> Posted by Sonja Kelly, Fellow, CFI
Jean-Claude Masangu, Former Governor of the Central Bank of the Democratic Republic of Congo discusses outreach to persons with disabilities and the macroeconomics of financial inclusion with Sonja Kelly, Fellow, Center for Financial Inclusion.
Kelly: As someone who has worked in the commercial banking industry, what are some of the considerations that financial services providers should keep in mind when devising a strategy for engaging with person with disabilities?
Masangu: Financial institutions should make their decision to provide financial services to persons with disabilities (PWD) based upon market surveys and research information that describe, among other things, the needs and kinds of products and services. These can be obtained through specialized firms if they are not readily available.
A second consideration is a thorough analysis of the required internal staff capabilities and transaction processes that will deliver the needed products efficiently without losing money. And a third consideration is for the financial provider to have a policy commitment towards PWD as part of its social corporate responsibilities. Last but not least, is to have an action plan that includes the identification of stakeholders in the community (i.e., disabled peoples’ organizations) and the signing of a strategic partnership with them.
Kelly: Some institutions think that working with persons with disabilities will be expensive. Is this attitude based upon false assumptions? What is the business case for serving persons with disabilities?
Masangu: Attitude and perception must be positive in order to impact a financial institution’s behavior. When attitude and perception are negative, there’s little chance for a financial provider to push for financial inclusion unless forced by law or regulations.
Cost is just one out of so many considerations to analyze. Therefore, one must first understand why attitude and perception are negative. Is this due to a lack of information or data on PWD, a lack of so-called tailored products and services, a lack of trained and experienced staff, or a lack of proper rules and procedures to process transactions? Once there’s a good understanding of the various barriers, then one can work to remove them. What PWD generally want is to have equal access to the same products and services provided to people with no apparent disability. And this can be achieved by access facilitation, sometimes physical and informational, and other times through facilities and devices that break away the mobility and distance barriers such as internet banking and mobile banking.
Kelly: Given your work as a central bank governor, do you think there is a role for government in increasing access to financial services for persons with disabilities?
Masangu: My government in general can certainly propose legislation that provides equal opportunity for all (i.e., for the young, elderly, women, PWD, and other discriminated minorities). That equal opportunity should not only be limited to policy statements. It should also include policy design and formulation. Now, more specifically, my government can propose legislation and regulations that increase access to financial services. That accessibility, including physical access, should be audited either by the government itself or one of its agencies or by stakeholders.
Finally, the audit information should be published and widely discussed. For example in Uganda, PWD members of parliament closely monitor legislation and its implementation. And moreover, the chair position of the parliamentary commission that deals with such issues is also held by a PWD!
My last comment on the subject is to draw your attention to the fact that around the world, a lot has been done in the last 20 years or so, if not more, for PWD in terms of physical access with respect to public transportation and public buildings. I am convinced that the same can be done by all governments in the area of financial services access!
Kelly: One of your major contributions as Governor was increasing currency stability in the DRC and putting the country on the path to growth. How has this legacy had an impact on financial inclusion?
Masangu: Let me briefly describe for you the situation I inherited when I took office as Governor of the Central Bank in August 1997 compared to my legacy some 16 years later in May 2013.
From the 1980s until the year 2000, the DRC was experiencing a three-to-four digit inflation rate. The local currency was losing its value against the U.S. dollar on a daily basis. The banking system was no longer providing financial services. The norm was: no or few deposits, no or few borrowings, no cash guarantee or collateral, few withdrawals at par value and upon demand. And GDP growth was negative over several years with a maximum negative rate of 14 percent!
The above situation reversed during my tenure. As of year end 2012 the following financial status prevailed: a local inflation rate of 2.7 percent, GDP growth of 7.2 percent, a stable currency fluctuating against the dollar at an average 1 percent rate over the last six years. As for the banking system, not only had its deposits and credit levels increased 28- and 38-fold respectively while its penetration rate jumped from below 2 percent to 20 percent over an estimated adult population of 35 million; new products and services such as microfinance, mobile banking, bank cards, ATMs, and electronic government payments of civil servants, the armed services and police forces (G2P payments) were introduced.
Having described both the before and after situations, I can now answer your question more specifically and precisely. The impact on financial inclusion has been:
- Mobile-banking technology increased access, reduced cost, and the distance between providers and beneficiaries of financial services.
- Microfinance not only increased access and borrowings, even though at a relatively higher cost than mobile-banking, but it also reduced distance.
- The G2P payments increased access and allowed the use of bank cards and ATMs by more unbanked individuals. G2P beneficiaries now have access to consumer loans, whereas they were totally excluded previously.
- The low 2.7 percent inflation rate induces lower borrowing interest rates.
- Finally, the stable currency acted as an incentive for higher deposits and raised the savings rate.
Kelly: Is there anything else you would like to add?
Masangu: I just would like to thank you for the opportunity you have given me to talk about financial inclusion, a subject that I am passionate about. From a macro level point of view and as governor of a central bank I was used to thinking “No country can develop without an efficient financial system.” But now, I look at things differently. I think more about people as opposed to systems. And I can confidently say today that, “No person can develop without having access to financial services.”
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