TOOLKIT Developing and Operationalizing a National Financial Inclusion Strategy JUNE 2018 FINANCE, COMPETITIVENESS & INNOVATION GLOBAL PRACTICE TOOLKIT Developing and Operationalizing a National Financial Inclusion Strategy JUNE 2018 © 2018 International Bank for Reconstruction and Development/The World Bank Group 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org DISCLAIMER This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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CONTENTS Acknowledgments vi Abbreviations vii EXECUTIVE SUMMARY 1 INTRODUCTION 4 1 THE NFIS DEVELOPMENT PROCESS 6 1.1 Identifying and Engaging NFIS Stakeholders 7 1.2 Developing an NFIS Drafting Model and NFIS Development Road Map 10 1.3 Conducting Data Collection and Diagnostic Work 13 2 NFIS TEMPLATE AND KEY COMPONENTS 23 2.1 Rationale and Vision 23 2.2 Baseline Assessment 24 2.3 Objectives and Policy Areas 26 2.4 Governance Arrangements 30 2.5 Monitoring and Evaluation System 34 2.6 Action Plan 37 2.7 Risks and Mitigation Measures 40 3 OPERATIONALIZING THE NFIS 41 3.1 Operationalizing the NFIS Governance Arrangements 41 3.2 Operationalizing the NFIS Action Plan 44 3.3 Operationalizing the NFIS M&E System 47 3.4 Communicating NFIS Progress 51 GLOSSARY OF TERMS 53 REFERENCES 55   iii iv   Developing and Operationalizing a National Financial Inclusion Strategy BOXES, FIGURES, AND TABLES Box ES.1: Key Success Factors for NFIS Development and Operationalization 2 Box I.1: Defining Financial Inclusion 5 Box 1.1: Tip: Securing Initial High-Level Buy-in for NFIS Development 8 Box 1.2: Tip: Engaging the Private Sector 9 Box 1.3: Country Example: NFIS Drafting Committee in Zambia 10 Box 1.4: Country Example: Working Groups in Peru 10 Box 1.5: Tip: Key NFIS Areas for Stakeholder Input during NFIS Development 11 Box 1.6: Tip: NFIS Development Kick-Off Events 12 Box 1.7: Tip: Using the RACI Model 12 Box 1.8: Key Resource: Universal Financial Access Web Portal 15 Box 1.9: Key Resource: The Global Findex 17 Box 1.10: Country Examples: Financial Inclusion Surveys in the Philippines, Mexico, and Ethiopia 19 Box 1.11: Tip: Conducting a Mapping of Access Points: Collecting and Analyzing Geospatial Data 20 Box 1.12: Country Example: Diagnostic Work to Inform NFISs in Pakistan and Paraguay 21 Box 1.13: Tip: Orienting Diagnostic Work to Inform an NFIS 21 Box 2.1: County Examples: NFIS Visions in Tanzania, the Philippines, and Haiti 24 Box 2.2: Country Examples: Defining Financial Inclusion in Nigeria, China, and Paraguay 25 Box 2.3: Country Examples: NFIS Implementation Period Examples 25 Box 2.4: Tip: Alignment of Assessment and NFIS Policy Areas 25 Box 2.5: Tip: World Bank Approach to Analysis of Financial Inclusion in FSAPs 26 Box 2.6: Country Example: Jamaica’s NFIS Policy Areas and Objectives 28 Box 2.7: Country Example: NFIS Policy Frameworks in Zambia 28 Box 2.8: Country Examples: NFIS Target Populations in Indonesia and Peru 29 Box 2.9: Country Examples: Gender in National Financial Inclusion Strategies{TO COME} 29 Box 2.10: Country Example: NFIS Governance Arrangements in Pakistan 31 Box 2.11: Tip: Tailoring NFIS Governance Arrangements to Country Context 32 Box 2.12: Tip: Ensuring Accountability at the Institutional Level 32 Box 2.13: Tip: Distinguishing the Different Functions of NFIS Governance Entities 33 Box 2.14: Country Examples: NFIS Actions to Improve Data Infrastructure 35 Box 2.15: Tip: Determining Targets 36 Box 2.16: Country Examples: NFIS Actions 37 Box 2.17: Key Resource: G20 High-Level Principles for Digital Financial Inclusion 38 Box 2.18: Key Resource: 2017 Global Financial Inclusion and Consumer Protection Survey 39 Box 2.19: Tip: Consistency in Defining Actions 39 Box 2.20: Tip: A Lean NFIS 40 Box 2:21: Country Example: Addressing NFIS Implementing Risks in Zambia 40 Box 3.1: Country Examples: NFIS Secretariats in Indonesia, Zambia, and Jamaica 44 Box 3.2: Tip: Effective Working Group Meetings 45 Box 3.3: Tip: Determining Accountability and “Champions” within Each Implementing Stakeholder 45 Box 3.4: Tip: Developing SMART Indicators 47 Box 3.5: Country Example: Financial Inclusion Web Portal in India 50 Box 3.6: Key Resources 50 Box 3.7: Tip: Periodic Internal Reports 51 Box 3.8: Tip: Annual Public Reports 52 Box 3.9: Country Example: An NFIS “Refresh” in Nigeria 52 Figure 1.1: Segmentation of NFIS Stakeholder Roles 7 Figure 1.2: Illustrative NFIS Development Timeline 13 Figure 1.3: Demand- and Supply-Side Financial Inclusion Data 16 Figure 1.4: Determining the Need for a New Demand-Side Survey 18 Figure 2.1: Policy Areas across 34 NFISs 27 Contents  v Figure 3.1: Illustrative Example of an NFIS Secretariat Staffing Structure 43 Figure 3.2: Theory of Change Diagram 46 Figure 3.3: Cyclical M&E Functions Typical of a Secretariat 49 Table 1.1: Example Stakeholder Segmentation Table 9 Table 1.2: Global Resources for Financial Inclusion-Related Data and Diagnostics 14 Table 1.3: Available Data Sources Template Example 17 Table 1.4: Publicly Available Financial Inclusion Demand-Side Data Sources 18 Table 2.1: Illustrative Mapping of NFIS Governance Roles and Responsibilities 30 Table 2.2: Example National Results Framework Template 36 Table 2.3: Example Action Plan Template 39 Table 2.4: Example Risk Table Template 40 Table 3.1: Operationalizing an NFIS after Its Launch 42 Table 3.2: Illustrative Example of Secretariat Staff Responsibilities 43 Table 3.3: Detailed Implementation Plan Template 46   v ACKNOWLEDGMENTS This toolkit is a product of the Financial Inclusion, Infrastructure & Access Unit within the World Bank Group’s Finance, Competitiveness & Innovation Global Practice. The toolkit was prepared by Helen Luskin Gradstein, Douglas Randall, and Oya Ardic Alper. Sarah Fathallah contributed to an earlier version of chapter 2, published in 2016. Mahesh Uttamchandani, Douglas Pearce, and Sebastian Molineus provided overall guidance. The team is grateful to the World Bank Group peer reviewers Rathnija Arandara, I Gede Putra Arsana, Jennifer Chien, Ivo Jenik, and Collen Masunda, as well as to external peer reviewers from the Superintendency of Banks, Insurance, and Private Pensions in Peru and the Bank of Jamaica. The team thanks Charles Hagner for editorial assistance and Naylor Design, Inc. for design and layout assistance. vi ACRONYMS AND ABBREVIATIONS IC Implementation Committee KPI key performance indicator M&E monitoring and evaluation MSME micro, small, and medium enterprise NFIS national financial inclusion strategy   vii EXECUTIVE SUMMARY Financial inclusion plays a critical role in enabling shared The toolkit covers three key areas: prosperity and reducing poverty, and is complementary to financial sector objectives of stability and integrity. Yet THE NFIS DEVELOPMENT PROCESS most economies have large financially excluded popula- tions. Achieving greater financial inclusion requires a An effective NFIS development process engages and deliberate and coordinated approach to identify relevant solicits buy-in from a range of stakeholders, follows a obstacles and opportunities, leverage linkages across structured approach, and is grounded in robust data and financial and nonfinancial policy areas, and align the diagnostics work. The first chapter of the toolkit provides efforts of a wide range of stakeholders. guidance on the overall NFIS development process with an emphasis on the initial phases of the process and A national financial inclusion strategy (NFIS) provides an focusing on three main tasks: (i) identifying and engaging effective instrument to chart a clear and coordinated path stakeholders, (ii) developing an NFIS drafting model and toward improving financial inclusion. An NFIS enables development road map, and (iii) conducting data and stakeholders to jointly define financial inclusion objec- diagnostics work. tives, identify obstacles and opportunities relevant to the achievement of those objectives, and outline a prioritized Organizing NFIS stakeholders during the development set of actions to pursue in a coordinated manner. The process can often be done by segmenting them into establishment of governance arrangements and a moni- three groups: (i) lead stakeholder(s), (ii) drafting stake- toring and evaluation (M&E) system for financial inclusion holders, and (iii) consultation stakeholders. The identifi- are also critical elements of an effective NFIS. As of mid- cation of a strong lead stakeholder or “NFIS champion” 2018, more than 35 countries have launched an NFIS, and is particularly critical to ensure the credibility and effi- at least 25 countries are in the process of developing such ciency of the NFIS development process. In most cases, an instrument. this institution will continue to have a leadership role in NFIS implementation. This toolkit provides financial sector authorities and other stakeholders with practical guidance on developing and An effective NFIS development process also requires a operationalizing an NFIS. The toolkit includes detailed drafting model and development road map. A drafting operational tips as well as country examples from over 20 model identifies how each stakeholder will contribute to countries. The toolkit is informed by the World Bank the NFIS development process, including how stakehold- Group’s experience as a technical partner in the develop- ers will organize themselves and the processes through ment and implementation of NFISs in a diverse range of which they will engage with one another. The NFIS devel- country contexts. opment road map outlines the sequence of steps and key   1 2   Developing and Operationalizing a National Financial Inclusion Strategy milestones to be followed when developing and launch- NFIS TEMPLATE AND KEY COMPONENTS ing an NFIS. The development road map also covers data and diagnostics work and steps needed to secure high- While NFIS documents vary across countries, certain key level approval for the NFIS. elements should be articulated in the NFIS to facilitate its effective implementation. The second chapter of this tool- Finally, data and diagnostics work is a critical input for kit provides NFIS stakeholders with a template to facilitate assessing the current state of financial inclusion and identi- the drafting of a comprehensive and action-oriented fying obstacles and opportunities relevant to achieving NFIS. The chapter’s structure follows a recommended out- greater financial inclusion. An NFIS grounded in a robust line of a national financial inclusion strategy and includes evidence base is more likely to be effectively implemented. the following sections: A range of data and diagnostics can be undertaken during the NFIS development process, including demand-side Rationale and vision: The introductory section of an NFIS surveys, supply-side data collection, and sectoral or the- should answer the question, Why is this important? and matic diagnostics. A number of global data sources and set forth the national vision and defintion for financial technical guidance are available to inform this work, inclusion. This section should also articulate how the NFIS including the 2017 World Bank Group (WBG) Global Fin- is aligned with and complementary to existing national, dex; the 2017 WBG Good Practices for Financial Con- economic, and financial sector priorities and strategies. sumer Protection; the 2017 WBG Global Financial Inclusion and Consumer Protection Survey; the 2016 G-20 High- Baseline assessment: This section provides the analytical Level Principles for Digital Financial Inclusion; and the underpinning of the NFIS. The section should summarize 2016 CPMI-WBG Payment Aspects of Financial Inclusion. current levels of financial access and usage and identify the obstacles and opportunities relevant to the achieve- ment of the NFIS vision. BOX ES.1 Key Success Factors for NFIS Development and Operationalization Early and sustained engagement of relevant stakeholders—including the private sector—to create broad 1. buy-in and align efforts across financial and nonfinancial policy areas 2. Investment in data and diagnostics work to ensure that the NFIS is grounded in a robust evidence base and accurately identifies constraints and opportunities relevant to the achievement of greater financial inclusion Identification of high-level champions within key institutions who can integrate relevant NFIS actions into 3. institutional work plans and advance their implementation 4. Clear articulation of NFIS objectives and targets to ensure a shared understanding of expected outcomes Prioritization of forward-looking NFIS actions that emphasize digital approaches, proportionality, and the 5. needs of financial consumers Establishment of inclusive but efficient governance arrangements to facilitate collaboration and consulta- 6. tion throughout the NFIS implementation period 7. Mobilization of resources prior to NFIS launch—including those needed for “quick win” actions and Secre- tariat staff—to build momentum and demonstrate credibility Effective communication and branding of the NFIS, including the signaling of early implementation suc- 8. cesses Flexibility to adapt NFIS elements during implementation to reflect market developments and emerging 9. policy priorities 10. A well-resourced and robust M&E system to track implementation progress, identify bottlenecks, and inform course corrections Executive Summary   3 Objectives and policy areas: A set of specific policy OPERATIONALIZING THE NFIS objectives should be clearly defined, and they can be grouped into a set of policy areas—for example, digital The third and final chapter of the toolkit provides guid- financial services or financial consumer protection. ance on operationalizing key NFIS elements. The desired result is an effectively implemented NFIS, wherein NFIS Governance arrangements: Inclusive but efficient gover- actions are advanced in a timely manner, progress is mon- nance arrangements are important to ensure continued itored and assessed, and bottlenecks are addressed. The collaboration during NFIS implementation. first six months of NFIS implementation are important for maintaining momentum, securing “quick wins,” and Monitoring and evaluation system: An M&E system is ensuring that the various elements of the NFIS are operat- needed to translate financial inclusion objectives into ing effectively. measurable indicators and targets and to ensure that implementation progress is tracked and assessed. Operationalizing the NFIS action plan requires shifting from high-level actions described in the NFIS to opera- Action plan: A set of sequenced, time-bound, and priori- tional work plans, based on a theory-of-change approach. tized actions make up the core of the NFIS. The action Ensuring that implementing stakeholders have embed- plan should include clear indication of institutional respon- ded relevant NFIS actions into their institutional work sibilities as well as a set of “quick wins.” plans and aligned staff incentives and resource availability to facilitate the implementation of these actions is critical. Risks and mitigation measures: Clear identification and discussion of implementation risks keep these risks front- An effective NFIS M&E system must be quickly operation- of-mind for all stakeholders and facilitate the develop- alized in order to track implementation progress, strength- ment of effective mitigation measures. en financial inclusion data infrastructure, monitor high- level national financial inclusion progress, and evaluate Each section of chapter two describes the key content the impacts of key NFIS actions. that should be covered in an NFIS document, along with guidance on the drafting process. Operationalizing NFIS governance entities—including a high-level NFIS Council, an NFIS Implementation Com- mittee, an NFIS Secretariat, and working groups—is important to ensure effective collaboration and consulta- tion. These entities should have clear mandates and be composed of relevant and effective individuals. INTRODUCTION Policy makers increasingly recognize the role of financial A deliberate and coordinated approach is therefore inclusion in enabling shared prosperity and reducing required to accelerate progress toward financial inclu- poverty. Individuals, households, and firms need appro- sion. A national financial inclusion strategy (NFIS) pro- priate financial products and services to save, borrow, vides a powerful instrument to address this challenge make and receive payments, and manage risk. Enhanc- and chart a clear and coordinated path toward achiev- ing financial inclusion can improve resistance to shocks, ing national financial inclusion objectives. An NFIS boost productivity of firms, facilitate empowerment of enables stakeholders to jointly define financial inclusion marginalized groups, such as women and rural residents, objectives, identify obstacles and opportunities rele- and help reduce poverty.1 Yet according to the 2017 vant to the achievement of those objectives, and out- Global Findex, an estimated 1.7 billion adults still lack line a prioritized set of actions to pursue in a coordinated access to a basic transaction account; many more are manner. The establishment of governance arrange- underserved (Demirgüç-Kunt et al. 2017). ments and a monitoring and evaluation (M&E) system for financial inclusion are also critical elements of an Financial inclusion is not a naturally occurring phenome- effective NFIS. In addition, an NFIS can serve as a use- non. Accelerating progress toward financial inclusion ful tool to secure and/or rationalize resources and elim- requires taking a holistic view to identify constraining inate overlaps. factors—such as high transaction costs and informational asymmetries—as well as potential opportunities, such as The adoption of NFISs has accelerated significantly in the market entry of new technology-driven providers or the past decade. Prior to 2010, NFISs were rare. A small the digitization of government-to-person payments. group of NFIS pioneers, including Brazil and Nigeria, Financial inclusion is a broad policy objective that spans launched an NFIS between 2010 and 2013. Approxi- multiple financial subsectors (for example, banking, mately 12 countries—including Peru, Pakistan, China, microfinance, payments, insurance, and so forth); and the Philippines—launched an NFIS during 2014 or involves financial, information and communications tech- 2015, and another 15 or so countries—including Colom- nology, and data infrastructure; and requires consider- bia, Mexico, Ethiopia, and Zambia—launched an NFIS in ation of both demand-side and supply-side issues. 