FINANCIAL INCLUSION
ISTOCKPHOTO
Microfinance needs to be recognised as a vital
part of the financial system, dedicated mainly to
meeting the needs of the poor and vulnerable.
TOWARDS A STRATEGY FOR SOUTH AFRICA
South Africa has a range of financial institutions providing financial services to the poor, including both private and public sector institutions. However, there is a gap in the market in terms of the provision of affordable and responsible financial services
to low-income earners and the poor, especially in rural areas and specifically for micro enterprises. The overall supply-side
situation needs to be studied in depth to understand the barriers to suppliers in providing adequate access to services.
One area is cost-to-serve for suppliers and strategies that can decrease cost-to-serve.
A comprehensive financial inclusion strategy should provide clear objectives and guidelines to both the private and public sector focusing on the policy level, the industry level, supplier and client levels, and a clear and simple monitoring
approach to measure progress. Strategies to address the problem can include supply-side measures, such as regulatory enablement, and demand-side interventions, such as education on the benefits of financial product usage.
The Minister of Finance has suggested that the current indication of access of 63% of people banked should improve to 70%
by 2013. Thus, the outcome of the NPC process should culminate in a plan that also improves efficient access to financial services for those excluded and those who are forced to make limited use of formal financial services. It should further build on and
align closely with the process of the National Treasury towards improved financial inclusion in South Africa. This is embodied
in the document A Safer Financial Sector to Serve South Africa Better and, at the international level, is seen in the efforts of the
G20 towards improved financial inclusion.
Continued »
Edition 1
SA BANKER
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