Manila-based Asian Development Bank (ADB) said Thursday, Oct. 5, that it has approved a $300-million policy-based loan to help the Philippine government expand its financial inclusion programs.
ADB Senior Financial Sector Specialist Kelly Hattel in a statement affirmed that the multinational bank will continue to support the country’s inclusivity-centered programs to improve Filipinos’ access to financial products and services “including via digital platforms, to help improve their lives and livelihoods.”
“Considering the significant impact of climate change on the vulnerable segments of the population, the reform actions supported by the loan will ensure government assistance can reach people faster during crises and emergencies; help raise climate resilience of farmers and micro, small, and medium-scale businesses through expanded insurance; and promote improved financial stability,” said Hattel.
The new loan is intended to support the Philippines’ establishment of a “stronger institutional and policy environment” to help “expand Filipinos’ access to financial services, particularly the vulnerable segment of the population, and to promote economic growth.”
The ADB assistance provided under the Inclusive Finance Development Program Subprogram 1 and Subprogram 2 was first delivered in October 2018 and August 2020. It noted that reforms “pursued under this loan will complement other ADB programs in the Philippines, such as the Competitive and Inclusive Agriculture Development Program Subprogram 2 approved in January 2023.”
ADB’s Inclusive Finance Development Program, Subprogram 3, also support reforms that will expand financial inclusion in the country by improving financial infrastructure and the digital financing ecosystem. It also supports efforts to increase the capacity of financial service providers, including rural banks and nonbank financial institutions, to offer quality products and services accessible through various delivery channels, said the bank.
Based on the 2021 Global Findex Database, the ADB said the number of Filipino adults holding an account with a financial institution or mobile money provider has risen from 34 percent of the population in 2017 to 51 percent in 2021. “Hastened by the COVID-19 pandemic lockdowns, the Philippines nearly doubled the number of financial institution or mobile money accounts for the bottom 40% of the population by income from 18% in 2017 to 34% in 2021,” it said.
ADB noted the government’s objective of improving the number of Filipinos with formal financial accounts with banks or mobile money providers which should be 70 percent of adult Filipinos by 2024.
This will be aided by the Philippine Identification System (PhilSys), it said. Almost 88 percent of the population are under PhilSys as of Sept. 1.
ADB also noted the government’s key reforms to “eliminate barriers to access financial services and mainstream gender across its policies” such as updating and providing action plans for the National Strategy for Financial Inclusion 2022–2028.
“The Philippines also passed and implemented key legislation on financial consumer protection under the Financial Products and Services Consumer Protection Act, and rules encouraging digital platforms to provide financing to agriculture value chain members in support of the Agriculture, Fisheries and Rural Development Financing Enhancement Act 2022,” it noted.
The government has likewise implemented a regulatory sandbox framework for financial solutions to test new business models and facilitate the adoption of innovative technology approaches, ADB also noted.
Last September, the Bangko Sentral ng Pilipinas (BSP) signed a Manila Manifesto with other central banks and financial groups to expand the global financial inclusion agenda.
BSP Governor Eli M. Remolona Jr. has called for renewed efforts to push for all central banks’ sustainability agenda and to work together to overcome the risks and challenges of financial inclusion to improve access to credit and reduce global poverty.
The Philippines was the country-host for the 2023 AFI Global Policy Forum. It was co-hosted by the Alliance for Financial Inclusion or AFI, and attended by 700 delegates from over 70 countries. AFI is the world’s leading organization on financial inclusion policy and regulation.
The discussions during the event covered a wide range of critical issues, including the disruptive potential of digital technology, the need for inclusive green finance, the persistent gender gap, the need to support youth entrepreneurs, and the role of financial inclusion in uplifting forcibly displaced people.