2016 or 2017. As of mid-2018, more than 35 countries Ensuring that financial inclusion efforts are aligned with have launched an NFIS, and at least 25 countries are in and complementary to poverty alleviation, economic the process of developing such an instrument.2 Several development, and financial sector development objec- countries, including Indonesia and Tanzania, have tives requires coordination between financial and non- updated their original NFIS or launched a second NFIS.3 financial sector stakeholders, such as ministries of education and social affairs and consumer protection The purpose of this toolkit is to provide financial sector entities. authorities and other stakeholders with practical guid- ance on developing and operationalizing an NFIS. The 4 Introduction    5 BOX I.1 Defining Financial Inclusion For the purpose of this toolkit, financial inclusion is defined as • Accessibility refers to consumers’ ability to access and use “the uptake and usage of a range of appropriate financial prod- financial products and services conveniently. Consumers ucts and services by individuals and MSMEs [micro, small, and need sufficient physical proximity to access points—includ- medium enterprises], provided in a manner that is accessible ing branches, agents, automated-teller machines, and and safe to the consumer and sustainable to the provider.” This mobile phones—to enable them to select and use a range definition reflects the following four critical dimensions to finan- of financial products and services easily. cial inclusion: • The provision of responsible and safe financial products • Diverse and appropriate products are critical to ensuring and services is important to ensure that consumers truly that the needs of consumers—particularly those that are cur- benefit from financial inclusion and that the policy objectives rently unserved or underserved—are met and that consumers of financial inclusion align with those of financial stability, are motivated to take up and use financial products. Appro- market integrity, and consumer protection. priate product design requires identifying the needs of partic- • Commercial sustainability and viability are critical to sus- ular consumer segments (including at various life stages) and taining a financial ecosystem in which providers can deliver designing products that meet those needs at a reasonable appropriate products in a cost-effective and sustainable cost. This includes a basic set of products: payments, savings, manner over the long term. An enabling environment that credit, and insurance products. supports the healthy operation of a diverse set of innovative providers is key to achieving sustainable levels of financial inclusion. Source: Adapted from World Bank Group and PBOC, 2018 toolkit covers three key areas: (i) the process of develop- The rest of this toolkit is structured as follows: ing an NFIS, (ii) the key content of an NFIS document, • Chapter 1 provides overall guidance on the NFIS and (iii) the operationalization of an NFIS. The toolkit is development process with an emphasis on the initial informed by the World Bank Group’s experience as a phases of NFIS development. technical partner in the development and implementa- tion of NFISs in a diverse range of country contexts. • Chapter 2 provides a detailed template for drafting a While NFIS experiences vary considerably across coun- comprehensive and action-oriented NFIS, including tries, the authors have identified a range of good prac- explanations of key NFIS elements (for example, policy tices to facilitate effective NFIS development and framework, action plan). implementation. The toolkit provides general guidance • Chapter 3 provides guidance on operationalizing the and detailed operational tips and country examples NFIS—in particular, the governance arrangements, from over 20 countries. action plan, and M&E system. NOTES For instance, a recent study has found that access to mobile money products has lifted two percent of Kenyan households out of 1.  poverty as a result of changes in financial resilience and savings, with more pronounced impacts for female-headed households (Suri and Jack 2016). Additional research is summarized in World Bank 2013. 2.  A range of publicly available NFISs are available at World Bank Group 2018. Other countries use similar instruments to achieve the same purpose—for example, a Financial Sector Strategy (Maimbo and 3.  Melecky 2014) or National Payments Systems Strategy (World Bank Group 2012a). 1 THE NFIS DEVELOPMENT PROCESS An effective NFIS development process engages a range development process—including how stakeholders will of relevant stakeholders, solicits buy-in and ownership organize themselves and the processes by which they will from implementing institutions, and is grounded in a engage with one another. The drafting model should robust evidence base. In general, the initial NFIS develop- reflect time constraints, the comparative advantages of ment process involves three main tasks: (i) identifying and each stakeholder, and political realities. engaging stakeholders, (ii) developing an NFIS drafting model and development road map, and (iii) conducting The drafting model will inform the NFIS development data and diagnostics work. These tasks are addressed in road map, which outlines the sequence of steps and the three sections of this chapter. related actions to be followed when developing and launching an NFIS. The development road map creates Section 1.1: Identifying and Engaging NFIS Stakehold- structure for the drafting process and ensures that expec- ers. An NFIS typically covers a wide variety of topics within tations and responsibilities are clearly established. The the financial system as well as other sectors (for example, development road map also covers data and diagnostics education, social protection, women, agriculture, digital work and steps needed to secure high-level approval for economy). As a result, there is a need to identify a range the NFIS. A strong emphasis should be placed on effec- of stakeholders who can actively provide value-add contri- tive stakeholder engagement, since the NFIS will ulti- butions to the NFIS development process. Organizing mately be implemented by a wide range of stakeholders, these stakeholders can often be done by broadly seg- and their buy-in and ownership of NFIS priority areas and menting them into three groups: (i) lead stakeholder(s), (ii) actions is pivotal to NFIS success. drafting stakeholders, and (iii) consultation stakeholders. Section 1.3: Conducting Data and Diagnostics Work. The identification of a strong lead stakeholder or “NFIS Data, diagnostics, and mapping exercises are critical champion” is particularly critical to ensure the credibility inputs toward assessing the current state of financial inclu- and efficiency of the NFIS development process. In most sion and identifying obstacles and opportunities to meet cases, this institution will continue to have a leadership policy objectives. NFIS stakeholders should identify exist- role in implementation once the NFIS is launched. Section ing resources that can inform the NFIS (for example, 1.1 provides guidance on identifying and engaging NFIS demand-side data) and remaining gaps. Once informa- stakeholders. tion gaps are identified, efforts should be made to address them prior to drafting and finalizing a strategy, in order to Section 1.2: Developing an NFIS Drafting Model and provide a comprehensive overview of the sector related to NFIS Development Road Map. A drafting model identi- financial inclusion. fies how each stakeholder will contribute to the NFIS 6 The NFIS Development Process    7 IDENTIFYING AND ENGAGING 1.1  Once the universe of relevant stakeholders is outlined, NFIS STAKEHOLDERS stakeholders can be segmented into three categories: (i) lead stakeholder(s), (ii) drafting stakeholders, and (iii) con- An effective NFIS requires an inclusive development pro- sultation stakeholders. The selection of a motivated and cess that engages relevant stakeholders in line with their capable lead stakeholder(s) or “champion(s)” is critical to comparative advantages, relevance, and desired level of driving the NFIS development process. Figure 1.1 illus- engagement. In most countries, there are dozens of trates the three main categories of stakeholder roles institutions whose remit and mandate are relevant to during the NFIS development process, and table 1.1 pro- national financial inclusion objectives. These institutions vides an illustrative example of mapping stakeholders to include financial sector authorities, financial service pro- these categories as well as to potential areas of engage- viders and industry associations, nongovernmental orga- ment by topic. nizations, consumer associations, research and statistical entities, other government institutions, and international Lead stakeholder(s). The lead stakeholder(s) will man- ➤  organizations. Identifying and structuring these various age the entire NFIS development process and act as stakeholders so that each can contribute to the NFIS the NFIS champion. The lead stakeholder(s) will be development process is a critical step once high-level responsible for propelling the NFIS development pro- support for developing an NFIS has been secured. (See cess forward and for engaging other stakeholders and box 1.1.) holding them accountable for their agreed-upon con- tributions. For this reason, it is advisable to select a It is useful first to define the entire universe of stakehold- lead stakeholder(s) that has not only strong relation- ers relevant to financial inclusion. A broad and inclusive ships and credibility with other relevant stakeholders approach should be taken at this stage. Undertaking such but also relevant capacity and technical expertise in an exercise allows the lead stakeholder(s) to understand financial inclusion. An effective NFIS champion will be how many stakeholders may be involved in the process, able to build consensus among all relevant stakehold- so that the lead stakeholders can take a deliberate ers on key issues (for example, selection of NFIS policy approach to defining the roles of relevant stakeholders areas) and resolve inevitable frictions and obstacles. and understand optimal moments during the develop- The lead stakeholder(s) will typically also play a leading ment process when different sets of stakeholders should role in NFIS implementation (for example, chairing the be engaged. Implementation Committee, housing the Secretariat, and/or implementing key actions). FIGURE 1.1: Segmentation of NFIS Stakeholder Roles Lead stakeholder/ NFIS champion Coordinates and leads all elements of NFIS development process Drafting stakeholders Actively engages in NFIS development and drafting activities, including through drafting committee and/or working groups Consultation stakeholders Regularly consulted and asked to provide feedback at key intervals 8   Developing and Operationalizing a National Financial Inclusion Strategy Countries may differ in their choice of the lead cies and programs relevant to financial inclusion, such stakeholder(s) when developing an NFIS. According to as a ministry of social development (often critical in results from the 2017 Global Financial Inclusion and efforts to digitize government-to-person transfers), the Consumer Protection Survey, 11 responding jurisdic- education ministry (which may play a key role in finan- tions reported that the central bank was the lead stake- cial education), or a national statistics agency (whose holder (for example, Brazil and the Philippines), seven technical capacity and data resources can strengthen jurisdictions reported that it was the Ministry of Finance national M&E systems for financial inclusion). Some (Sweden and Zambia), five jurisdictions reported that it countries may also choose to have industry representa- was another ministry (the Coordinating Ministry for tives (for example, from a banking or microfinance Economic Affairs in Indonesia), and one jurisdiction association) included as a drafting stakeholder. Often reported another financial sector regulator (South these drafting stakeholders form a drafting committee, Korea). Many of the NFIS development processes in chaired by the lead stakeholder(s) (as further described the above-mentioned countries were still led by a mul- in section 1.2.1). tistakeholder entity. However, even in this scenario, it is useful to select one or two stakeholders who will chair Consultation stakeholders. Finally, consultation stake- ➤  the multistakeholder entity. holders are those who will not play an active drafting While this stakeholder segmentation focuses mainly role but will be consulted regularly and asked to pro- on institutions, it is particularly important for the lead vide feedback at key intervals during the drafting pro- stakeholder to have a well-respected and effective cess. Selecting a wide range of consultation stake- individual or team of individuals leading the process. holders helps to ensure that the NFIS gathers inputs and generates buy-in from all institutions that have a ➤  Drafting stakeholders. Drafting stakeholders will play stake in the financial inclusion agenda. an active role in drafting the NFIS. These stakeholders Consultation stakeholders can include the private typically include institutions involved in financial sector sector (for example, industry groups or leaders of major policy making and regulation. In many cases, represen- financial service providers; see box 1.2), nongovern- tatives from multiple departments within a given insti- mental organizations, international organizations, and tution may be needed as drafting stakeholders—for other public sector stakeholders that are not included example, representatives from the banking supervision as lead or drafting stakeholders. A good rule of thumb department, payments department, and credit infra- is that if any aspect of the NFIS falls within the remit of a structure department of a financial sector regulator. given stakeholder, they should be included at least as a Drafting stakeholders can also include institutions consultation stakeholder. In practice, the levels of with a key role in developing and implementing poli- BOX 1.1 Tip: Securing Initial High-Level Buy-in for NFIS Securing initial high-level buy-in for the development entity can be helpful both for propelling the process of an NFIS is, of course, a critical first step. This should forward and for securing approval of the NFIS, as be done not only within the lead institution but also some countries have experienced delays between among key relevant stakeholders, including, at a min- the strategy drafting and its launch due to a lack of imum, the central bank, financial sector regulators, initial engagement by relevant high-level officials. and the ministry of finance. For example, in Jamaica, Establishing such an entity can also facilitate the when the minister of finance appointed the Bank of smooth transition into a high-level implementa- Jamaica to lead the NFIS development process, cred- tion-oriented entity. (See section 2.4.) An alternative ibility was given to the process and a range of stake- approach is to rely on the engagement and guid- holders were incentivized to participate. ance of existing high-level financial sector commit- tees during the NFIS development process. Developing a higher-level NFIS Development Council (for example, composed of ministers, the central bank Regardless of the approach, it is important to secure governor, and executives of regulatory agencies or high-level buy-in for the NFIS development process their deputies) is also a common practice during the early on and also to plan ahead for how the NFIS will development of the strategy. Establishing such an ultimately be approved. The NFIS Development Process    9 engagement of consultation stakeholders will vary, but casting a wide net ensures that all who want to contrib- BOX 1.2 ute to the process are able to do so. Consultation stake- holders are often engaged through participation in Tip: Engaging the Private Sector working groups, periodic consultation workshops, and/ Private sector stakeholders should play a signifi- or requests for written comments on NFIS drafts. cant role in providing inputs into the NFIS. NFIS champions should be encouraged to include a In this phase, stakeholders should also consider the range of private sector players (such as industry potential role of external consultants and international associations, major financial service providers, organizations. Defining the role of external consultants fintech companies, mobile network operators, and/or international organizations may be motivated by (i) and so forth) to gather a variety of different view- the difficulty of balancing NFIS development tasks with points and understand bottlenecks to financial other day-to-day responsibilities for lead and drafting inclusion from a provider’s perspective. In addi- stakeholders, (ii) a desire for additional technical exper- tion, private sector players provide unique tise, including knowledge of global best practices, and/or insights into the cost drivers and constraining regulatory or supervisory environments that may (iii) the utility of having an honest broker to facilitate the prevent the provision of appropriate products process among a wide range of stakeholders. A key suc- and services to underserved consumers. cess factor in leveraging external assistance is defining the role and expectations of the consultant and/or technical TABLE 1.1: Example Stakeholder Segmentation Table NFIS DEVELOPMENT ROLE ROLE IN NFIS POLICY AREAS FINANCIAL MSME/ CONSULT- DIGITAL INFRA- AGRICULTURAL CONSUMER FINANCIAL DATA AND STAKEHOLDER LEAD DRAFTING ATION FINANCE STRUCTURE FINANCE PROTECTION LITERACY INSURANCE MEASUREMENT Central bank ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Sectoral financial ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ sector authorities Ministry of finance ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Market conduct ✔ ✔ ✔ ✔ authorities SME/rural development ✔ ✔ ✔ agencies ICT regulator ✔ ✔ Ministry of agriculture ✔ ✔ ✔ Development banks ✔ ✔ Ministry of industry/ ✔ ✔ ✔ commerce Industry associations (banks, payments, MFIs, ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ cooperatives, telecom- munications) International organizations ✔ Fintech companies ✔ ✔ Agricultural associations ✔ ✔ Ministry of education ✔ ✔ Ministry of social affairs ✔ ✔ ✔ National statistics ✔ ✔ agencies Note: ICT = information and communications technology. MFI = microfinance institution. MSME = micro, small, and medium enterprise. SME = small and medium enterprise. 