NATIONAL FINANCIAL INCLUSION...National Financial Inclusion 1• Financial inclusion enables the underbanked to better undertake and grow business activities, save safely in the financial

National Financial Inclusion 1

Why it is needed,What it will achieve,

And how you can participate?

NATIONALFINANCIAL INCLUSION

S T R A T E G YAccess for ALL

National Financial Inclusion 1

• Financial inclusion enables the underbanked to better undertake and grow business activities, save safely inthefinancialsector,managerisksandbuildfinancialsecurity.• Ultimately,financialinclusionhelpstopromoteeconomicgrowthandreducepovertyandincome inequality.• FinancialinclusionwillcontributetoJamaica’stransformationfromamiddleincomecountrytoonewhich affordsitscitizenshighstandardsofliving.

• ANationalFinancialInclusionStrategy(NFIS)supportsJamaica’seconomicgrowthagenda.• TheStrategysupportsJamaica’sgoalforsustainableprosperity,asoutlinedintheVision2030-National DevelopmentPlan,whichaimstomakeJamaica“theplaceofchoicetolive,work,raisefamiliesanddo business”.• ANFIScanserveasapowerfultooltocoordinate,deepenandacceleratenationaleffortstoreachhigher levelsoffinancialinclusion.• TheNFISestablishesasetoffinancialinclusionobjectives,arangeofpublicandprivatesectoractions toachievethoseobjectivesandacoordinationstructureandM&Esystemtoensurethattheseactions areimplemented.• Over30countriesarenowintheprocessofdesigningorhavelaunchedaNationalFinancialInclusionStrategy.

• Relianceoncashremainshigh,while the usage of accounts and of electronic transactions instrumentsislow,inpartduetotheirperceivedhighcostandinconvenience.

Example:65% of wage earners receive their wages in cash. 23% of account holders do not make any

deposits or withdrawals into their accounts (Global Findex)

• Householdslacksuitableandaccessiblesavings,affordableinsuranceandretirement products,andstruggletobefinanciallyresilient.

Example:Only 30% of Jamaicans save through a regulated financial institution (Global Findex)

• Toomanypeopleandbusinessesdonothaveaccesstoformalcredit and alternative financinginstrumentsthatspecificallymeettheirneeds.

Example:11% of Jamaican adults and 27% of SMEs access formal credit (Global Findex, Enterprise Surveys)

• Alargeshareofthepopulationdoesnothaveconfidencethatthefinancialsystemwill servetheirneedsandmostJamaicansdonotunderstandthebasicsofpersonalfinance.

Example:Half of the Jamaican population does not have confidence in the financial system

(Gallup World Poll)

Why Financial inclusion in Jamaica?

Why a national Financial inclusion strategy?

What are the challengesthat We Face today?

Over the last few years, much has been done to make Jamaica more financially inclusive, but many challenges remain:

National Financial Inclusion 2

The National Financial Inclusion Strategy (NFIS) sets forth an ambitious agenda of reforms structured around four main pillars and a cross-cutting foundation:

•The‘Financial Access and Usage’ pillarsupportsreformsthatwouldfacilitateincreasedusageofelectronicpayments,expansionofagents,digitizationofgovernmentpaymentsanddevelopmentoffinancialproductsthatchannelremittanceproceedsinaccounts/cards.

•The‘Financial Resilience’pillarsupportsreformsthatwould contribute to increased usage of savings, insurance andretirementaccountsforthelow-incomesegment.

•The‘Financing for Growth’ pillarfocusesonthreesectorsthathavesignificantpotentialforcontributiontothedevelopmentofoureconomyandthewell-beingoftheJamaicanpopulation:

→ MSMEFinance:ThegoalistoincreaseaccesstofinancetoMSMEsthroughrevampingthecreditguaranteescheme,developingalternativefinancinginstruments,suchasleasing,factoringandventurecapitaland providingcapacity-buildingtoMSMEs. → AgricultureFinance:Thegoalistostrengthenfinancialinstitutionsthatlendtoagriculture,providetechnical assistancetofarmersandagro-processorsandpromoteinvestmentsinagriculturetomitigaterisks. → HousingFinance:Thegoalistodeployappropriateproductstoextendhousingfinancetolow-incomeand informalsegments,strengthenmortgageinsuranceandenhancefundingoffinancialinstitutionsthatlend tothissegment.

•The‘Responsible Finance’ pillarsupportsmeasuresthatwouldresultinenhanceddisclosure,adequatebusinesspracticesandbetterinformedconsumersthatcanresolveconflictsinanefficientandlowcostmanner.

•The ‘Supporting Infrastructure’foundationsupportsmeasuresthatwouldreviewandrevisetheAML/CFTframeworktoensureanadequatebalancebetweenfinancialinclusionandintegrity,adoptaregulatoryframeworkforcreditunionsandMFIs,furtherstrengthencreditreportingandsecuredtransactions,evaluatemeasurestoreduceinformality,encouragelandtitlingandexpandfinancialinclusiondatacollectionefforts.

In order to achieve this agenda, we have :•SetupaNationalFinancialInclusionCounciltocoordinatestakeholdersandholdeachoneaccountable.•Activatethesequencedandtime-boundroadmapofprioritizedactionswithassignedresponsibilities.•ThroughtheFinancialInclusionSteeringCommitteeandtechnicalandsecretariatSystematicallymonitorprogress andevaluatetheeffectivenessandimpactofkeyreforms.

Why a national Financial inclusion strategy?

National Financial Inclusion 3

FinancialAccessandUsage

FinancialResilience

FinancingforGrowth

AccessPointsandPaymentsInfrastructure

Frameanaccesspolicytofacilitateafairandopenpaymentsinfrastructure

BOJ

BasicAccounts Evaluate,designandimplementapolicyframeworkforopeningtransactionaccountswithgradedKYCrequirements.

