1 CONTRIBUTION OF THE AFRICAN POSTS TO THE DEVELOPMENT OF - - PowerPoint PPT Presentation

1

PAN AFRICAN POSTAL UNION

CONTRIBUTION OF THE AFRICAN POSTS TO THE DEVELOPMENT OF FINANCIAL INCLUSION

A presentation by Mr. Younouss Djibrine, Secretary General

2

OUTLINE

¨ Introduction ¨ Current situation ¨ Benefits of Financial Inclusion ¨ Contribution of the Post to the development of Financial

inclusion

¨ Business models ¨ Initiatives to increase Financial Inclusion ¨ Objectives of the initiatives ¨ Challenges ¨ Key success factors ¨ Way forward ¨ Conclusion

3

INTRODUCTION

¨ Financial inclusion is the provision of basic financial services

to people without access to them in the form of:

¤ Savings; ¤ Payments; ¤ Money transfers; ¤ Insurance; ¤ Credit etc.

¨ About1.5 billion people worldwide are already using

financial services provided by Posts.

¨ The postal sector is the second largest contributor to

financial inclusion worldwide

CURRENT SITUATION

¨ 80% of the African adult population is un(der)banked; ¨ More than 97% of children have no access to financial

services;

¨ More than 60% of the African Governments and/or African

financial sector regulators have already shown their commitment to improving financial inclusion;

¨ They are also improving financial inclusion, including

financial literacy etc.

q There is insufficient infrastructure for access to financial

services and financial literacy;

q More than 10% of Africa’s adult population uses post

• ffices for payments, savings or other financial services.

CURRENT SITUATION (Cont’d)

¨ INTERNAL( within the post):

ü Delayed or low level of modernization & business

transformation;

ü Continued decline in the demand for conventional

postal mail services ;

ü Information on the role of postal networks is in most

cases not available or partially included in standard reports;

ü Furthermore, the quality of data is often poor.

CURRENT SITUATION (Cont’d)

¨ EXTERNAL :

ü Lack of/or inadequate policies or regulations; ü Post offices suffer from competition by banks,

telecommunications companies ( including mobile) and private operators;

ü Access to internet is increasing; ü Migrant remittances flows to Africa amount to more

than an estimated USD60 billion/year;

ü The post currently accounts for about 3% of migrant

remittances.

BENEFITS OF FINANCIAL INCLUSION

¨ Reduction in income inequalities and increases in earning

• pportunities;

¨ Extends credit facilities to those who do not have adequate

finance but have business ideas and zeal to carry entrepreneurial activities resulting in acceleration of growth;

¨ Results in borrowing at low rates of interest; ¨ Reduction in poverty ; ¨ Likely to increase national income ; ¨ Increase in employment and income opportunities ; ¨ Helps in more effective distribution of income ; ¨ Assists in implementation of social security schemes, such as old

age pensions, window pensions etc;

CONTRIBUTION OF AFRICAN POSTS TO THE DEVELOPMENT OF FINANCIAL INCLUSION

¨ More than 30,000 postal outlets in Africa which could be used for

savings and deposit accounts;

¨ With widespread presence in rural areas, post offices compliment

access to infrastructure in semi- urban and rural areas;

¨ Post offices can fill in gaps in the landscape in between banks and

microfinance institutions;

¨ Where microfinance services exist in post offices they assist MSMEs with

products/services such as credit facilities, savings etc;

¨ Post offices can enhance banking services via different models outlined

in the next slide;

¨ Insurance services can also be offered in post offices; ¨ Different forms of money transfers can be offered in post offices; ¨ Cross-border trade can be facilitated via the post.