10   Developing and Operationalizing a National Financial Inclusion Strategy partner clearly (that is, diagnostics work versus drafting groups are chaired by a member of the drafting com- support versus facilitation). mittee and composed of consultation stakeholders, including those from the private sector. The working groups would provide inputs into, and discuss key ele-  EVELOPING AN NFIS DRAFTING MODEL 1.2 D ments of, their policy area, such as the existing chal- AND NFIS DEVELOPMENT ROAD MAP lenges and opportunities, NFIS policy objective, key actions, and M&E. (See box 1.4.) 1.2.1 NFIS Drafting Model A drafting model also identifies the processes through An NFIS drafting model identifies how each stakeholder which stakeholders will engage with one another. The pro- will contribute to the NFIS development process. Once cesses may include the following: relevant stakeholders have been identified and seg- mented into lead stakeholder(s), drafting stakeholders, Consultation workshops: Consultation workshops can ➤  and consultation stakeholders, specific ways to organize be effective tools to engage stakeholders at key junc- and engage each group should be considered. tures throughout the NFIS development process. Workshops can be held with larger groups of consulta- A drafting model determines how stakeholders will orga- tion stakeholders to kick off the NFIS development pro- nize themselves, including through a drafting committee cess (see box 1.6), consult on high-level elements of the and/or working groups. NFIS (such as vision, policy areas), and validate the final document. Working groups can also leverage consulta- Drafting committee: A drafting committee is an effec- ➤  tion workshops to engage with a smaller set of stake- tive way to organize the lead stakeholder(s) and draft- holders in a more focused manner and frequent basis. ing stakeholders. The lead stakeholder(s) typically chairs the committee, and the membership consists of ➤ Drafting retreats: Once drafting is under way, draft- drafting stakeholders (generally not more than 10). ing retreats can be an effective way for the drafting This entity is responsible for drafting the NFIS docu- committee and/or working groups to undertake ment, engaging with consultation stakeholders, coor- intensive drafting and avoid distractions of day-to- dinating inputs from within their respective institutions, day responsibilities. securing buy-in from the leaders of their institutions, and ensuring that the necessary steps are taken for Solicitation of written inputs or comments: This ➤  final approval and launch of the NFIS. (See box 1.3.) approach can be used in conjunction with consultation workshops to solicit written inputs from a wide range Working groups: Working groups can be established ➤  of stakeholders. This is most useful when undertaken to inform the development of specific policy areas of at the beginning of the process (to gather initial views the NFIS—for example, financial consumer protection, to shape the vision, policy areas, and so forth) and financing micro, small, and medium enterprises toward the end of the process (to request comments (MSMEs), or digital payments. Often these working on a draft document). (See box 1.5.) BOX 1.3 BOX 1.4 Country Example: NFIS Drafting Committee Country Example: Working Groups in Peru in Zambia Peruvian authorities established seven technical working In developing Zambia’s NFIS, authorities established a groups to inform the development of Peru’s NFIS. The National Financial Inclusion Strategy Drafting Committee technical working groups were structured along the follow- chaired by the Ministry of Finance. Members of the drafting ing themes: payments, savings, financing, insurance, con- committee included representatives from the Bank of Zam- sumer protection, financial education, and vulnerable bia, the Pensions and Insurance Authority, the Securities and populations. Participants in these working groups included Exchange Commission, the Competition and Consumer Pro- representatives from a wide range of public, private, and tection Commission, and the Rural Finance Expansion Pro- civil society organizations. The working groups were man- gramme. The mandate of the drafting committee was to dated with defining the NFIS policy objective for their lead and facilitate the NFIS development process, including respective area, specific actions to achieve that objective, through the engagement of all relevant stakeholders. and indicators to use to measure progress. The NFIS Development Process    11 One-on-one stakeholder consultations: This approach ➤  ize on the knowledge and experience of other stakehold- can also be used in conjunction with other approaches ers and may be lead to lower levels of support and buy-in and is particularly valuable for ensuring that key stake- during implementation. holders feel adequately consulted and for addressing politically sensitive issues that may be difficult to dis- Another approach has been to divide NFIS drafting activ- cuss in a broader forum. If an external consultant is ities among a number of institutions and stakeholders used to facilitate the NFIS development process, he or who provide inputs bilaterally to the lead stakeholder. The she can make use of such consultations during the ini- advantage to such an approach is a high degree of tial phases to collect inputs from key stakeholders. engagement and a diverse range of perspectives incorpo- rated within the NFIS. However, since stakeholders are The usage and combination of these various mechanisms providing inputs bilaterally and not through a larger work- to organize and engage stakeholders is the overall draft- ing group, it will be more difficult to achieve consensus on ing model. NFIS objectives and priorities. The effectiveness of this approach in delivering a cohesive and coordinated NFIS Some countries have pursued drafting models that have hinges on the strength of the central drafting institution proven to be ineffective in securing buy-in from relevant and may reduce ownership of the strategy among rele- stakeholders. One such approach is for a lead stakeholder vant stakeholders. The consultative approach to drafting, to retain sole responsibility and accountability for devel- while potentially more time-consuming in the short term, oping and implementing the NFIS with minimal consulta- ultimately has a greater chance of resulting in an effective tion with other agencies or stakeholders. This approach is and successful NFIS. not recommended, as it can miss opportunities to capital- BOX 1.5 Tip: Key NFIS Areas for Stakeholder Input during NFIS Development Several NFIS areas benefit from input from stakehold- 4. Actions: Each stakeholder should have the oppor- ers. The areas of input outlined below are aligned tunity to propose concrete actions to be included with the NFIS template described in chapter 2, and in the NFIS. In particular, actions and reforms such inputs should be referred to during the drafting should address identified obstacles and oppor- process. A lead stakeholder can solicit these inputs tunities, and they should be linked to broader during consultations or workshops in order to inform NFIS objectives and policy areas. Recommended further stages of drafting. In practice, a template can actions and reforms can include (i) legal and regu- be used to structure and collect these inputs. latory enactments or amendments, (ii) supervisory 1. NFIS vision and definition of financial inclusion: actions, (iii) diagnostics and data-collection exer- Stakeholders should contribute their view of the cises, (iv) capacity building, (v) product develop- NFIS vision and a national definition for financial ment, and (v) financial education activities. inclusion. 5. Monitoring and evaluation: Stakeholders may 2. Baseline assessment: Stakeholders should help also be requested to propose key indicators to identify the obstacles that currently constrain finan- be used to track national financial inclusion prog- cial inclusion (legal, regulatory, market structure, ress or measure the outcomes of key actions. The and so forth) and the main opportunities they see stakeholders should flag data sources managed for accelerating progress. Stakeholders can also pro- by their own institution, if applicable. vide each institution’s main achievements to date Documenting contributions during the NFIS devel- with regard to financial inclusion. Achievements opment process can also be useful to ensure should indicate impact and effectiveness as feasible. accountability and for reference during the imple- 3. Policy objectives and policy areas: Stakeholders mentation phase. should be asked to suggest specific NFIS objec- tives and policy areas. 12   Developing and Operationalizing a National Financial Inclusion Strategy 1.2.2 NFIS Development Road Map vided in figure 1.2. Typically, the lead stakeholder(s) will develop the NFIS development road map and share it for Once relevant stakeholders are identified and a drafting consulation with other drafting stakeholders. model has been selected, an NFIS development road map should be outlined to structure the NFIS develop- Typically, developing an NFIS takes between 12 and 18 ment process and keep it on track. In essence, an NFIS months. Factors that determine the length of the process development road map should provide stakeholders with include (i) the scope and depth of data and diagnostics a set of clear, sequenced, and time-bound steps to follow work, (ii) the timeliness and efficiency of processes to when developing the NFIS, including their respective gather and incorporate stakeholder inputs and feedback, responsibilites. (See box 1.7.) An NFIS development road (iii) the number of consultation stages, (iv) the existence of map should higlight key milestones, including consulta- hard deadlines (for example, the need to launch before a tion events, data and diagnostics work, drafting dead- certain date), and (v) the time needed to secure high-level lines, and processes to secure high-level approval of the approval prior to the launch. NFIS. An illustrative drafting road map and timeline is pro- BOX 1.6 Tip: NFIS Development Kick-Off Events Once an NFIS development road map is drafted and stakeholders, as well as nongovernmental organiza- agreed upon, conducting an NFIS development tions and international organizations. The kick-off kick-off event to mark the initiation of the process event should motivate the NFIS, outline the devel- and inform stakeholders of next steps (based on the opment road map, and indicate the expected roles road map) can help to generate enthusiasm and of the assembled stakeholders. Initial ideas for NFIS buy-in. A kick-off event can be large in size and vision, objectives, and policy areas can also be pre- include a wide range of private and public sector sented and discussed. BOX 1.7 Tip: Using the RACI Model A RACI model7 is a useful tool for determining the role • A (Accountable) = the stakeholder ultimately of each lead and drafting stakeholder in the drafting accountable for the work or decision being made. road map. A RACI model can be used to align expec- Use this letter where appropriate but not to excess; tations and provide clear ownership of tasks and deci- use it only when a key decision or task is at hand. sions. In a RACI model, stakeholders or titles are noted There can be no As or only one A in each row. across the top, tasks or responsibilities are noted • C (Consulted) = any stakeholder who must be down the left-hand side, and the cells inside the table consulted prior to a decision being made and/or are filled in based on the following criteria: the task being completed. There can be as many • R (Responsible) = the stakeholder who performs Cs as are appropriate in each row. the work. There must be one R on every row, no • I (Informed) = any stakeholder who must be in- more and no less. R is the only letter that must formed when a decision is made or work is com- appear in each row. pleted. There can be as many Is as are appropriate in each row. Example: Financial Ministry of Central bank services authority finance Organize NFIS stakeholder kick-off workshop R, A I, C I, C Undertake assessment of ecosystem for digital financial services C R, A C Draft NFIS vision and objectives R C C The NFIS Development Process    13 FIGURE 1.2: Illustrative NFIS Development Timeline STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 Initial NFIS Develop NFIS Secure high-level Identify and brainstorming drafting model Stakeholder event: buy-in for NFIS segment (vision, financial and development NFIS kick-off development stakeholders inclusion definition, broad map policy areas) 0–1 month 0–1 month 0–1 month 1–2 months 0–1 month STEP 6 STEP 7 STEP 8 STEP 9 STEP 10 Initial NFIS drafting Undertake data (policy objectives, Stakeholder event: Further NFIS Stakeholder event: and diagnostics baseline assessment, Consultation drafting Validation workshop work governance workshop (action plan, M&E) arrangements) 3–6 months 2–3 months 0–1 month 2–3 months 0–1 month STEP 11 STEP 12 STEP 13 STEP 14 Secure high-level Stakeholder event: Final NFIS drafting Begin NFIS approval of NFIS Public launch implementation of NFIS 1–2 months 1–2 months 0–1 month Planning for and securing the necessary high-level approv- CONDUCTING DATA COLLECTION AND 1.3  als to launch the NFIS is a key element of the NFIS devel- DIAGNOSTICS WORK opment road map. A higher level of approval can motivate stakeholders to dedicate resources toward and ensure Lead and drafting stakeholders should leverage a wide effective implementation of the NFIS. Some countries (for range of data and diagnostics work to ensure that the example, Indonesia) have also sought to ensure that the NFIS is evidence-based and accurately identifies obsta- NFIS has a legal or regulatory backing, another approach cles and opportunities relevant to the achievement of to ensuring that implementation is taken seriously. In some national financial inclusion policy objectives. Robust data cases, however, the process to secure high-level approval and diagnostics activities also provide a valuable base- can delay the launch of the NFIS, so the lead stakeholder(s) line from which to measure progress over time and struc- should consider the approach early in the process. Local ture a robust M&E system. This section aims to provide governance structures and norms will play a key role in greater detail about the various types of data and diag- determining the appropriate path for NFIS approval. nostics activities that can usefully inform the NFIS devel- opment process. According to results from the 2017 Global Financial Inclu- sion and Consumer Protection Survey, 18 countries report A first step is to determine the scope and quality of exist- that their NFIS was approved by a single institution (for ing financial inclusion data and diagnostics resources. This example, the Ministry of Finance in Pakistan) or a multis- will allow stakeholders to identify gaps and determine takeholder entity (such as the National Financial Inclusion what additional activities may need to be undertaken to Council in Mexico). Some countries secured a higher-level gather relevant information. Information gathering falls approval. Four countries report that their NFIS was into the following three broad categories: approved by cabinet (for example, Jamaica and Thailand), and three jurisdictions report that their NFIS was approved Data—in the form of demand-side data from a survey ➤   by presidential decree (Indonesia and Turkey). of individuals and/or households and/or MSMEs, and supply-side data from providers of financial services— is critical to benchmark current trends in the uptake, usage, and quality of financial products and services. 