GovernmentPaymentsDesignastrategytoshiftgovernmentpayments,includingdirectbenefittransferschemes,wagesandsupplierpayments,fromchequestoretailelectronicpaymentproducts

MOFPS,AGD,MLSS

RemittancesReviewandrevisetheregulatoryframeworktofacilitatethedevelopmentoffinancialproductslinkedtoremittances,includingremittance-basedpaymentcards

BOJ

AgricultureFinance

EvaluateoptionsforstrengtheningorrestructuringtheNPCBandenhancetheregulationandsupervisionoftheNPCB MICAS

Supportbanks,creditunions,NPCBandMFIstodeveloplendingprogrammestosustainablyservetheagriculturalsector

Interestedprivateentities,MICAS

Promotetheprivatefinancingofrisk-copinginvestments(waterharvesting,ponds,greenhouses) MICAS

HousingFinance,MEGAjC

Designanddeployhousingfinancesolutionsforlowerandinformalincomehouseholds,e.g.housingmicrofinance NHT,OPM

ReviewandstrengthenNHT’sroleinprovidingliquiditytolenders,including credit unions NHT

Assessthesizeandoperationsofthemortgageinsurancefundanddetermineneedforresources JMB

MSMEFinance

RevampthePCGschemetoprovideadequateincentivesforlenderstoparticipate

DBJReview/revisethelegal,regulatory,andtaxframeworkforassignmentofreceivables (Factoring)

Review/revisethelegislativeframeworkand/ordevelopleasinglawasnecessary

Developthelegal,regulatoryframeworkandinfrastructureforthedevelopmentofventurecapital DBJ,FSC

Key actions

Theme ProposedAction ImplementingEntitiesPrimaryentities

Savings,Insurance,Pensions

Developalegalandregulatoryframeworkformicro-insurance FSC

Promotethedevelopmentanduseofmoresavingsproducts,inclusiveofcommitmentsavingsproducts,torespondtotheneedsofthelow-incomepopulation.

BOJ

Promotearetirementproductforlow-incomeandinformallyemployed,withlowfeesandeasycontributionsandafocusonpaymentsinfrastructure,productdesignandeligibility.

MOFPS

National Financial Inclusion 4

ResponsibleFinance

SupportingInfrastructure

ConsumerProtection

EnsuretheappropriatelegalframeworkandmechanismsformarketconductsupervisionofDTIs,creditunionsandmicrofinanceinstitutions

BOJ,FSCStrengthenFSC’scapacityformarketconductsupervisionoftheinsurance,pensionandsecuritiessectors

StrengthenFSC’sexistingcomplaintshandlinganddisputeresolutionmechanisms FSC

Compileandwidelydisseminateinformationperiodicallyonfeesandcharges levied by banks and nonbanks

BOJ,CACEstablishanindependentdisputeresolutionschemeforconsumersofDTIs,creditunionsandmicrofinanceinstitutions

FinancialCapability DevelopacomprehensiveNationalFinancialLiteracyActionPlan MOEYI,MOFPS,BOJ,FSC,CAC,JDIC

AML/CFT ReviewandreviseAML/CFTframeworktoensureanadequatebalancebetweenfinancialinclusionandfinancialintegrity

MinistryofNationalSecurity,FSC,MOFPS,BOJ

Enablingregulatoryandsupervisoryframework AdopttheMicro-CreditActandtheCreditUnionRegulations BOJ,MOFPS,MICAS

FinancialSector’sfinancialinclusionplans

EncourageDTIsandotherfinancialinstitutionstodevelopindividualfinancialinclusionplans BOJ

Informality Undertakeanassessmentofmeasuresneededtoreduceinformality MICAS

Landregistrationandtitling Acceleratelandtitlingeffortsandmeasurestofacilitatetheuseoflandtenure rights and other agricultural assets as collateral

OPM,Municipalities,MOFPS

SecuredTransactions Review and enhance as necessary collateral registry regulationsCollateralregistry(CompaniesOfficeofJamaica),MICAS

Theme ProposedAction ImplementingEntitiesPrimaryentities

National Financial Inclusion 5

Adiagrammaticpresentationofthegovernanceframeworkfor implementingtheaction items in theNationalFinancialInclusionStrategyinJamaicaisshownabove.

National Financial Inclusion Council

The Minister of Finance and the Public Service hasestablishedaNationalFinancialInclusionCouncil,towhichthe Financial Inclusion Steering Committee (“FISC”) willreport semi-annually on the implementation of the actionitems in the National Financial Inclusion Strategy. TheMinister will chair this Council, which includes the headsof the ministries, departments and agencies which aremembersoftheFISC.TheFISCischairedbytheGovernorofBankofJamaica.

Stakeholder Advisory Group

Asoutlinedinthechartabove,aStakeholderAdvisoryGroupwillbeformedtofacilitateconsultationwithrepresentativesoftheprivatesectorandcivilsociety.Thisstructurewillensuregreater accountability for the implementation of the actionitems,whilesecuringbroad-basedsupport for thestrategyfrom the non-governmental sector. Selected members oftheStakeholderAdvisoryGroupwillattendthemeetingsoftheCouncilattheinvitationofthechairoftheStakeholderAdvisoryGroup,followingdiscussionswiththeCouncil.

TherewillbeperiodicreportingonthestatusofimplementationoftheactionitemsundertheStrategyandtheachievementoftheintendedgoals.Forfurtherinformation,pleasecontactthe technical secretariat at [email protected], orat932-4145.

Figure 1 - Governance Framework for Financial Inclusion

National Financial Inclusion 6

NATIONALFINANCIAL INCLUSION

S T R A T E G YAccess for ALL