AusAID, Financial Inclusion & Remittances

1. AusAID, Financial Inclusion & Remittances Sydney, 18 July 2012 Ruth Goodwin-Groen, Senior Sector Specialist

2. Outline • Why International Remittances Matter for Development • AusAID context • Financial Inclusion priorities • Pacific Financial Inclusion • Remittances - Pacific • Remittances - Global

3. Why International Remittances matter • Remittances contribute to poverty reduction • Reducing the cost of remittances is needed to increase the amount of money in poor people’s hands • Reducing remittance costs is a global & Pacific issue - • as are improving remittances’ development impact and increasing financial inclusion • It takes a multi-faceted and ‘joined up’ approach to reduce costs, increase financial inclusion and have a long term impact on poverty.

4. AusAID: An Effective Aid Program: • The purpose of Australian aid: to help people overcome poverty • 5 strategic goals: • Saving lives • Promoting opportunities for all • Investing in food security, sustainable economic growth and private sector development • Supporting security, improving the quality of governance, and strengthening civil society • Preparing for and responding to disasters and humanitarian crises

5. Financial Inclusion: • Financial inclusion means expanding appropriate and affordable financial services to poor or low income people, previously unable to gain access. • Borrowing, saving or buying insurance allows planning for the future - risk management. • Building up assets and investing in education and health – contributes to job creation, reduces inequality • Financial services helps families cope in times of need - consumption smoothing • AusAID’s FI Strategy targets: policy change, institutions and infrastructure building, innovation and financial education – all of which are important to reducing the cost of remittances and increasing their developmental impact

6. AusAID & Financial Inclusion in Pacific • Support Coombs declaration and Money Pacific Goals • Multi-country programs through multilateral partners • Pacific Financial Inclusion Program (PFIP) • Private Sector Development Initiative (PSDI – ADB) • Pacific Microfinance Initiative (PMI – IFC) • IFC & World Bank work, eg. credit bureaus, payment systems • Single-country: many with those same partners • Fiji Financial Education Project (PFIP) • PNG Microfinance Expansion Project – ADB

7. AusAID & Remittances: Pacific 1. Product Innovations – PFIP, AsDB, PMI • E.g. Mobile wallets and agents (Reuben) 2. Competition: Send Money Pacific • Results – Fiji MTO reduced by 50% (Jonathan) 3. Financial infrastructure: Payments systems • Four assessments plus Australia moving ahead (John) 4. Client Financial Education • To achieve Money Pacific Goals (Kim) 5. In collaboration: FEMM Remittance Road Map • In collaboration with development partners and countries

8. AusAID & Remittances – G20, CHOGM • Australia leads the G20 remittances work with Indonesia and Italy • Target of 5% by 2014 in global average cost • Currently 9% (weighted approx. 7%) • G20 Remittance Toolkit • Endorsed General Principles (Carlo next) • CHOGM – Trust Fund • AUD 3.5 million for Commonwealth countries to take action to reduce the cost of remittances • Major challenge - some of highest cost corridors

9. Conclusion • Remittances contribute to poverty reduction • Reducing the cost of remittances is needed to increase the amount of money in poor people’s hands • Reducing remittance costs is a global & Pacific issue - • as are improving remittances’ development impact and increasing financial inclusion • It takes a multi-faceted and ‘joined up’ approach to reduce costs, increase financial inclusion and have a long term impact on poverty

10. Thank you.

11. AusAID in the Pacific • Total Australian aid budget $5.2 billion in 2012-13 • Pacific (incl PNG): est. A$1.17 billion in 2012-13 • Half of all aid to Pacific is from Australia • Nearly a quarter of Australia’s aid is to the Pacific • Commitment to scale up ODA to 0.5% in 2016-17