14   Developing and Operationalizing a National Financial Inclusion Strategy Thematic/subsector diagnostics or evaluations that ➤  Mapping or stocktaking of key financial inclusion activ- ➤  assess enabling environment factors and financial ities or initiatives—for example, financial education pro- inclusion efforts and that may cover a particular sub- grams, digitization of government-to-person transfers. sector (for example, microfinance, payments), topic (for example, financial consumer protection, remit- Lead and drafting stakeholders should also leverage tances), or program (for example, financial education, global data resources and global standards or good prac- partial credit guarantee). At a minimum, lead and tices that can be used to diagnostic work. For example, drafting stakeholders should collect relevant laws and the Global Findex provides triennial demand-side data on regulations (including those under development), the uptake and usage of financial products and services in existing strategies, and institutional annual reports rel- more than 140 countries. Table 1.2 lists globally relevant evant to financial inclusion. TABLE 1.2 Global Resources for Financial Inclusion-Related Data and Diagnostics DEMAND-SIDE SUPPLY-SIDE GLOBAL STANDARDS OR GOOD DATA SOURCES DATA SOURCES PRACTICES FOR DIAGNOSTIC WORK WBG Universal Financial Access Web Portal ✔ ✔ ✔ WBG Global Findex ✔ WBG Enterprise Surveys ✔ WBG Financial Capability Surveys ✔ Living Standard Measurement Surveys ✔ FinScope Surveys ✔ Financial Inclusion Insights (FII) Surveys ✔ IMF Financial Access Survey ✔ MIX FinClusion Lab (Geospatial Maps) ✔ FSP Maps (Geospatial) ✔ GSMA Mobile Money Adoption Survey ✔ WBG Global Payment Systems Survey ✔ ✔ G20 High-Level Principles for Digital ✔ Financial Inclusion CPMI-World Bank Payment Aspects ✔ of Financial Inclusion WBG Global Financial Inclusion and ✔ Consumer Protection Survey WBG Good Practices for Financial Consumer ✔ Protection, 2017 Edition OECD Set of Criteria, Principles, Guidelines, ✔ and Policy Guidance to Improve Financial Education CPMI-World Bank General Principles for ✔ International Remittances CPSS5-IOSCO Principles for Financial ✔ Market Infrastructures WBG Guidelines for Developing a Compre- ✔ hensive National Retail Payments Strategy A Practical Guide for Retail Payments ✔ Stocktaking (World Bank, Banco Central do Brasil, European Central Bank) WBG General Principles for Credit Reporting ✔ Basel Guidance on the Application of Core ✔ Principles to the Regulation and Supervision of Institutions Relevant to Financial Inclusion Note: CPMI = Committee on Payments and Market Infrastructures. CPSS = Committee on Payment and Settlement Systems. FSP = financial service provider. GSMA = GSM (Groupe Spécial Mobile) Association. IMF = International Monetary Fund. IOSCO = International Organization of Securities Commissions. OECD = Organisation for Economic Co-operation and Development. WBG = World Bank Group. The NFIS Development Process    15 resources that can be drawn on to complement or inform Enabling environment data is supplied by institutions ➤  country-specific resources and analyses. that provide the enabling legal, regulatory, infrastruc- ture for the financial sector. This can include information If time and resources permit, new data-collection and from credit-reporting systems (for example, the percent- diagnostics work—including demand-side surveys of indi- age of adults covered by a credit bureau) and from alter- viduals and/or firms, supply-side surveys of existing prod- native dispute-resolution mechanisms (for example, the ucts and their key features, mappings of existing financial number of consumer complaints received annually). inclusion initiatives, and legal/regulatory analyses (for Enabling environment data is typically readily available example, related to financial consumer protection or pay- but requires coordination with relevant institutions. ment systems)—can provide timely and targeted insights to inform the NFIS. In other cases, particularly when NFIS Program data is collected by programs relevant to ➤  drafts are facing time or resource constraints, primarily financial inclusion, including, for example, govern- existing materials will be leveraged, with data and diag- ment-to-person transfer programs, financial education nostic gaps included as potential actions in the NFIS itself. programs, or credit guarantee programs. Such data is also typically readily available but requires effort to consolidate. 1.3.1 Data Collection and Analysis Robust data is a critical input for the design of an NFIS. As Use of these four types of data is recommended to pro- noted previously, a key first step is defining the universe of vide a comprehensive picture of the availability, uptake, relevant data that can be leveraged to inform a baseline and quality of financial services. Demand- and supply-side assessment of financial inclusion, and to identify obstacles data in particular are complementary to one another and opportunities for greater financial inclusion. Lead and given the limitations and strengths of each—that is, with drafting stakeholders should consider the following types respect to frequency, cost, and methodological issues (for of data, which together make up a country’s financial example, respondent recall, double-counting accounts). inclusion data infrastructure: (See figure 1.3.) Supply-side data collected from providers of financial ➤  A useful first step in determining what data exists or services, often through off-site supervision reporting should be collected to inform the NFIS is to map all avail- systems. Supply-side data is particularly valuable for able data sources. (See table 1.3 and box 1.8.) The follow- measuring levels of physical access (for example, the ing subsections provide a closer examination of number of branches, agents, automated-teller demand- and supply-side data, including key consider- machines, and so forth) and transaction numbers and ations for how to strengthen these aspects of the financial volumes. It can be difficult to use supply-side data to inclusion data infrastructure. measure ownership of accounts, due to double-count- ing (that is, an individual owning more than one Demand-Side Data account) and dormancy issues. Supply-side data is typ- Demand-side surveying of individuals, households, and ically less costly to collect and can be gathered on a firms has long been a critical tool for policy making. Sur- more frequent basis. veys collect valuable data from the perspective of the indi- vidual (or household) or firm. Demand-side financial Demand-side data is collected from current and ➤  potential users of financial services, typically via sur- veys of individuals, households, and/or firms, and is particularly valuable for measuring uptake and usage of financial services, and for assessing the distribution BOX 1.8 of financial services across key consumer segments (for Key Resource: Universal Financial example, women, rural residents) and the relationship Access Web Portal between financial behaviors and other factors (for example, poverty, employment, and so forth). How- The World Bank’s web portal Universal Financial ever, demand-side financial inclusion data can be Access 2020 consolidates and analyzes a variety costly to collect and is therefore typically gathered only of financial inclusion demand- and supply-side once every two to five years. indicators. The portal provides country statistics as well as regional comparisons and global out- looks. 16   Developing and Operationalizing a National Financial Inclusion Strategy FIGURE 1.3: Demand- and Supply-Side Financial Inclusion Data DEMAND SIDE • Household survey questions such as • Household survey questions such as “Do you own a transaction account at “How often have you used your account a bank or other regulated institution?,” in the last 12 months?,” “Do you own “Are cost, distance, or documentation any additional products (that is, savings, barriers to access?,” and “How far is the credit, etc.)?,” and “Do you use mobile nearest bank branch to your home?” money or your account to pay bills or make payments?” • Focus group discussion data on common barriers to access and reasons for financial • Focus group discussion data on common exclusion transactions paid in cash versus through a regulated channel ACCESS USAGE • Central bank/regulator data on the number • Central bank/regulator data on activity of bank branches, agents, or automated- of accounts, number of transactions via teller machines in a given country certain channels • Central bank/regulator data on the number • Central bank/regulator data on the of accounts and female-owned accounts by value and volume of transactions banks, microfinance institutions, mobile money, etc. • Geospatial data from regulators to map distribution of access points SUPPLY SIDE inclusion surveys can directly inform the design of finan- • Allow an understanding of the relationship between cial inclusion strategies and seek to achieve the following financial inclusion and broader socioeconomic and objectives: demographic circumstances • Provide representative data at the national level that During the NFIS development stage, lead and drafting elucidates financial inclusion insights for key popula- stakeholders should determine whether new demand- tion segments, including regions or provinces, income, side data is needed to inform a baseline assessment and rural/urban, gender, and so forth whether the data can feasibly be collected during the • Create a baseline assessment of current financial inclu- NFIS development stage. This determination will be pri- sion levels, including financial patterns and prefer- marily influenced by (i) the scope and quality of existing ences, perceived barriers, and awareness levels of demand-side data, (ii) options for integrating the financial formal financial services inclusion module into existing demand-side surveys, (iii) resource availability, and (iv) time constraints. • Evaluate perceptions and the thought processes behind certain behaviors, which may include per- Figure 1.4 provides guidance on this process. While new ceived barriers, unmet demand for certain products or data-collection initiatives can provide invaluable and tar- product features, and underlying psychological atti- geted insights to inform a strategy, a new stand-alone sur- tudes that may affect financial decisions vey may not always be the most effective approach, • Identify potential services or channels that can better particularly if there are notable time and resource con- meet the needs of underserved adults straints. It may be more beneficial to assess if publicly The NFIS Development Process    17 TABLE 1.3: Available Data Sources Template Example YEAR (MOST RESPONSIBLE SOURCE TYPE OF DATA KEY INDICATORS SAMPLE RECENT) FREQUENCY INSTITUTION Country-owned Off-site supervision data Supply – # of financial access points Banks, nonbank 2018 Monthly Central bank – Volume of retail cashless e-money issues, payments per capita financial cooperatives Living standard Demand - % of adults with a transaction 10,000 individuals 2016 Every five National measurement survey account years statistics agency - % of adults making a digital payment in past year Credit bureau Enabling % of individuals covered by Bank customers 2018 Monthly Credit bureau credit bureau Income support program Program % of social transfer recipients 40,000 beneficiaries 2018 Annual Ministry of receiving money electronically Social Affairs International organizations (selected) Global Findex Demand – % of adults with a transaction 1,000 individuals 2017 Triennial World Bank account per country, 140+ Group – % of adults making a digital countries payment in past year Enterprise Surveys Demand – % of adults with a loan or line Firms with 5+ 2017 Varies by World Bank of credit employees, 135+ country Group – % of firms reporting access countries to finance as a major obstacle Financial Access Survey Supply – # bank branches per 100,000 130+ countries 2017 Annual International adults Monetary Fund available global resources can instead be leveraged as baseline data for an NFIS. In addition, another effective BOX 1.9 approach may be to integrate financial inclusion indica- tors and modules into preexisting, relevant, and estab- Key Resource: The Global Findex lished surveys. If these options are not feasible or if stakeholders are interested in a timely, comprehensive, The Global Findex is a cross-country, demand- side database that measures how adults save, and locally tailored demand-side survey, then a new effort borrow, make payments, and manage risk. The should be considered. (See box 1.9.) In some cases, given Global Findex is undertaken every three years as time constraints, efforts in the NFIS development stage part of the Gallup World Poll, which surveys more will be oriented toward ensuring that reliable demand- than 150,000 adults in over 140 countries. The side financial inclusion data will be available in the future Global Findex 2017 data shows that 1.7 billion and leveraged to monitor NFIS progress. adults worldwide still lack access to a basic account, though significant progress has been Many international organizations conduct periodic finan- made since 2011. Global Findex data can be lev- cial inclusion surveys that are publicly accessible. (See box eraged by lead and drafting stakeholders to pro- 1.9.) Table 1.4 lists common, globally available, demand- vide a baseline assessment of financial inclusion side financial inclusion survey resources that can be used in instances where country-owned data is not available, or to undertake a benchmarking analy- to underpin the development of an NFIS. sis against peer economies. More information, including country-specific data and survey meth- Financial inclusion surveys that are conducted and man- odology, is available at https://globalfindex. aged by relevant national authorities or statistical agen- worldbank.org. cies are often sustainable data sources that will help provide periodic financial inclusion tracking over time, particularly if they are integrated into already-existing sur- veys. Leading government research agencies, such as national statistics agencies, can be leveraged to provide 18   Developing and Operationalizing a National Financial Inclusion Strategy FIGURE 1.4: Determining the Need for a New Demand-Side Survey Has the country conducted an in-depth financial inclusion survey in the last five years? Yes (Consider No as baseline data) Are there any already-existing surveys within the country that can feasibly integrate a financial inclusion module? Yes (Consider integrating module No for baseline data) Are there any publically available global surveys that suffice for baseline data? Yes (Consider as baseline data) No Consider contracting a new stand-alone fiancial inclusion survey TABLE 1.4: Publicly Available Financial Inclusion Demand-Side Data Sources TARGET SAMPLE POPULATION SIZE FREQUENCY BENEFITS CHALLENGES World Bank Global Findex All adults 1,000 Triennial 5 Global benchmarking Sample size can limit analysis granularity of analysis World Bank Enterprise Surveys Firms Varies Varies Access to finance Limited to formal firms with module for firms at least five employees World Bank Financial All adults ~3,500 Stand-alone Detailed financial Limited country coverage Capability Surveys capability modules World Bank Living Standard Households ~10,000 Biennial Linkages to socio- FI module not always Measurement Surveys individuals demographics included Financial Inclusion Insights (FII) All adults ~3000 Annual or Linkages to digital Limited country coverage7 (Gates Foundation) biennial6 financial inclusion periodic financial inclusion data either by developing spe- for tracking. It is necessary to scope relevant ministries cific financial inclusion surveys or by integrating financial and government agencies to assess (i) if relevant surveys inclusion modules into already-existing household or indi- and modules exist, (ii) if there is scope to integrate addi- vidual surveys. In some cases, it may be worthwhile for a tional modules and indicators, and (iii) if these surveys can country to consider inserting high-level financial inclusion be leveraged periodically for continuous financial inclu- indicators into the census when it becomes applicable. sion tracking. By stocktaking and mapping these various surveys and potential surveys efforts, countries can utilize In addition, other government agencies may already con- country-owned resources to gather financial inclusion duct relevant surveys that provide natural synergies and data, as opposed to conducting a stand-alone survey from can be further leveraged to include core financial inclusion scratch and as an alternative to global data sources. indicators or modules. For instance, a national agricultural survey conducted by the Ministry of Agriculture may be an Depending on the country context, some government opportunity to integrate core financial inclusion indicators agencies (and international organizations) privately con- The NFIS Development Process    19 BOX 1.10 Country Examples: Financial Inclusion Surveys in the Philippines, Mexico, and Ethiopia • The Inclusive Finance Advocacy unit within the develop a baseline and identify key constraints Bangko Sentral ng Philippines developed and and strategies to inform the recently launched conducted its own central bank–led financial 2016 financial inclusion strategy. inclusion survey in 2015 to create a baseline and • The National Bank of Ethiopia integrated a finan- inform the development of a financial inclusion cial inclusion module into the Ethiopian Socio-Eco- strategy. nomic Survey, a biannual survey conducted by the • The central bank of Mexico (the Comision Nacio- Ethiopian Central Statistics Agency. This mod- nal Bancaria y de Valores) conducted a financial ule forms the foundational data used for tracking inclusion survey periodically in 2012 and 2015 to national financial inclusion progress. tract survey firms or institutions to conduct financial inclu- Some countries face a limitation in the use of supply-side sion baseline assessments. Benefits include being able to data when their data does not include strategically rele- customize the survey and methodology depending on the vant indicators or segmentations. For instance, many country context, but privately contracting firms may be countries do not have a centralized way to gain insight costly to continue over time. Each survey wave will require into the unique distribution of financial services through funding