Definition: “Financial Inclusion Strategies Are Roadmaps .

Definition: “Financial inclusion strategies are roadmaps of actions, agreed and defined at the nationalor subnational level, which stakeholders follow to achieve financial inclusion objectives. Successfulstrategies coordinate efforts with the main stakeholders, define responsibilities among them, and statea clear planning of resources by, for example, prioritizing targets. A strategy can promote a moreeffective and efficient process to achieve significant improvements in financial inclusion. Engagementwith the private sector, including through structured consultation, can help ensure the success of thestrategy and the relevance of the goals set.” (World Bank (2012), Reference Framework for FinancialInclusion Strategies)

Acronyms and Abbreviations . 31. Introduction . 41.1. Vision for the NFIS . 41.2. Definition of financial inclusion . 52. Assessment of the Current State of Affairs . 63. Strategy Objectives . 83.1. Priority policy areas . 83.2. Target population groups . 83.3. Strategy pillars . 104. Coordination and Implementation Mechanism . 114.1. Stakeholder roles and responsibilities . 125. Monitoring and Evaluation System . 135.1. Data sources . 135.2. Monitoring and evaluation results framework . 145.3. Evaluation of key NFIS activities . 175.4. Institutional responsibility for M&E. 176. Action Plan . 19References . 21This document is a product of the Finance and Markets Global Practice and was prepared by SarahFathallah and Douglas Randall. The team is grateful to the peer reviewers – Denise Dias, Jane C. Hwang,Thomas Lammer, and Harish Natarajan – for their valuable comments. Massimo Cirasino and DouglasPearce provided overall guidance.

AFIAlliance for Financial InclusionCPMICommittee on Payments and Market InfrastructuresCPSSCommittee on Payment and Settlement ServicesFASFinancial Access SurveyFSAPFinancial Sector Assessment ProgramFSPFinancial Services for the Poor (The Bill and Melinda Gates Foundation)G20Group of TwentyGSMAGroupe Speciale Mobile AssociationIOSCOInternational Organization of Securities CommissionsICTInformation and Communication TechnologyIMFInternational Monetary FundKPIKey Performance IndicatorMWMigrant WorkersMSMEMicro, Small, or Medium EnterpriseM&EMonitoring and EvaluationNFISNational Financial Inclusion StrategyNGONon Govermental OrganizationOECDOrganization of Economic Co-operation and DevelopmentPAFIPayments Aspects of Financial InclusionSMESmall or Medium EnterpriseWBGWorld Bank Group

Before tackling the core content of the National Financial Inclusion Strategy (NFIS), it is necessary toprovide sufficient background and context in order to answer the reader’s question: “Why is thisimportant?”1 Answering this question means demonstrating the rationale behind why financial inclusionas a policy objective is imperative, but also why a strategic approach to financial inclusion reforms isnecessary within the specific country context. As such, NFIS generally begin with a foreword orintroduction that covers two main elements:The context of the NFIS in relation to the main previous commitments or headline efforts made by thecountry’s authorities and other stakeholders to financial inclusion.How the NFIS aligns with or supports the country’s overall national, financial sector and NationalPayment System development, economic development, and/or poverty alleviation objectives andexisting initiatives. Clarification can also be usefully provided on the relationship and hierarchy of theNFIS with other relevant strategies or plans.Tip: An NFIS can provide an overall framework and roadmap for supporting and/orcomplementary thematic strategies and action plans (e.g. National Payment Systems Strategy,Financial Education Strategy, SME Finance Strategy), institutional strategies (e.g. CentralBank Strategic Plan), or regional (i.e. for a specific state or province) strategies providing moredetailed guidance in specific areas. Specifically, an NFIS can be a useful tool to secure and/orrationalize resources and increase the effectiveness of their allocation by eliminating overlapsor gaps in the field of financial inclusion that can emerge from uncoordinated actions.Eithera standalone sub-section or as part of the abovementioned introductory section, the overarchingnd asapproaches.vision for the National Financial Inclusion Strategy and its timeline of execution can be provided.Tip: The vision should answer the question “what would a successful implementation of theNFIS achieve?”Examples: Tanzania’s National Financial Inclusion Framework sets forth as its vision thefollowing: “All Tanzanians regularly use financial services and payment infrastructures tomanage cash flows and mitigate shocks. These are delivered by formal providers through arange of appropriate services and infrastructure, with dignity and fairness.”The Philippines’ National Strategy for Financial Inclusion establishes an overall vision of “a1Different terminology is applied to the concept of a National Financial Inclusion Strategy, including National FinancialInclusion Framework, as in the case of Tanzania.

