The Asian Development Bank (ADB) committed to government’s program aimed at expanding Filipinos’ access to financial services, especially in unserved and underserved areas in the country.
The Manila-based lender announced yesterday the approval of a $300-million policy-based loan to the Philippines under the bank’s inclusive finance development program (subprogram 2).
ADB said the fresh financing should strengthen the institutional and policy environment for financial inclusion in the country, improve financial infrastructure, and increase the capacity as well as reach of service providers, especially rural banks and non-bank financial institutions.
“The Philippine government’s anti-poverty strategy aims to equip Filipinos in the bottom 40 percent of the income strata with education, skills, and livelihood assistance so they can break away from a vicious cycle of intergenerational poverty,” Ahmed M. Saeed, ADB vice-president said.
Ensuring all Filipinos are part of the financial system is important to this approach, Saeed said
Kelly Hattel, ADB senior financial sector specialist for Southeast Asia, meanwhile, said the implementation of digital finance will significantly improve poor Filipinos’ access to financial services and products as a way to lift their incomes and wellbeing.
According to the 2017 Global Findex Survey, the Philippines ranked among the lowest in Southeast Asia on almost all financial inclusion indicators.
Only 34 percent of Filipino adults have an account at a formal financial institution, compared with 49 percent in Indonesia, 82 percent in Thailand, and 85 percent in Malaysia.
“The Philippines can expand financial access to poor Filipinos through credit, savings, insurance, pensions, and remittances,” ADB said.
Reforms supported by the loan are being implemented by the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, the Philippine Guarantee Corp. (Philguarantee), the Philippine Statistics Authority, the Department of Justice, and the Insurance Commission.
These reforms, which focus on the poorest 40 percent of the population and rural residents, aim to more than double the number of Filipinos holding an account at a formal financial institution by 2023.
Key reforms include the rollout of the country’s National Identification System, which will benefit all Filipinos and help speed up the delivery of social assistance programs, the launch of pilots on agriculture value chain finance, and public–private partnerships for crop insurance.
The loan also supports government reforms to incorporate financial literacy programs in the country’s K-12 basic education curriculum and increase the use of digital payments in the country.
It will help reorganize and strengthen Philguarantee’s operations, expand coverage of the credit reporting system, promote the use of cloud-based core banking technology among rural banks, and support the development of Islamic finance in the country.