and contracting by a financial inclusion champion supply-side data alone. That is, it is difficult to tell if an or relevant agency. adult has more than one account by using supply-side data alone—even if a country’s total number of accounts Supply-Side Data is equal to its population (that is, a one-to-one ratio of The data from financial service providers is an essential adults to accounts)—or if an individual owns multiple or component in analyses of the financial inclusion land- dormant accounts. This same limitation also often occurs scape and environment. Supply-side data is typically more with gender, frequent account activity, and regional seg- readily available to lead and drafting stakeholders during mentation, which limits insights into the reach of the finan- the NFIS development process, though additional efforts cial sector for priority populations. A final limitation to may be required (including during NFIS implementation) supply-side data is that due to the diversity of institutions to strengthen the quality, scope, and consistency of this and products in a given country, aggregation may not be data. Lead and drafting stakeholders should engage with straightforward. Other considerations that may affect the the collectors of supply-side data to determine what data quality of supply-side financial inclusion data collection is readily available, what the limitations of this data are, are (i) the accuracy of reported data, (ii) the independence and what can be done to strengthen the data during NFIS of collecting entity, and (iii) adequacy of resources. development and implementation. (See box 1.11.) Ideally, supply-side indicators should include relevant Collectors of supply-side financial inclusion data generally financial inclusion segmentations (like gender, region, include central banks, financial sector regulators, national account uniqueness and activity, addresses/locational bureaus of statistics, agricultural ministries, and a range of data,8 and so forth). However, if strategically relevant indi- other public and private stakeholders. While the primary cators are not available, financial sector authorities should function of these supervisory functions has been to assess consider embedding these additional financial inclusion the viability and performance of individual institutions indicators into off-site supervision and reporting systems. (including commercial banks, e-money issuers, nonbank While it may not be possible to collect this data in time to institutions, insurance companies, and so forth) and to inform the NFIS, it can inform indicators that can be evaluate systemic risk, certain data indicators can be lev- included in the NFIS M&E system and tracked during the eraged for frequent financial inclusion tracking. Relevant implementation period. For instance, it may be feasible to indicators often include (but are not limited to) the total integrate within an off-site supervision template a column number of accounts, account activity, volume and value of to collect the number of accounts by males/females or to transactions, number of different products, and number of request a total of unique accounts. access points. 20   Developing and Operationalizing a National Financial Inclusion Strategy BOX 1.11 Tip: Conducting a Mapping of Access Points: Collecting and Analyzing Geospatial Data Geospatial data is becoming increasingly popular Step 2: Collect the data. Data can be collected by with respect to financial inclusion, as geospatial data regulators primarily via financial service providers. Dif- can be leveraged to map available and existing ferent tiers of locational data can be collected. For access points and to assess the distribution of finan- each access point, the following locational data can be cial services. Some publicly available geospatial finan- collected: (i) geocoded data, (ii) coordinate-level data cial inclusion maps exist—namely, those provided by (longitude and latitude), (iii) addresses, (iv) neighbor- MixMarket’s Finclusion Lab and the Bill and hood-level data (such as zip or postal codes), and (v) Melinda Gates Foundation. Geospatial data can be administrative division (for example, district) locations. constructed by data that is either geocoded, has a longitude or latitude, contains an address, postal Step 3: Verify the data. Once data is collected, a geo- code, or any locational data. Although geolocation graphic information system specialist will need to (or latitude and longitude) is ideal for accurate map- compile all the different geographic data, cross-lo- ping, geolocated access points are not essential for a cate through a geolocation platform, and assess any mapping analysis. Insightful maps can also be devel- errors and gaps for follow-up work and verification. oped by collecting locational data available at the Step 4: Analyze and map the data. A series of analy- “town” or postal code level. Many central banks ses can be conducted to map all the access points, already collect locations of access points in some way, identify opportunities, and build a business case for and these data points can often be leveraged for geo- reforms. Different data can be overlaid onto maps— spatial mapping. The steps outlined below provide for example, demand-side financial inclusion data or guidance on conducting geospatial analyses. data on levels of mobile coverage or paved roads. Step 1: Identify types of data to collect. Typically, for Typical research questions include (i) the optimum dis- mapping of access points, locational data is collected tance between adults and various types of access for (i) branches of various financial service providers, points, (ii) optimal access points for different popula- such as banks, financial cooperatives, microfinance tions and regions, and (iii) hot-spot analysis to under- institutions, and insurance providers; (ii) automat- stand quick wins and highest opportunity areas for ed-teller machines (on- and off-site); and (iii) agents. new access point placement. 1.3.2 Diagnostic Work including government entities, financial institutions, rele- vant financial associations, nonbank institutions, mobile Thematic or subsector diagnostics or evaluations are network operators, international organizations, nongov- another critical input into the NFIS development process. ernmental organizations, and other relevant players— Diagnostics can provide a clear assessment and set of rec- should be met to collect the necessary information. The ommendations relevant to the enabling environment for results and insights from a technical diagnostic can be financial inclusion and allow NFIS drafters to draw from leveraged to detail the strategy and formulate the NFIS in-depth technical analysis. (See box 1.12.) Such diagnos- action plan. (See box 1.13.) Diagnostic areas include (but tics may already exist. For example, several countries have are not limited to) the following: leveraged recent IMF-World Bank Financial Sector Assess- ment Program analyses and recommendations to inform • Agricultural finance their NFIS. In most countries, however, additional diag- • Financial consumer protection nostics or evaluations provide useful insight into specific • Payments subsectors or themes. • Credit infrastructure • Digital financial services Technical diagnostics often cover key areas of the financial • Housing finance sector, with a focus on financial inclusion aspects. Con- • Insurance ducting a technical diagnostic can be resource intensive. • Islamic finance If there are resource constraints, priority sectors can be • Microfinance identified and sequenced instead. Key stakeholders — • SME finance The NFIS Development Process    21 BOX 1.12 Country Example: Diagnostic Work to Inform NFISs in Pakistan and Paraguay The State Bank of Pakistan initiated the development To inform the development of Paraguay’s NFIS, the of Pakistan’s National Financial Inclusion Strategy in authorities worked with the World Bank Group to pre- August 2014. As part of the NFIS development pro- pare four technical notes drawing on (i) a nationally cess, the authorities worked with the World Bank representative demand-side survey of individuals, (ii) Group to prepare 10 diagnostics to identify key a supply-side assessment of existing financial prod- obstacles and opportunities to advance financial ucts and services, (iii) an assessment of the legal and inclusion and inform NFIS objectives and actions. The regulatory framework for financial inclusion, and (iv) a technical diagnostics covered (i) agricultural finance, consumer protection and financial literacy diagnostic. (ii) consumer protection and financial literacy, (iii) dig- The findings of these technical notes are highlighted ital transaction accounts, (iv) housing finance, (v) insur- in a section of the NFIS entitled, “Current State of ance, (vi) Islamic finance, (vii) MSME finance, (viii) Financial Inclusion in Paraguay—Where Are We?,” payment systems, (ix) pensions, and (x) secured trans- which is divided into seven subsections (financial actions. The diagnostics also served as useful inclusion environment, savings, credit, payments, resources to the NFIS working groups, which were insurance, financial education, and consumer protec- structured along similar theme. tion). The assessments are publicly available (in Span- ish) on the Banco Central del Paraguay website. BOX 1.13 Tip: Orienting Diagnostic Work to Inform an NFIS The purpose of diagnostics undertaken in this stage is financial inclusion in the sector or subtopic to inform the NFIS itself. Therefore, diagnostics under assessment. should be oriented toward gaining insights that can 3. Objectives relevant to financial inclusion: The be directly embedded in the NFIS. As such, diagnos- sector- or subtopic-specific objectives relevant to tics should shed light on the following areas, which improving financial inclusion should be identified. are aligned with the structure of an NFIS as outlined in chapter 2. A typical technical diagnostic report con- 4. High-level targets: The objectives should be tains the following sections: translated into measurable indicators and tar- gets that can track the development of the sec- 1. An overview of the current state of the sector: tor or subtopic over time as it relates to financial A diagnostic should provide a detailed overview inclusion. of the sector or subtopic, employing key data collected by both supply- and demand-side data 5. Recommendations and actions: Technical recom- sources, and it should provide a snapshot of cur- mendations that address the key constraints and rent trends. This can include, as applicable, (i) an opportunities should be listed and detailed, with institutional landscape, (ii) the legal framework, sequencing for short-, medium-, and long-term (iii) relevant infrastructure, (iv) products and ser- actions. A high-level action plan should also be vices, (v) demand-side analysis, and (vi) global provided or listed. benchmarking. The NFIS drafting process discussed in chapter 2 2. Primary constraints and opportunities: A diag- requires that insights gained from various diagnostic nostic should generate insights about the pri- work be integrated into a single coherent baseline mary constraints and opportunities relevant to analysis (see section 2.2), set of policy objectives (see section 2.3), and action plan (see section 2.5). 22   Developing and Operationalizing a National Financial Inclusion Strategy 1.3.3 Mapping and Taking Stock of Key assess obstacles or opportunities relevant to the NFIS. A Programs Relevant to Financial Inclusion mapping will help shed light on existing financial inclusion experiences, understand lessons learned, and identify A mapping and stocktaking of relevant recent or existing strategies from successful programs and delivery channels initiatives should be undertaken. Such an exercise should that can be further leveraged as part of the NFIS. In addi- cover efforts by government authorities, financial institu- tion, the mapping will constitute the first step in identify- tions, international organizations, and nonprofit organiza- ing additional stakeholder meetings and required tions to tackle any aspect of financial inclusion. This follow-up work, as well as quantitative and qualitative process should attempt to include a description of all resources that need to be further developed prior to the essential aspects of relevant programs (including objec- NFIS drafting process. tive, target population, achievements, and so forth) and to NOTES 4.  “Organization Charts and Position Descriptions” in PMI 2013, 262. 5.  Some countries, such as China and India, have larger sample sizes. 6.  Depending on the country context. Financial inclusion insight surveys are available in Bangladesh, Benin, Ghana, India, Indonesia, Kenya, Nigeria, Pakistan, Rwanda, 7.   Senegal, Tanzania, and Uganda. Addresses and even locational data equivalent to postal codes can be collected to provide a mapping of access points to 8.   understand the locational distribution of financial services to inform policy or a business case of reforms. 2 NFIS TEMPLATE AND KEY COMPONENTS This chapter provides NFIS stakeholders with a template Section 2.4: Governance Arrangements. This section to facilitate the drafting of a comprehensive and outlines a set of NFIS governance entities, as well as their action-oriented NFIS. As discussed in chapter 1, the NFIS roles and functions. Inclusive but efficient governance development process should be consultative and draw arrangements are important to ensure continued collabo- from a range of technical resources and expertise. The ration during NFIS implementation. guidance provided in this chapter can be used to elabo- rate and iterate an NFIS draft as relevant stakeholders Section 2.5: Monitoring and Evaluation System. This provide their contributions and inputs. section summarizes the key elements of the NFIS M&E sys- tem, which is needed to translate financial inclusion objec- This chapter’s structure follows a recommended outline tives into measurable indicators and targets and to ensure of a national financial inclusion strategy. It includes the that implementation progress is tracked and assessed. following sections: Section 2.6: Action Plan. This section comprises a set of Section 2.1: Rationale and Vision. The introductory sec- sequenced, time-bound, and prioritized actions to achieve tion of an NIFS should answer the question, Why is this NFIS objectives. The action plan should include clear indi- important? and set forth the national vision and defintion cation of institutional responsibilities as well as a set of for financial inclusion. This section should also articulate “quick wins.” how the NFIS is aligned with and complementary to exist- ing national, economic, and financial sector priorities and Section 2.7: Risks and Mitigation Measures. This section strategies. identifies NFIS implementation risks and effective mitiga- tion measures. Section 2.2: Baseline Assessment. This section provides Each section of this chapter describes the key content the analytical underpinning of the NFIS. The section that should be covered in an NFIS document, along with should summarize current levels of financial access and guidance on the drafting process. usage and identify the obstacles and opportunities rele- vant to the achievement of the NFIS vision. 