New financial inclusion data from the Pacific Islands

Caitlin Sanford

Until now there have been few sources of publicly available data about financial access and usage in the Pacific Islands. Although individual central banks are measuring and tracking progress toward financial inclusion, the small island countries in the Pacific region have often been left out of international financial inclusion datasets, such as the Global Findex. The IMF Financial Access Survey does capture some key financial inclusion indicators but does not encompass all the countries from the Pacific.

The Pacific Islands Working Group (PIWG) on financial inclusion of the Alliance for Financial Inclusion (AFI) came together in 2013 to define and collect financial inclusion data specifically tailored to the region. Fiji, Papua New Guinea, Samoa, Solomon Islands and Vanuatu participated in this Data Project. While AFI and the GPFI have elaborated key sets of financial inclusion indicators to be used for global comparison, in some instances, individual countries such as Mexico, Brazil, Tanzania, and others have crafted broader sets of country-level indicators. This is the first time a broader set of common indicators have been developed at a regional level.

In selecting these indicators that they will track over time, policymakers focused on measuring variables related to government commitments and factors likely to move markets in their countries. Firstly, the five countries wanted to measure progress against their Maya Declaration Commitments. Secondly, market development topics such as tracking the growth of mobile financial services in this sparsely populated region. In addition to this, measuring remittance flows to assess how they can be drivers of financial inclusion were additional priorities. Quantifying barriers to opening an account and benchmarking client protection and financial education were additional priorities.

The national-level Pacific Islands Financial Inclusion Indicators for Samoa, Solomon Islands, Papua New Guinea, Fiji, and Vanuatu are presented in Table 1. These data are current as of 31 December, 2012.

piwg3

Comparative analysis

The comparatively large population and land area of Papua New Guinea results in lower numbers of access points per 10,000 adults and per 1,000 square kilometers, despite there being more access points in absolute terms in the country. Similarly, the land area of the Solomon Islands is the second largest of the countries sampled, contributing to lower access levels in the indicators calibrated by land area (indicator 2.1- 2.4).

As reflected by indicators 1.4 and 2.4, Electronic Funds Transfer Point of Sale (EFTPOS) devices are more prominent than other types of access points in all five countries. This is due to the improvements in technology in the region. Mobile financial services have been introduced in Samoa, Fiji, and Papua New Guinea. For indicator 3.5, the percentage of banks offering mobile financial services, Papua New Guinea’s figure (3 percent) appears small because there are 35 banks in the country, compared with about five banks in each of the other countries. We learned that the size of the banks and their market share, not just the number of banks, should ultimately be taken into account when considering the development of the mobile financial services market.

Interestingly, although the access metrics for the Solomon Islands are some of the lowest in the region, usage indicators 4.1 and 4.2 show that the number of deposit and credit accounts per 10,000 adults are on par with Vanuatu and exceed the figures from Papua New Guinea. This could imply that clients in the Solomon Islands are traveling further on average to access bank accounts compared with other countries.

Measured using a simple mystery shopper exercise, indicators 5.1 and 5.2 shed light on the differences in the average balance and average number of identification documents required to open a bank account in the five countries. The average opening balance in Papua New Guinea is US$ 2.26, significantly less than about US$ 18 in Samoa and US$ 15 in Vanuatu. While Fiji has some of the strongest access indicators in the region, the fact than an average of 3.6 documents are required to open an account (compared to two or fewer in Vanuatu and Samoa) suggests that important barriers to account opening for individuals without multiple forms of identification persist in Fiji.

Indicators 8.1 through 9.2 permit PIWG countries to track their progress against key policy objectives, including Maya Declaration Commitments. A majority of countries in the region are integrating financial education into the national school curriculum and have in place or are currently developing national financial literacy strategies. The consumer protection-related indicators 8.1-8.4 show that Samoa, Solomon Islands, and Vanuatu have not yet put in place a credit bureau or consumer protection policies or guidelines.

Way Forward

Members of AFI’s Pacific Island Working Group will continue measuring these indicators approximately every six months going forward. Some countries such as Fiji are also collecting indicators from the past five years in order to have a sense of the progress made to date.

ABOUT THE AUTHORS
Caitlin Sanford is an Associate at Bankable Frontier Associates specialized in demand-side research, and served as project manager for the PIWG Data and Measurement project. MPA, Woodrow Wilson School of International and Public Affairs, Princeton University.  BA Stanford University. Lanna Lome-Ieremia has been with the Central Bank of Samoa since the start of 2003 in the Financial Markets Department. Leaving the department as the Assistant Manager in late 2012. Since then she is Manager, Financial System Development Department. Master of Business Administration, 2007 University of the South Pacific. Bachelor of Commerce and Administration (Economics, Commercial Law, Money and Finance), 2002Victoria University of Wellington, New Zealand. Sameer Chand has been with the Reserve Bank of Fiji since the start of 2011 in the Financial Systems Development & Compliance Group. Secretariat to the National Financial Inclusion Taskforce in Fiji. Postgraduate Diploma in Economics – 2011 Bachelor of Commerce – Accounting and Economics 2010 University of the South Pacific.

Categories: Measuring Financial Inclusion

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