BUSINNESS MODELS

q

Licensed bank as subsidiary of the post e.g. Algeria, Gabon and South Africa;

q

A postal financial services division as part of the postal operator e.g. Comoros & Republic of Congo;

q

An ICT based consumer service network providing agency services for multiple purposes, including public internet, mail, hybrid mail, bill payment, savings, financial services for many banks, microfinance services and money transfers, e-learning for financial literacy e.g. Huduma Centers in Kenya, Botswana, Uganda and Zambia;

q

Rental or lease of un(der) utilized space to banks and microfinance institutions e.g. Ghana, Uganda, Zambia and Zimbabwe;

q

African post can partner with other organizations such as Western Union, money gram, Cash for Africa, Reason Solution, among others. NB: Many variations and mixtures exist on the above models

INITIATIVES TO INCREASE FINANCIAL INCLUSION

¨ The African Postal Financial Services Initiative-A joint initiative launched by;

q International Fund for Agricultural Development (IFAD); q European Commission; q World Bank; q The Universal Postal Union (UPU)

¨ Adoption of Resolution L 12 by AU Ministers of Finance on Postal Financial Services in

2014, in Abuja, Nigeria;

¨ PAPU in collaboration with La Poste France implemented a project on international

express money order for French speaking countries and Indian Ocean Islands in the 2009-2012 cycle;

¨ An agreement was made in 2014 between Emirates Post and PAPU to facilitate electronic

money transfers between member states and Messrs Instant Cash using IFS platform;

¨ Relevant PAPU Administrative Council Resolutions were adopted in Malawi and Sudan in

2014 and 2015, respectively;

¨ Development of IFS by the Postal Technology Centre of the UPU.

OBJECTIVES OF THE INITIATIVES

¨ Reduce the cost of remittances to and within the

African continent;

¨ Reduce transaction times of remittances to and

within Africa;

¨ Broaden the network of rural locations through

which remittances can be picked up;

¨ Deepen the range of financial services provided in

rural areas

CHALLENGES

¨ The following challenges, among others, hinder or slow

down financial inclusion endeavours:

ü Regulatory (inadequate, weak, non-existent, etc.); ü In-availability or unreliable power supply; ü Low levels of connectivity; ü Financial illiteracy; ü High costs/high investments; ü Government intervention in postal USO, including

regulated tariffs below cost of service;

ü Entry into bilateral agreements.

KEY SUCCESS FACTORS

¨ Institutional Reform

¤ Governments should develop policies which will encourage postal

financial services;

¤ Streamline regulatory functions on financial services by setting

clear boundaries between Central Banks and Communications regulatory Authorities

¤ Develop corporate structures for the DPO to be able to grow

competitive business with good corporate governance, SBUs, improved financial management etc.

¨ Stable energy Sources

¤ Connected to national grid; ¤ Renewable sources of energy such as solar, etc;

¨ Human Resources Issues

¤ Good recruitment policies ¤ Continuous training of staff ¤ Encourage staff development

KEY SUCCESS FACTORS(Cont’d)

¨ Technology

¤ Implementation of advanced technology ( hardware

and software) in post offices;

¤ Ensure connectivity via Broadband, Vsat, optic fibre

¨ Marketing

¤ Develop strategies based on business concepts to

deliver demand-driven services

¤ Offer a mix of products/ services ¤ Implement financial literacy programmes etc.

WAY FORWARD

¨ Adoption of the use of IFS; ¨ Postal Administrations need to be committed to the

cause of Financial Inclusion;

¨ The role of both financial & communications

regulators must be clearly defined to avoid conflicting oversight, among others;

¨ Implementation of Resolution L12 On Postal

Financial Services- incorporate the resolution in national development plans.

CONCLUSION

¨ The potential of the existing post offices in Africa is being

rediscovered with a view to increasing financial inclusion;

¨ Post offices play a diverse and relevant role in promoting

financial inclusion but most often they are underestimated;

¨ The position of postal networks and their potential widely

differs

¨ Therefore, improvements are needed in:

¤ Institutional settings; ¤ Product portfolio; ¤ Marketing; ¤ Strategic alliances & partnerships: ¤ Interoperable ICT; ¤ Financial Management etc;

THANK YOU FOR YOUR ATTENTION www.upap-papu.org sc@papu.co.tz