2.1 RATIONALE AND VISION Section 2.3: Objectives and Policy Areas. This section defines a set of specific policy objectives should be clearly The introductory section of the NFIS should provide suffi- defined, and they can be grouped into a set of policy cient motivation and context by answering the key ques- areas—for example, digital financial services or financial tion, Why is this important? Answering this question consumer protection. means demonstrating not only why financial inclusion as a policy objective is imperative, but also why a strategic   23 24   Developing and Operationalizing a National Financial Inclusion Strategy approach to financial inclusion reforms is necessary within The overarching vision for the NFIS should be defined the specific country context. As such, NFISs generally early in the document. The vision should answer the begin with a few introductory paragraphs that motivate question, What would a successful implementation of the NFIS and cover the following elements: the NFIS achieve? and can be drafted as either as a stand-alone subsection or as part of the above-men- Why financial inclusion is an important policy objec- ➤  tioned introductory section. Box 2.1 provides several tive, including how the uptake and usage of appropri- examples of NFIS visions. ate financial products and services can help improve resistance to shocks, boost productivity of businesses, This introductory section should also include a clear defi- facilitate female empowerment, and help reduce nition of financial inclusion, so that all stakeholders share extreme poverty and increase shared prosperity (draw- an understanding of the overall concept and key ele- ing on a range of evidence and current research). ments. (See box 2.2.) Without such a definition, some Why an NFIS is needed now in terms of current gaps ➤  stakeholders may have a credit-focused view of financial in financial inclusion and the overall rationale for inclusion, others may view financial inclusion primarily in focused and coordinated efforts. In addition, the NFIS the context of corporate social responsibility, while others can refer to the benefits of having a strategy from a may take a more holistc view. A clear definition of financial global perspective. Typically, a national financial inclu- inclusion will enable more productive and focused discus- sion strategy is intended to provide a coherent and sions around policy areas and actions. institutionally collaborative approach to developing and implementing key activities that promote financial Finally, the implementation period should be specified in inclusion. The strategy should equip relevant stake- the introductory section (or in the title of the NFIS docu- holders and policy makers with a clear framework for ment itself). NFISs have varying time frames of implemen- implementation and evaluation, sequenced or priori- tation, typically ranging from three to six years; the tized areas of focus, and identified priority actions to average length is four years. (See box 2.3.) be completed within particular a time frame. How an NFIS aligns with or supports the country’s ➤  2.2 BASELINE ASSESSMENT related objectives, including overall national, financial sector, economic development, and/or poverty allevi- The assessment section provides the analytical foundation ation objectives and existing initiatives. Clarification of the NFIS. The objective is to benchmark the current can also be usefully provided on the relationship and state of affairs with respect to financial inclusion and iden- hierarchy of the NFIS with other relevant strategies or tify a set of obstacles and opportunities relevant to the plans (for example, national development plan, finan- achievement of the vision set forth in the previous section. cial sector development plan, national payments sys- The identification of these obstacles and opportunities tems strategy, and so forth). then serves to inform and motivate the policy pillars and The context of the NFIS in relation to other previous ➤  objectives (section 3), targets (section 5), and action plan commitments or efforts related to financial inclusion (section 6) to achieve the NFIS vision. made by the country and relevant stakeholders. BOX 2.1 County Examples: NFIS Visions in Tanzania, the Philippines, and Haiti Tanzania’s National Financial Inclusion Framework of the entire population and toward a broad-based sets forth as its vision the following: “All Tanzanians and inclusive growth, particularly, to ensure that this regularly use financial services and payment infra- financial system also serves the traditionally unserved structures to manage cash flows and mitigate shocks. or marginalized sectors of the population. This vision These are delivered by formal providers through a is guided by a focus on the client.” range of appropriate services and infrastructure, with Haiti’s National Financial Inclusion Strategy envi- dignity and fairness.” sions “wide access to savings, credit, and other finan- The Philippines’ National Strategy for Financial cial products and services, with the aim of reducing Inclusion establishes an overall vision of “a financial poverty and income inequality and creating a finan- system that is accessible and responsive to the needs cially and economically inclusive society.” NFIS Template and Key Components    25 BOX 2.2 Country Examples: Defining Financial Inclusion in Nigeria, China, and Paraguay Definitions of financial inclusion vary, but many have affordable cost, based on the principles of oppor- common elements, including those related to physi- tunity, equality, and commercial sustainability.” cal access, diverse and appropriate products, com- (China, Plan for Advancing the Development of mercial viability and sustainability, and responsibility Financial Inclusion, translated) and safety. Examples include the following: The access to and usage of a range of quality, • “ Financial Inclusion is achieved when adults have • “ timely, convenient and informed financial services easy access to a broad range of formal financial at affordable prices. These services are under services that meet their needs and are provided appropriate regulation that guarantee consumer at affordable cost.”(Nigeria, National Financial protection and promote financial education to Inclusion Strategy) improve financial capabilities and rational deci- • “ Financial inclusion means providing financial ser- sion making by all segments of the population.” vices to all social strata and groups with demands (Paraguay, National Financial Inclusion Strategy) for appropriate and valid financial services, at an BOX 2.3 Country Examples: NFIS Implementation Period Examples INDONESIA JAMAICA MADAGASCAR MALAWI NIGERIA PAKISTAN PARAGUAY TANZANIA ZAMBIA 4 years 5 years 5 years 5 years 3 years 5 years 5 years 5 years 6 years 2016–19 2016–20 2013–17 2010–14 2012–14 2016–20 2014–18 2018–22 2017–22 Source: World Bank Group 2017a. The assessment section should provide an overview of the levels of access, usage, and quality of financial ser- BOX 2.4 vices in the country through analyses of the following: Tip: Alignment of Assessment and ➤ Supply of financial services, or the financial sector NFIS Policy Areas landscape, including institutional composition, physi- cal reach, key products, level of innovation and use of The content and structure of this section should technology, and major recent developments be consistent with the policy objectives and areas outlined in the subsequent section. If, for exam- ➤ Demand for financial services, including current ple, the NFIS is structured around the policy areas usage (use cases, frequency of use, and so forth) of of payments, savings, insurance, financial con- regulated and unregulated financial services, including sumer protection, and financial capability, then trends over time and across key population segments each area should be explicitly addressed in the (for example, women, the poor, youth, and so on) and assessment section. regions ➤ Enabling environment, including relevant laws and The assessment section should also discuss key financial regulations as well as the financial infrastructure (for subsectors as feasible and detail the current state, notable example, payments infrastructures, credit-reporting progress, and major bottlenecks that may be slowing sec- systems) and other relevant infrastructures (such as ID toral progress. (See box 2.4.) This section can also usefully infrastructure, ICT infrastructure, power supply) highlight constraints that disproportionately affect some target groups (such as women or rural residents). Finally, 26   Developing and Operationalizing a National Financial Inclusion Strategy the assessment section should also refer to any national Rather than appending together existing or separately exe- trends that are relevant to financial inclusion (for example, cuted analyses, efforts should be made to integrate these labor market trends) or the achievement of the NFIS vision analyses into a single coherent narrative that motivates the (such as fiscal constraints). A section or box summarzing NFIS objectives and key NFIS actions. (See box 2.5.) constraints and opportunites can be useful to synthesize the insights from this section. 2.3 OBJECTIVES AND POLICY AREAS Lead and drafting stakeholders can draw on inputs from a range of stakeholders (see box 1.5) as well as relevant This section of an NFIS presents NFIS objectives and pol- data and diagnostics (see section 1.3) to draft this sec- icy areas that reflect the NFIS’s vision (section 2.1) and the tion. Preparatory work to inform this section should be identified barriers that constrain its achievement (section conducted prior to the strategy drafting. The scope and 2.2). NFIS objectives and policy areas can also be visually depth of the section will vary depending on available summarized as an NFIS framework. data and diagnostics. If time and resources permit, new data collection or assessments can provide invaluable A useful starting point for this section is defining a specific and targeted insight to inform this section, including set of NFIS objectives. These objectives should be more through demand-side surveys of individuals and/or firms, concrete than the overall NFIS vision and describe what supply-side surveys of existing products and their key should be achieved within the term of the NFIS. (See box features, and legal/regulatory analyses (for example, 2.6.) For example, a policy objective might be “faciliate related to financial consumer protection or payment sys- innovation and the use of technology among financial ser- tems). In other cases, the section will draw from existing vice providers,” “enable all rural residents to have conve- materials, highlighting gaps when applicable. nient access to financial access points,” or “reduce the gender gap in financial inclusion.” (Objectives can also be described in terms of expected outcomes.) BOX 2.5 Tip: World Bank Approach to Analysis of Financial Inclusion in FSAPs A range of analytical approaches can be used to effectively facilitates the use of a wide range of access structure a baseline assessment of financial inclusion points to reach underserved consumer segments. and identify relevant obstacles and opportunities. Product diversity and appropriateness: This com- The approach typically used by the World Bank when ponent addresses key constraints to greater access undertaking a financial inclusion assessment in the and use of a range of suitable, tailored products and context of a Financial Sector Assessment Program services, with an emphasis on product innovation, emphasizes the following components: “micro” or basic products, and risk-based approaches Current state of financial inclusion: The analysis to anti-money laundering/combating the financing of begins with a stocktaking of current levels of access terrorism. and usage of financial products, drawing primarily on Financial infrastructure: This component addresses demand-side data. the degree to which credit-reporting systems and Public and private sector commitment: This compo- national payment systems facilitate competition, nent assesses the degree to which key stakeholders innovation, and the reduction of informational asym- have committed to and are implementing a well-de- metries. veloped and coordinated set of actions to enhance Financial consumer protection: This component financial inclusion. addresses key legal, regulatory, and supervisory con- Provider diversity and sustainability: This compo- straints to ensuring that financial services are provided nent address the key constraints to achieving an inno- in a responsible, transparent, and nondiscriminatory vative and competitive financial sector in which a way, with accessible and effective avenues for recourse. range of providers are able to sustainably service the Financial capability: This component addresses the financial needs of individuals and MSMEs principal knowledge, skills, attitude, and behavioral Provider reach: This component addresses the constraints to greater uptake and usage of appropri- degree to which the legal and regulatory framework ate financial services by individuals and MSMEs. NFIS Template and Key Components    27 An NFIS document can also usefully group or summarize of actions that will be implemented under each policy these objectives via a set of policy areas. Defining a con- area can also be included in this section. cise set of policy areas can also help to structure other elements of the NFIS, including the action plan, gover- NFIS objectives and policy areas are sometimes pre- nance arrangements, and M&E system. Various approaches sented in a conceptual framework. Such a framework can can be taken to define a set of policy areas, and there is no serve as a useful visual distillation of the objectives and one right approach. For example, policy areas can be ori- policy areas. (See box 2.7.) ented by one of the following: Some NFISs also separately highlight a set of target • Subsector or product cluster—for example, banking, groups that represent underserved segments. (See box microfinance, payments, savings, insurance, pensions 2.8.) Target groups should be explicitly described in this • End users—for example, MSME finance, agricultural section only if the NFIS’s action plan (section 6) contains finance, women’s financial inclusion actions that are oriented toward such groups. These tar- • Enabling infrastructure—for example, credit infra- get groups are often defined by a number of factors: structure, national payment systems, information and • Demographic characteristics—for example, women communications technology infrastructure, identifica- (see box 2.9) and youth tion systems, data infrastructure • Income levels—for example, the poor • Cross-cutting themes—for example, digital financial services, fintech, distribution channels, product design, • Geographic location—for example, rural, urban, peri- financial consumer protection, financial capability urban, or by region/state Figure 2.1 presents some of the policy areas used com- • Economic activity—for example, MSMEs, agriculture- monly in recent NFIS documents. A summary of the type dependent households, informal sector workers FIGURE 2.1 Policy Areas across 34 NFISs Digital payments/ Distribution innovative channels/ products Financial 12 NFISs access points capability/ 15 NFISs Savings/ education pensions 18 NFISs 4 NFISs Financial Measurement infrastructure and data 9 NFISs 3 NFISs Financial MSME/ consumer Ag finance protection Microfinance/ access to 8 NFISs 16 NFISs credit Insurance 3 NFISs 4 NFISs Source: World Bank Group 2017a. 28   Developing and Operationalizing a National Financial Inclusion Strategy BOX 2.6 Country Example: Jamaica’s NFIS Policy Areas and Objectives Jamaica’s 2016–20 National Financial Inclusion Strat- • Develop a regulatory and supervisory framework egy consists of five policy areas: (i) financial resilience, for microinsurance, with a proportionate approach (ii) financial access and usage, (iii) financing for growth, to the level of risk; (iv) responsible finance, and (v) supporting infrastruc- • Support the development of viable insurance ture. For the policy area on financial resilience, the instruments for agriculture in coordination with NFIS defines an objective for each pillar. The objective and participation of relevant public entities; of the financial resilience policy area is to “promote the development and use of appropriate savings, • Encourage the development of savings and insur- insurance, and retirement products, particularly for ance products for underserved segments of the vulnerable segments of the population.” The NFIS population; and further elaborates that under this policy area, the • Promote pension coverage through retirement Jamaican authorities and financial inclusion stakehold- products targeted especially at the low-income ers plan to: and informal segments of the population. BOX 2.7 Country Example: NFIS Policy Frameworks in Zambia Zambia’s National Financial Inclusion Strategy identifies several policy areas and objectives for achieving its financial inclusion vision. VISION Comisi ón Multisectoral de Inclusi ón Financiera Universal access to and usage of a broad range of quality and affordable financial products and services DRIVER 1: DRIVER 2: DRIVER 3: DRIVER 4: Widespread and Diverse, innovative, Finance for SME Financial consumer accessible delivery customer-centric and agricultural protection and channels products sector growth capability (Agents, branches, (Digital financial services, (SME finance, agricultural (Disclosure, dispute ATMs, PoS, savings, credit, payments, finance, etc.) resolution, business mobile phones) insurance, pensions, etc.) practices, financial education) ENABLER 3: Financial infrastructure ENABLER 2: Policy/legal/regulatory environment and supervisory capacity ENABLER 1: Public and private sector commitment/coordination NFIS Template and Key Components    29 BOX 2.8 Country Examples: NFIS Target Populations in Indonesia and Peru • Indonesia’s National Strategy for Financial Inclu- lenges of several vulnerable groups, including sion maps target group-specific actions against rural residents, the poor, adults with low educa- each one of the four target population groups it tion, displaced populations, and the disabled. The identifies: the low-income poor, the working poor/ NFIS puts forward a range of actions that are MSMEs, population with special needs—migrant explicitly linked to each vulnerable group, includ- workers and those living in remote areas—and the ing the development of a national identification nonpoor (defined as the residual category, includ- system (linked to informal sector workers and dis- ing those who are financially excluded but do not placed populations), simplified documentation belong to the previous categories). requirements (linked to adults with low education), and the extension of agricultural insurance subsidy • Peru’s National Financial Inclusion Strategy programs (linked to rural residents). highlights the specific financial needs and chal- BOX 2.9 Country Examples: Gender in National Financial Inclusion Strategies Women represent a disproportionately large share of the world’s unbanked adults. According the 2014 Global Findex, women are 11 percent less likely than men to report owning an account at a formal financial institution; in some jurisdictions, the gap is significantly larger (Demirguc-Kunt et al. 2015). National financial inclusion strategies represent an opportunity to address the gender gap in financial inclusion. An analysis of the 34 juris- dictions that report having an NFIS in place shows that 14 NFISs include a gender dimension. Twelve jurisdic- tions have a thematic focus on gender, 10 jurisdictions include specific actions to increase financial inclusion among women, and eight jurisdictions include indicators to monitor financial inclusion progress among women. NFIS in place 34 jurisdictions NFIS includes gender-specific indicator(s) 8 NFIS includes gender-specific 10 action(s) NIFS includes gender thematic focus 12 NFIS includes gender dimension (any) 14 0 5 10 15 20 25 30 35 For example, Nigeria’s NFIS prioritizes the improvement of financial inclusion for women. To implement the NFIS, the Central Bank of Nigeria established several working groups including a “Special Interventions” Working Group that focuses primarily on the inclusion of youth and women. Nigeria’s NFIS calls for 60 per- cent of loans disbursed through the Micro, Small and Medium Enterprises Development Fund to be directed to women or women-owned enterprises. The NFIS also establishes a goal for 30 percent of staff in microfi- nance banks to be women. The monitoring and evaluation framework of the NFIS includes of several gender- disaggregated indicators. 