the most formidable challenges in formulating a strategy. Therefore, they agreed to include it in their peer learning agenda. Participants also pointed to the importance of effective coordination and demonstrated a willingness to learn from both the positive and negative experiences of their global peers. This openness is, in my view, a healthy sign that the group would continue to nurture its commitment to peer learning.

I listened to the lively conversations at the meeting with interest and excitement. The conversations were relevant and undoubtedly provided the participants with many insights. However, I left the meeting with two main impressions.

First, FISPLG members seemed eager to formulate a financial inclusion strategy that was as comprehensive as possible, covering areas and issues ranging from microfinance and small and medium enterprises (SMEs) to financial education and consumer protection. I found this troublesome for a number of reasons. While it is true that financial inclusion is influenced by many different factors, this is precisely why we need to develop focused and well-formulated strategies. In general, it is far better to have a simple, easy-to-implement strategy than an ambitious, all-encompassing strategy that may be difficult to implement within a reasonable time frame.

The participants struck me as overenthusiastic, forgetting that a major part of any development strategy is choice: what we choose to do and what we choose not to do. Making these choices is critical to any successful strategy, not least because institutional resources and capacity for implementing a financial inclusion strategy are limited. This is why expert in strategy formulation stress that “the quality of thinking that goes into such choices is a key driver of the quality and success of a strategy.”

After all, a strategy is only as good as its implementation. A perennial problem is the gap between a strategy’s stated objectives and the ability to achieve them within a specified period. There is a simple reason why strategies fail to meet their goals: there is often a disconnect between formulating a strategy and implementing it. Implementation simply does not receive adequate attention in the strategy process. One participant at the meeting asked, “How do we move from a document to implementation?” In my opinion, the right question to ask would be, “How do we formulate a strategy that is easy to implement in our own country context?”

Daniel Kahneman, who won a 2002 Nobel Prize in Economics for his work on the psychology of decision making, suggests that when planning major initiatives, top policymakers tend to exaggerate benefits, discount costs and risks, and be overly optimistic. As Kahneman has noted, “most people are highly optimistic most of the time.” It is important that FISPLG members are aware of these tendencies at the outset of the strategy process. Peer learning may provide an opportunity to hear alternative perspectives and minimize the biases we bring to decision making.

Secondly, I felt that not enough attention was given to the costs of developing and implementing a financial inclusion strategy. One high-level participant identified the high cost of financial education as a major issue, but there was no deliberation on cost issues in general. The costs of implementing a financial inclusion strategy need to be on the main agenda and we need to discuss the ways in which countries can keep costs within reasonable limits. Are there any “lean principles” that countries can adopt for this purpose?

FISPLG’s Bangkok meeting was a very productive event. It focused on many key issues and made an attempt to carve out a reasonable agenda for the group. I hope that FISPLG will broaden its conversation in the future to cover some of the issues mentioned above. I am confident that FISPLG members will make considerable progress in peer learning and improve the quality of the financial inclusion strategy process in their own countries while contributing to global knowledge on this important subject. Let’s work together and make a concerted effort to achieve the group’s agenda.

Thanks to AFI for organizing the FISPLG meeting!

Dr. Nimal A. Fernando is currently an Alliance for Financial Inclusion (AFI) Associate and the managing director of Inclusive Finance International (Pvt) Ltd. A Sri Lankan national, he is a former central banker with more than 35 years of development experience. He was the Practice Leader for Microfinance at the Asian Development Bank (ADB) until his retirement in 2008. Nimal was also the founder and chief editor of ADB’s quarterly microfinance newsletter, Finance for the Poor, and main author of ADB’s Microfinance Development Strategy.

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