financial system that is accessible and responsive to the needs of the entire population andtoward a broad-based and inclusive growth, particularly, to ensure that this financial systemalso serves the traditionally unserved or marginalized sectors of the population. This vision isguided by a focus on the client.”At a global level, the World Bank Group’s vision for Universal Financial Access is that “By 2020,adults globally have access to an account or electronic instrument to store money, and sendand receive payments as the basic building block to manage their financial lives.”Either as a standalone sub-section or as part of the abovementioned introductory section, a definition offinancial inclusion, based on the context of the country, can be provided.Examples: In the following examples of National Financial Inclusion Strategies and globalresources, financial inclusion is defined as: “The permanent access of adults to a range of financial products and services (i) offeredthrough formal and sustainable financial institutions, governed by appropriate regulation,(ii) diverse, affordable and tailored to the needs of the population, (iii ) used by [thepopulation] in order to contribute to the improvement of its socio-economic life.” (Burundi,Stratégie Nationale d’Inclusion Financière – translated) “Financial Inclusion is achieved when adults have easy access to a broad range of formalfinancial services that meet their needs and are provided at affordable cost.”(Nigeria, National Financial Inclusion Strategy) “The access to and usage of a range of quality, timely, convenient and informed financialservices at affordable prices. These services are under appropriate regulation thatguarantee consumer protection and promote financial education to improve financialcapabilities and rational decision-making by all segments of the population.” (Paraguay,National Financial Inclusion Strategy) “A state in which all working age adults, including those currently excluded by thefinancial system, have effective access to the following financial services provided byformal institutions: credit, savings (defined broadly to include current accounts),payments, and insurance.” Effective access is further defined as “convenient andresponsible service delivery, at a cost affordable to the customer and sustainable for theprovider, with the result that financially excluded and underserved customers can accessand use formal financial services.” (Global Partnership for Financial Inclusion) “Simply put, financial inclusion may be interpreted as having access to and using the type offinancial services that meet the user’s needs. The real needs for financial services ofindividuals, businesses and public administrations are, however, likely to be higher than isapparent from the actual use of a specific financial service at a given point in time. Inaddition, those needs tend to change over time. In this sense, a more desirable steady statefor financial inclusion would entail universal access to a wide range of financial services thatcan be used when and as needed.” (CPMI-WBG Payments Aspects of Financial Inclusion,Consultative Report)

The assessment section provides the analytical foundation of the NFIS. The objective is to identify a setof obstacles and opportunities relevant to the achievement of the vision set forth in the previous section.The identification of these obstacles and opportunities then serves to inform and motivate the objectives(Section 3), targets (Section 5), and action plan (Section 6) to achieve the NFIS vision.The overview section should provide an assessment of the levels of access, usage, and quality of financialservices in the country through analyses of (i) the financial sector landscape, including institutionalcomposition, physical reach, key products, and major recent developments; (ii) the enabling environment,including relevant laws and regulations as well as the financial (e.g. payments infrastructures, creditreporting systems) and other relevant infrastructures (e.g. ID infrastructure, ICT infrastructure, powersupply); (iii) current usage (use cases, frequency of use, etc.) of regulated and unregulated financialservices, including trends over time and across key population segments (e.g. women, the poor, youth,etc.) and regions.Tip: The structure and content of this section could be aligned with the policy priority areas,pillars, and/or target populations set forth in the NFIS objectives section. If, for example, theNFIS is structured around the policy priority areas of payments, savings, insurance, financialconsumer protection, and financial capability, then each area should be explicitly addressed inthe assessment section.Examples: To inform the development of Paraguay’s NFIS, the authorities worked with theWorld Bank to prepare four technical notes drawing on: (i) a nationally representative demandside survey of individuals; (ii) a supply side assessment of existing financial products andservices; (iii) an assessment of the legal and regulatory framework for financial inclusion; and(iv) a consumer protection and financial literacy diagnostic. The findings of these technical notesare highlighted in the “Current State of Financial Inclusion in Paraguay – Where are we?” sectionof the NFIS, which itself is divided into seven sections (financial inclusion environment; savings;credit; payments; insurance; financial education; consumer protection). The assessments arepublicly available (in Spanish) on the website of Banco Central del Paraguay.The scope and depth of the section will vary depending on available data and diagnostics. If time andresources permit, new data collection or assessments can provide invaluable and targeted insight toinform this section, including through demand-side surveys of individuals and/or firms, supply-sidesurveys of existing products and their key features, and legal/regulatory analyses (e.g. related to financialconsumer protection or payment systems). In other cases, the section will draw from existing materials,highlighting gaps when applicable. Rather than appending together existing or separately executedanalyses, efforts should be made to integrate these analyses into a single coherent narrative thatmotivates the NFIS objectives and key NFIS actions. The following table provides a list of globally relevantresources that can be drawn on to complement or inform country-specific resources and analyses.