Statement by Senator Alan Eggleston, Parliamentary Adviser to the Australian Delegation to the United Nations General Assembly regarding eradication of poverty and other development issues: plenary devoted to the follow up to the International Year of Microcredit. As delivered 13 October 2010.
Mr President,
I am grateful for the opportunity to address the General Assembly during this important follow-up to the 2005 International Year of Microcredit.
Australia sees financial inclusion of the poor as essential to the reduction of poverty, sustainable development and progress towards the Millennium Development Goals.
Some 2.7 billion adults around the world lack access to banking services. Access to a wide set of financial tools, such as credit, savings products, payment and transfer services and insurance, helps poor people to increase their income and build assets. Through financial services, poor people can set up small businesses, insure against crop losses and save in case of illness or disaster.
Microfinance is a particular important tool for promoting gender equality and the empowerment of women. Over two-thirds of microfinance clients around the world are women. When women are provided with access to finance, the whole household benefits.
Women with access to microfinance can have greater control over their incomes and more power in household decision-making. Through microfinance programs, women often gain new vocational skills, self-confidence and greater leadership, resulting in an enhanced ability to drive change within both the household and the community.
Australia supports financial inclusion initiatives across the globe, from Pacific Island countries, Papua New Guinea, Timór-Leste in the Asia-Pacific, to countries far outside our region including Iraq, Peru, and Colombia.
Australia’s approach to supporting financial inclusion is outlined in Financial Services for the Poor: A strategy for the Australian aid program 2010-15, which was launched earlier this year.
Through this stratregy, Australia will build the capacity of financial institutions to offer quality, affordable and fair financial services to the poor and assist governments to create an enabling policy and regulatory environment. We will seek to utilise the potential of new technologies. And we will support financial literacy programs to help people in developing countries understand their finances and the services available to them.
Mr President,
It is clear that an enabling policy environment and supportive legal and regulatory framework are essential for sustainable growth of financial services for the poor.
Governments play a crucial role in creating a policy environment that promotes the expansion of financial services while also protecting consumers against predatory service providers, including by ensuring effective interest rate disclosure.
Australia is working within the Pacific Islands Forum Economic Ministers Meeting (FEMM) to ensure financial inclusion is high on the agenda for finance and economic ministers in our region. Current work with our Pacific region partners is helping facilitate transfer of remittances, and promoting the use of new technologies including mobile phones for branchless banking.
Technology such as mobile telephones, point-of-sale devices, and low-cost automatic teller machines (ATMs) offer great potential in strengthening access to financial services, especially for the poor in rural and sparsely populated areas where high transaction costs have impeded the development of traditional financial services.
When new technology is appropriately used, financial institutions no longer have to open numerous bricks-and-mortar branches to provide and expand services. In addition, new technology-based microfinance models can significantly reduce transaction costs compared to conventional banking models.
Innovative models of financial service delivery can provide a range of services previously unavailable to the poor, including savings, payments and transfer services.
The Australian Government is committed to supporting institutions and fostering partnerships that push the frontiers of technology and innovation to expand the provision of financial services to the poor.
We also recognise the importance of supporting financial education. Financial education can provide the poor with the skills and knowledge to take advantage of financial opportunities and plan for the future. Financial education forms a vital cornerstone to ensure that poor clients are protected and treated fairly when using financial services. Lack of financial literacy is also a key contributing factor to over-indebtedness which can push poor people even deeper into poverty.
Mr President,
Australia supports the G20’s efforts to promote financial services for the poor, and we are pleased to contribute as co-chair of the G20 Financial Inclusion experts group, together with Brazil. The nine Principles for Innovative Financial Inclusion, endorsed by the G20 Leaders in Toronto in June, set important standards for financial access, financial literacy, and consumer protection.
Mr President,
Australia will continue to work closely with our development partners to unlock the potential of financial services for the poor.
Thank you for the opportunity to contribute to this important debate.