Over the last few decades, the process of evidence-based policymaking has been prominent in the agenda of international organisations, governments and researchers alike. Employing evidence or research based on data as the basis of policy formulation is certainly desirable; however, it does draw a number of challenges. Evidence-based policymaking is where credible or tested evidence is used in the process of formulating, implementing, evaluation, and monitoring of a particular policy. However, does data alone constitute a good policy?
The rationale optimism about evidence-based policy is that better knowledge and data will result in a better policy which in-turn leads to improved outcomes for the citizens of a country. Policy development is undertaken in a complex and multidimensional environment with various actors’ playing a part of the process. Thus, having good evidence can be critical to overcoming these obstacles to some extent and ensuring that policy reforms are achievable.
A policy stream where evidence-based policy formulation has been extremely successful is in the area of financial inclusion. Financial inclusion has been broadly recognised as a catalyst in reducing poverty levels and attaining inclusive economic growth in developing and emerging countries. The goal is to establish an inclusive financial system that facilitates sustainable economic growth resulting in increased job opportunities, reduced poverty levels, and mainstreaming marginalized sections of the society into the economic and social landscape.
An integral aspect of the financial inclusion journey in Fiji is the development of the National Financial Literacy Strategy (NFLS) that exemplifies the argument of shifting towards evidence-based policymaking. The NFLS is an evidence-based policy made possible by undertaking the formulation in three phases.
Firstly, to ensure it is a collaborative model, a technical committee made up of committed representatives from private and public entities, microfinance institutions, civil society groups, non-governmental organisations (NGOs), development partners and donor groups was formed to oversee the formulation and implementation of the NFLS. Secondly, a national baseline survey of the low-income households was undertaken to assess the level of financial literacy amongst the target group. Lastly, the results were discussed in a National Workshop to get the feedback from the relevant stakeholders before the NFLS was finalised.
The survey results provided policy implications for the stakeholders to pursue in line with the financial inclusion agenda. This baseline data is incomplete without understanding the underpinnings and rational behind it. Once the results were released, a National Financial Literacy Workshop was convened to discuss and deliberate with the relevant stakeholders.
It must be noted that a robust evidence-base alone does not necessarily translate into good policy. To ensure evidence creates a transformative reform, dedicated and experienced practitioners must be consulted to map the way forward thus, a National Workshop to review and deliberate on the results of the draft NFLS. Key stakeholders from government, financial institutions, microfinance institutions, development partners, NGOs, and civil society groups met to identify key policy areas that the NFLS must include. As a result, key policy areas that were highlighted through the survey results and unanimously endorsed by the stakeholders, which was included in the NFLS.
The process through which the NFLS was formulated models an evidence-based policy framework. A quantitative survey was undertaken to establish the facts and gather demand-side data to better understand the needs of the people and identify areas where they lack financial literacy. In addition, to validate the data, practitioners who are closer to the reality of these households participated in robust discussions to endorse those findings. Since the strategy is a fairly new one, a policy impact analysis of the strategy has not yet been undertaken to assess its effectiveness. However, monitoring and evaluation is an on-going process.
Fiji has benefitted from the peer-learning model that exists amongst the members of the Alliance for Financial Inclusion (AFI) in a range of policy areas and NFLS is a product of this. Similarly, other countries part of the AFI Pacific Islands Regional Initiative (PIRI) took the lead from Fiji and employed this best practice to develop their NFLS as well. With Fiji hosting the 2016 AFI Global Policy Forum (GPF) in September, it will be an excellent platform to showcase a number of successful evidence-based policymaking in practice from the NFLS to the implementation of agent banking guidelines here in the Pacific.
Therefore, policymaking extends beyond data and requires political commitment, a stakeholder consultative approach, skilled and experienced policy analysts, and adequate financial support. You may have the best evidence that indicates that there is a problem, however, if you cannot get the commitment and buy-in of the stakeholders, a good policy may never see the light of the day.
ABOUT THE AUTHOR
Sameer Chand is a graduate student at the University of Queensland on study leave from the Reserve Bank of Fiji, a member institution of the Alliance for Financial Inclusion.
Categories: Measuring Financial Inclusion