30   Developing and Operationalizing a National Financial Inclusion Strategy 2.4 GOVERNANCE ARRANGEMENTS There are a range of models for NFIS governance arrange- ments. A typical model consists of four main entities. This section of the NFIS should describe the governance Table 2.1 provides an illustrative example of functions that arrangements that will facilitate the implementation of the may be tasked to the following governance entities: NFIS. The governance arrangements of an NFIS often ➤ NFIS Council is comprised of high-level officials and build upon the NFIS development and drafting process provides overall policy guidance relevant to NFIS itself. As outlined in chapter 1, an NFIS should be devel- implementation. The NFIS Council should also ensure oped through a consultative process that involves all rele- that financial inclusion remains a key policy priority in vant stakeholders from the outset. Different mechanisms their respective institutions. Members of the NFIS can be used to coordinate across these different stake- Council are typically high-level figures and include min- holders and may yield a relatively formal structure that will isters, governors, and executives (or their deputies) of endure through the implementation period of the NFIS. financial sector authorities. NFIS governance arrangements should be considered in ➤ NFIS Implementation Committee (IC) oversees the the context of the various functions needed for effective day-to-day implementation of the NFIS and provides implementation of an NFIS. These functions include (i) regular updates to the NFIS Council. The NFIS IC policy guidance and implementation oversight, (ii) stake- would meet at least quarterly. Members of this entity holder coordination and consultation, and (iii) M&E. would typically be director-level figures. TABLE 2.1: Illustrative Mapping of NFIS Governance Roles and Responsibilities NFIS NFIS NFIS IMPLEMENTATION WORKING NFIS FUNCTION COUNCIL COMMITTEE GROUPS SECRETARIAT Policy guidance and implementation oversight Providing overall policy guidance ✔ Addressing bottlenecks to NFIS implementation ✔ ✔ Securing and allocating resources ✔ ✔ Approving NFIS implementation plans ✔ Determining areas where policy guidance or resources are needed ✔ Stakeholder coordination and consultation Mandating actions to various institutions ✔ ✔ Establishing NFIS governance entities ✔ Convening working groups ✔ ✔ ✔ Providing feedback on NFIS action implementation plans ✔ Facilitating coordination of implementation of related NFIS actions ✔ ✔ ✔ Ensuring consistency and quality of NFIS action implementation plans ✔ ✔ Liaising with international organizations ✔ ✔ Monitoring and evaluation Developing and implementing an Action Plan Tracker ✔ Consolidating and analyzing the implementation progress of NFIS actions ✔ Tracking national financial inclusion progress through data collection and ✔ analysis Preparation of internal NFIS progress reports for the NFIS Steering ✔ Committee and NFIS IC Preparation of public NFIS progress reports ✔ Developing and implementing a communications strategy for the NFIS ✔ Reviewing progress and guiding next steps ✔ ✔ Implementing or coordinating the implementation of evaluations of ✔ strategically important NFIS actions NFIS Template and Key Components    31 ➤ NFIS working groups serve as consultation forums A variation of this model can be found in several coun- for an NFIS policy area or group of specific NFIS tries, including Jamaica, Zambia, Peru, and Pakistan. (See actions. Members of the working groups should be boxes 2.10 and 2.11.) Once a model is determined during decision makers in their respective institutions and the NFIS drafting and consultation process, it should be would typically include a range of stakeholders from outlined in this section of the NFIS document, including, the public, private, and civil society sectors. for each entity, (i) mandate, (ii) key functions and respon- sibilites, and (iii) institutional membership. Other aspects ➤ An NFIS Secretariat with dedicated staff supports the of the governance arrangments, including details about other three entities through the execution of some or its operationalization (for example, staffing, frequency of all of the following functions: (i) administrative and meetings, internal rules), can be elaborated in separate coordination support, (ii) NFIS monitoring and report- terms of reference documents. ing, (iii) research and evaluation, and (iv) technical inputs for selected actions. BOX 2.10 Country Example: NFIS Governance Arrangements in Pakistan Pakistan’s National Strategy for Financial Inclusion cial Inclusion Council, which then approves, provides includes a governance structure that includes a high-level guidance, and assists with budget setting National Financial Inclusion Council, a National Finan- for the activity. The working groups, in coordination cial Inclusion Steering Committee, nine technical with the Secretariat, then develop a series of activi- committees, and a Secretariat. (See below.) ties and subactivities, with assigned stakeholder roles, responsibilities, and deadlines, to push imple- NFIS working groups jointly crafted terms of refer- mentation. These elements are then periodically ence based on the NFIS action plan. The terms of reported and monitored over time, and progress is reference were submitted to the higher-level Finan- discussed. National Financial Inclusion Council Ministry of SBP SECP, Federal Finance (Co-Chair) Board of Revenue, PTA, Provincial Finance Minister Governor Secretaries, others National Financial Inclusion Steering Committee Updates to the NFIS NFIS Secretariat SBP Technical level representatives Action Plan, conducts SBP from MoF, SBP, SECP, PTA, data aggregation, (Co-Chair) Governor professional associations reporting to the Governor (PBA, PMN, LAP, etc.) Steering Committee, M&E, research, technical Technical Committees and administrative support to lead Digital Agriculture Housing agencies. payments finance finance Awareness MSME Pensions and literacy finance Islamic Gender Insurance finance *Non exhaustive, illustrative set of Technical Committees 32   Developing and Operationalizing a National Financial Inclusion Strategy BOX 2.11 BOX 2.12 Tip: Tailoring NFIS Governance Tip: Ensuring Accountability at the Arrangements to Country Context Institutional Level There are many considerations in developing NFIS gover- The implementation period of the NFIS will likely nance arrangements, and some good practices are now see changes in senior management and staff beginning to emerge. National authorities should consider within many of the implementing stakeholders, what has worked and what has not worked with regard to sim- including as a result of elections. It is therefore ilar strategies and coordination structures in their country. Ulti- important that the NFIS clearly establish account- mately, an effective governance arrangement is one that is ability at the institutional level, rather than empha- aligned with the political realities of the country, takes into size the roles of individuals. Using regulation or account institutional strengths and weaknesses, and is led by other legally enforceable means to establish the effective champions for financial inclusion. Internationally, NFIS and related governance arrangements can NFIS governance arrangements vary greatly from one country be one approach to ensure that the prioritization to another. Examples from 15 countries, including Colombia, of NFIS implementation remains an institutional India, Madagascar, Mexico, Paraguay, and Peru, are available priority when individual roles and responsibilities in the following note. change. 2.4.1 NFIS Council 2.4.3 Working Groups The NFIS Council provides overall policy guidance and A set of working groups are often formed as part of the assures that financial inclusion remains a key policy priority NFIS governance arrangements. Working groups are in their respective institutions. Members of an NFIS Coun- often structured in line with the NFIS policy areas (such as cil generally include relevant ministers (for example, min- consumer protection) and/or key subsectors (for example, ister of finance), the central bank governor, heads of other payments) and serve to guide the implementation of NFIS regulatory agencies, such as the insurance regulator or actions that fall under those pillars or subsectors. Working the capital markets regulator, and other relevant high- groups can also be formed to tackle cross-cutting themes level key policy officials. An NFIS Council should typically like gender. Working group members should be decision meet at least twice a year, as otherwise infrequent meet- makers in their respective institutions. Working groups ings may risk slowing progress of the strategy. One com- typically include a range of stakeholders from the public, mon responsibility of the high-level Council is to help private, and civil society sectors. The NFIS Council and IC secure budget resources and fund large-scale initiatives. are typically responsible for determining the structure and NFIS Councils may also provide policy guidance on the composition of the working groups. prioritization, sequencing, and coordination of key NFIS actions. (See box 2.12.) A key decision point is whether the onus for NFIS imple- mentation lies with the working groups or with individual implementing stakeholders. In some countries, working 2.4.2 NFIS Implementation Committee groups serve primarily as consultation and coordination An NFIS IC oversees the implementation of the NFIS. forums, with the onus for implementation lying with one This entity would typically be comprised of director-level or more implementing stakeholders (for example, the representatives from institutions involved in the imple- pensions regulator) as outlined in the NFIS action plan. mentation of the NFIS and may also include the chairs of This approach can improve accountability and lessen the the working groups and/or private sector representa- risk that implementation will be slowed by bureaucratic tives. The NFIS IC should meet at least quarterly and can processes. In other countries, each working group (as a be available more frequently than a Council to provide whole) is responsible for the implementation of NFIS focused, technical guidance to NFIS stakeholders, given actions under its mandate. In these instances, working their broader perspective of financial, social, macroeco- groups prioritize and select NFIS actions and jointly nomic, and other relevant developments and research. develop detailed implementation plans and road maps to (See box 2.13.) achieve each action. The working group can assign partic- ular tasks to its members for implementation, who some- times form subgroups or task forces, and progress can be reported periodically and provided to the Secretariat. NFIS Template and Key Components    33 BOX 2.13 Tip: Distinguishing the Different Functions of NFIS Governance Entities It can be difficult to understand the difference and consultation on actions in the action plan—for between the functions of an NFIS Council and an example, drafting laws/regulations, performing Implementation Committee, particularly as both diagnostics, designing and implementing certain groups of stakeholders provide guidance and direc- programs, and so forth. Feedback loops are devel- tion for NFIS implementation. In short, a Council oped when, most commonly, an entity like a Secre- should provide high-level approvals of the direction tariat is able to report progress to the Council and determined by the IC. The IC works to directly guide IC, helping to move progress of the NFIS implemen- relevant stakeholders and working groups who are tation forward and reducing bottlenecks. The tasked with implementing NFIS actions. Working accompanying figure provides an illustrative exam- groups are responsible for technical collaboration ple of a common NFIS governance arrangement. Illustrative Example of NFIS Implementation Structure NFIS COUNCIL Provides overall policy guidance Meets binnually (at minimum) Report on overall NFIS implementation and progress NFIS Secretariat NFIS IMPLEMENTATION COMMITTEE Oversees day-to-day implementation • Reports progress and Meets quarterly (at minimum) bottlenecks WORKING GROUPS • Reports progress and bottlenecks • Provides data as needed • Coordinates implementation It is important to include the relevant stakeholders from the piloting of new products and delivery mechanisms. private and civil society sectors in each working group, as Civil society stakeholders can also provide valuable relevant given the respective topic. Financial service pro- inputs and guidance on areas related to consumer pro- viders are the entities that actually deliver financial prod- tection and advocacy, informal financial service providers, ucts and services to the population and are thus critical to and research. any financial inclusion effort. As noted previously, private sector stakeholders should be involved in the strategy 2.4.4 NFIS Secretariat design and target-setting stages and have a seat in the coordination and implementation mechanism of the The NFIS should summarize the location and function of actual NFIS. If the financial industry has shared ownership the Secretariat. Typically, the NFIS Secretariat provides the of the NFIS, it would be more likely to see the implemen- day-to-day administrative, coordination, and M&E func- tation of the NFIS as being in its own interest, rather than tions needed to implement the NFIS and is located within an imposition, which is key to achieving sustainable out- the lead stakeholder institution (for example, central bank). comes. The involvement of the private sector is also It is recommended that the Secretariat be comprised of important to ensure that policy makers and regulators are dedicated, full-time staff. The Secretariat can either be a providing a conducive environment for innovation and separate unit or embedded within an existing unit. The 34   Developing and Operationalizing a National Financial Inclusion Strategy Secretariat commonly provides some or all of the following accepted by the full range of stakeholders. When these functions to push forward the implementation of an NFIS: conditions are met, an M&E system can be a powerful and (i) administrative and coordination support, (ii) NFIS moni- effective tool for identifying obstacles, demonstrating toring and reporting, (iii) research and evaluation, and (iv) results, and efficiently allocating resources. technical inputs for selected actions. See section 3.1.1 for guidance on operationalizing the NFIS Secretariat. The structure of this section of the NFIS should reflect the following four key elements of an M&E system: 2.4.5 Funding ➤ A data infrastructure that provides relevant, reliable, and comprehensive financial inclusion data to assess It is often useful to include a brief funding section within the access, usage, and quality of financial services. A the NFIS itself to clearly address funding and resources robust financial inclusion data infrastructure includes relevant to the implementation of NFIS actions. It is critical sources from the demand side, supply side, enabling to ensure that these discussions begin during the NFIS environment, and program level. development process and that action items included in the NFIS are based on available resources and capacity or ➤ A national results framework that establishes key per- realistic assumptions about the future. There are many dif- formance indicators (KPIs) and targets aligned with ferent funding models and resource types to consider, the policy objectives of the NFIS. which can come from a variety of different platforms. For ➤ Action plan tracking system and reporting mecha- instance, depending on the action and strategy, a variety nisms that track the execution and outcomes of NFIS of funding options can be explored, including (but not actions to ensure that implementation is on track. limited to) the following: ➤ Evaluations of key actions and programs provide ➤ Self-funding. Implementing stakeholders (that is, those insight into the efficiency, effectiveness, and impact of given primary responsibility to implement an NFIS these actions. action) fund their respective actions—for example, a public agency or ministry might fund a program through An NFIS M&E section should also describe the mechanics a budget line item or the reallocation of budgeted of coordination and implementation of the M&E system, funds. Self-funding is typically the most common which may include a working group and/or dedicated approach. technical team. (See subsection 5.5.) ➤ Dedicated NFIS funding. Funding for the implemen- tation of financial inclusion actions can potentially be 2.5.1 Data Infrastructure secured by higher-level committees (like the Council) for the implementation of the NFIS. High-quality data is the foundation of a robust M&E sys- tem. This section of the strategy should include a brief ➤ International organizations. International organiza- analysis of any gaps in the financial inclusion data land- tions can be engaged to support specific NFIS actions. scape for the respective country (as informed by the ➤ Pooled funding. A group of implementing stakehold- data-landscaping work described in section 1.3). It can ers (including those outside of the NFIS governance also highlight gaps between the indicators readily avail- entities and working groups) may pool funding in able and the full depth and breadth of the