IFC helps Sri Lanka reach under-banked, under-insured
ECONOMYNEXT – International Finance Corporation (IFC) is providing financial and technical assistance to Sri Lanka’s Central Bank to develop a national strategy to help under-banked and under-insured people and small businesses get the financial services they need.
"As Sri Lanka looks to grow, a strong, inclusive financial sector is crucial, simply because, financial inclusion is pretty much the need of the hour for sustainable, continued economic development," IFC Country Manager for Sri Lanka and Maldives Amena Arif said.
About 2.5 billion adults in the developing world don’t have access to financial services, 625 million of them in South Asia alone, according to IFC. Around 200 million small businesses in emerging economies can’t access credit they need to grow.
"Sri Lanka presents a rosy picture in terms of the wide range of financial service providers in the country, high levels of physical access to branches, and a high number of accounts," Arif said.
Sri Lanka has 18.6 bank branches for each 100,000 people in the population, and 83 percent of all adults have bank accounts. Over 80 percent of adult women have savings accounts.
"Despite this, financial inclusion is still listed as a key constraint for growth across many sectors in Sri Lanka.
Despite a high bank account penetration rate (83 percent of all adults), the number of individuals who reported no deposit and no withdrawal in the past year was 31 percent
"Only 17 percent of women have been successful in borrowing from the formal sector, whereas over 80% of borrowers in the informal microfinance sector are women," Arif said.
"The Insurance sector is also significantly underdeveloped, which leaves enterprises and individuals vulnerable," she said.
Less than 15 percent of SMEs and 1 percent of micro enterprises used any form of insurance.
"There’s also a minimal focus on women: Insurance payouts received by women in Sri Lanka dropped by 34 percent during 2006 to 2009," Arif said.
Sri Lanka’s Central Bank and the IFC on Tuesday launched the Development Process for Sri Lanka’s National Financial Inclusion Strategy.
The process involves extensive consultations with members of the public sector, private sector, civil society organizations, and academia.
IFC says it will leverage experiences of the World Bank Group, gained from helping more than 20 countries to design or implement National Financial Inclusion Strategies or Action Plans.
"For it to be effective, it cannot be a one size fits all solution that IFC brings. It needs to be localized and customized to provide solutions that are specific to the Sri Lankan context, specific to our needs towards achieving financial inclusion," Arif said. (COLOMBO, March 21, 2018)