objectives and order to fund a particular action. Pooled funds might actions defined in the NFIS. This can serve to motivate come from a combination of private, public, and civil additional efforts to increase the scope of quality of data society organizations. For instance, a financial literacy in certain areas—for example, as it relates to financial working group and related commercial banks and capability and product quality, or through upgrades to off- MFIs could pool funding to implement a nationwide site supervision data-collection processes or modification financial literacy campaign. of existing household survey efforts. As such, the national and action-level results frameworks (see subsections 2.5.2 and 2.5.3) should maintain a certain degree of flexibility to 2.5 MONITORING AND EVALUATION SYSTEM incorporate these data sources, indicators, and targets as they become available. The M&E section of an NFIS is a valuable opportunity to outline a comprehensive M&E system for financial inclu- Related to the above, many NFIS action plans contain sion. The measurement of progress toward financial inclu- several actions related to data collection. It can be useful sion objectives set out in an NFIS requires an M&E system to highlight these activities here, even including a brief that is well resourced, well coordinated, and broadly “data action plan” table. (See box 2.14.) NFIS Template and Key Components    35 BOX 2.14 Country Examples: NFIS Actions to Improve Data Infrastructure Many NFIS action plans contain several actions related to data infrastructure: • Brazil: Improve the methodology used to measure financial inclusion and incorporate quality indicators. • Jamaica: Establish regular national demand-side measurement of financial inclusion (including financial capability). • Madagascar: Conduct an assessment of the penetration of microfinance services by district and identify potential for opening service points (translated). • Papua New Guinea: Compile and update the consolidated list of financial literacy providers, their location, content, and target group of training. • Philippines: Make available relevant data to stakeholders to institutionalize accountability and M&E. 2.5.2 National Results Frameworks the stability or competitive equilibrium of a country’s financial system. Targets pertaining to the usage of credit A national results framework establishes high-level KPIs to products in particular should be carefully considered to quantify NFIS policy objectives and monitor progress avoid overindebtedness and systemic stability risks. Third, toward their achievement. When appropriate, these KPIs target-setting exercises should be informed by an analytic should be associated with ambitious but achievable tar- and consultative process. At the end of the day, however, gets. A national results framework is distinct from, but target setting is both an art and a science, as the value of related to, action-level results frameworks that serve to targets often comes from the rallying effect generated track the implementation (that is, outputs) and outcomes and their role in “branding” an NFIS. (See box 2.15.) of NFIS actions (discussed further in section 2.5.3). National-level KPIs will naturally be influenced by a range A national results framework should include several ele- of NFIS actions as well as factors outside the scope of the ments (see table 2.2): NFIS (for example, economic growth). They are import- • Alignment with NFIS policy objectives ant, however, for monitoring and communicating overall progress toward policy objectives. • Key performance indicators, including: → KPI baseline values → KPI targets (where relevant) 2.5.3 Action Plan Tracking System → Timeline to reach said targets A robust NFIS M&E system should include appropriate steps to monitor outputs and direct outcomes associ- • Data sources (including responsible institution) ated with action plan implementation. An action plan • Relevant indicator breakdowns (for example, by gen- tracking system, which should feed into an overarching der, income, and age, for demand-side indicators) NFIS reporting structure, may be needed to monitor the execution of outputs and outcomes of NFIS actions to The G20 Set of Financial Inclusion Indicators and the ensure that implementation is on track. Although an AFI Core Set of Financial Inclusion Indicators provide a action plan tracking system does not need to be fully useful guide and starting point for the design of coun- described in the NFIS document itself, the NFIS is well try-specific indicators and targets. The note from the placed to note that implementing stakeholders will be Global Partnership for Financial Inclusion on target set- responsible for developing an action plan tracking sys- ting provides additional guidance on the value and tem and regularly reporting progress on NFIS actions design of national financial inclusion targets. periodically. In general, the development of the action plan tracking system and the reporting templates is High-level KPIs and targets should be developed with cer- often the responsibility of the Secretariat. tain principles in mind. First, targets should be achievable but ambitious. Second, national financial inclusion targets Including language within the NFIS itself regarding the should not promote or justify actions that adversely affect need for regular reporting and periodic reviews will help 36   Developing and Operationalizing a National Financial Inclusion Strategy TABLE 2.2: Example National Results Framework Template NATIONAL/IMPACT INDICATORS 2018 2023 DATA REPORTING REPORTING POLICY AREA # IMPACT INDICATOR (BASELINE) (TARGET) SOURCE FREQUENCY BREAKDOWN Access Financial infrastructure 1 # of financial access 8.8 14 Central bank Annual By type of financial points per 100,000 access point, region adults Financial infrastructure 2 % of SMEs covered 22 35 Central bank Annual By firm size, sector by credit reporting systems Usage Savings and payments 3 % of adults with a 41 75 National Every By urban/rural, transaction account financial two years gender, income inclusion survey MSME finance 4 % of MSMEs 34 15 National MSME Every three By firm size, sector considered credit- survey years constrained Quality Financial consumer 5 % of adults aware of 45 60 National Every two By urban/rural, protection and deposit insurance financial years gender, income capability inclusion survey Financial consumer 6 % of adults that 33 50 National Every two By urban/rural, protection and report budgeting financial years gender, income capability inclusion survey BOX 2.15 Tip: Determining Targets There are several benchmarking approaches that target values would then be subjected to a consulta- can be used to support the analytic process of finan- tive process with a wide range of stakeholders with cial inclusion target setting. A useful initial exercise is the goal of arriving at one target value per KPI that is to project forward existing growth rates of select broadly accepted and aligns with the principles financial inclusion KPIs. This process can provide a noted above. lower-bound estimate for target setting, reflecting the fact that financial inclusion in a given country will likely improve naturally over time as a result of eco- KPI value High- performing nomic growth, financial sector development, and peer countries technological advances. Benchmarking against peer countries can also be a useful exercise in establish- Possible target values ing a range of target values. Depending on the time span of the target, a given country could examine Existing the levels of financial inclusion across country peers national within its geographic region or income group, iden- growth rates tifying “high performers” within each comparator group to generate target values. At the end of the Time analytic process, there will likely be a range of target Historic data Estimations values to choose from for each KPI. These potential NFIS Template and Key Components    37 lay the foundation for higher-level stakeholders and often ties identified in section 2.2. A broad range of types of broader audiences to understand the overall advances that actions can be included in an NFIS (see boxes 2.16, 2.17, have been made since the launch of the NFIS. Such report- and 2.18) and can include the following: ing also allows for self-evaluation (and enables policy guid- • Legal or regulatory enactments or amendments ance) and feedback loops that help reallocate or revamp delayed actions (or scale up successful actions) as needed. • Supervisory actions This provides a platform for course correction, if necessary. • Development of financial infrastructures • Diagnostic and data-collection exercises 2.5.4 Evaluation of Key NFIS Actions • Information campaigns and promotion The NFIS should highlight the need to determine the • Capacity building and training activities (for users, pro- effectiveness and impact of key NFIS actions and the viders, and regulators alike) degree to which they contribute to national-level NFIS • Business model development and product roll-out objectives and targets. In this sense, evaluation activities are a key element of the NFIS M&E system. Many NFIS Each listed action should include the following information: action plans may contain explicit evaluation components • A concrete and self-explanatory description of the or be conducive to rigorous evaluation. It can be useful to action to be implemented highlight these activities here or include a brief “evaluation action plan” table. In many cases, the exact scope of these • The primary implementing stakeholder responsible for evaluation activities will naturally depend on the availability its execution (and in the case of actions involving mul- of resources, the action being evaluated, and the appropri- tiple stakeholders, a secondary implementing stake- ate methodology. However, signaling a broad commit- holder can be identified) ment to rigorous evaluation is recommended in the NFIS • The time of implementation of said action document itself. A key role of the institution responsible for • The priority of execution of said action (high, medium, M&E (often a Secretariat) will be to coordinate, oversee, or low) and mobilize resources for these evaluations. • The preconditions necessary to implement said action, if relevant (this is particularly in the case of 2.6 ACTION PLAN reforms sequenced in a way that their execution is dependent on the implementation of other reforms in The action plan is a critical section of every NFIS. It pro- the action plan) vides a list or table of actions to be undertaken within the • Indication of linkage to NFIS policy objective or area time frame of implementation of the NFIS. The actions (which can be done via the structure of the table) should align with the objectives and policy areas outlined in section 2.3, which address the obstacles and opportuni- A template of an NFIS action plan is provided in table 2.3. BOX 2.16 Country Examples: NFIS Actions The following are a sample of NFIS actions from various countries: • Issue agent banking regulations (Zambia) • Carry out pilot projects to establish an alternative dispute-resolution mechanism (China) • Shift government-to-person payments into digital transaction accounts (Pakistan) • Develop a regulation to facilitate the development of microinsurance (Haiti) • Review bank account–opening regulations to improve public access to savings (Indonesia) • Develop a regulatory framework to address data privacy issues of financial consumers (Mexico) • Consolidate public programs for MSME finance to improve efficiency and effectiveness (Jamaica) • Undertake an assessment of the role of the State Bank in financial inclusion (Peru) • Establish a centralized collateral registry (Tanzania) • Develop a consumer protection framework for the pensions sector (Nigeria) 38   Developing and Operationalizing a National Financial Inclusion Strategy BOX 2.17 Key Resource: G20 High-Level Principles for Digital Financial Inclusion In 2016, the G20 leaders approved the G20 High-Level Principles for Digital Financial Inclusion proposed by the Global Partner- ship for Financial Inclusion. These principles serve as the first international high-level guidance in the field of digital financial inclu- sion. The principles include 66 actions spanning eight principles to guide and advise national authorities in the development of digital financial inclusion. These principles and actions can be leveraged to develop an NFIS action plan that promotes the advance- ment of digital financial inclusion. The principles are as follows: 1. Promote a digital approach to financial inclusion 5. Establish responsible digital financial practices to protect — Example action: Digitize large-volume, recurrent pay- consumers ments from government agencies to consumers and Example action: Ensure that consumers of digital finan- — small businesses. cial services have meaningful choice and control over their personal data—including through informed consent 2. Balance innovation and risk to achieve digital financial based on clear, simple, comprehensive, age-appropriate, inclusion and brief privacy policy disclosures in relevant languages. Example action: Encourage providers to use multiple — sources of digital data for evaluating consumer credit- 6. Strengthen digital financial literacy and awareness worthiness, including appropriate data safeguards and Example action: Identify emerging financial competency — nondiscrimination. requirements arising from the digitization and bundling of financial services. 3. Provide an enabling and proportionate legal and regulatory framework for digital financial inclusion 7. Facilitate customer identification for digital financial services — Example action: Implement a framework for digital finan- Example action: Establish an interoperable, technolo- — cial inclusion that allows for the piloting of innovative gy-neutral national database system that, where appro- new delivery channels, products, and services. priate, links relevant civil registration and identity systems and is appropriately and securely accessible to autho- 4. Expand the digital financial services infrastructure ecosystem rized parties, such as financial service providers. Example action: Modernize and expand the retail pay- — ment system infrastructure and establish open payments 8. Track digital financial inclusion progress platforms linked to countries’ clearing and settlement Example action: Establish or adapt financial inclusion — systems and that provide safe and efficient access to data-collection systems to cover new digital financial ser- banks, nonbank financial institutions, and emerging ser- vice providers and products. vice providers. Actions should be developed through a consultative pro- Flexibility can also be built into an NFIS to accommodate cess, using the organizational structures and engagement and facilitate future revisions and updates to the NFIS strategies outlined in section 1.2. Initially, it is useful to and action plan, in order to ensure that the NFIS remains consider a broad range of actions, as informed by stake- relevant over time. (See box 2.20.) A periodic review and holder suggestions, diagnostic recommendations, and updating system can be incorporated directly into the the obstacles and opportunities identified in the baseline NFIS, as part of the responsibilities of the governance assessment. However, toward the end of the drafting pro- entities. Another approach is to have a “living” docu- cess, the list of actions should be narrowed to focus on a ment, where new actions and next steps are identified set of 15–25 actions that are high-impact, forward-look- over time, enabling the NFIS to refocus and continuously ing, achievable within the time frame of the NFIS and fea- realign efforts to international good practices and shifting sible given available resources and capacity. (See box policy priorities. For example, actions can be reassessed 2.19.) Having a smaller and focused set of actions can after a particular time frame (for example, every two also help stakeholders to communicate with others about years), and updates can be launched subsequently with what the NFIS is meant to accomplish. This set of actions new guidance. This approach allows stakeholders to should span the time frame of the NFIS, including several leverage the NFIS as an ongoing platform to consistently “quick wins” that can be accomplished early in the NFIS map and take stock of NFIS efforts, confirm the impact implementation in order to demonstrate credibility and and cost-effectiveness of NFIS actions, reassess focus build momentum. areas, and recommend new actions or priorities through- out the NFIS implementation process. NFIS Template and Key Components    39 BOX 2.18 Key Resource: 2017 Global Financial Inclusion and Consumer Protection Survey Financial sector policy makers often take inspiration understand what financial sector stakeholders in other from their counterparts in other countries. The 2017 countries are doing with regard to nonbank e-money WBG Global Financial Inclusion and Consumer Pro- issuers, agent-based distribution channels, simpli- tection Survey benchmarks policy, legal, regulatory, fied customer due diligence, microfinance, disclosure and supervisory reforms to strengthen the enabling and transparency, fair treatment, dispute resolution, environment for financial inclusion and financial con- and financial capability. sumer protection in 141 economies. Lead and draft- ing NFIS stakeholders can leverage this resource to BOX 2.19 Tip: Consistency in Defining Actions In drafting an NFIS action plan, an effort should be the actions be overly specific or granular—for exam- made to standardize the level of detail of actions. The ple, “add an indicator of account dormancy to off-site key is to provide enough specificity to guide imple- supervision reporting templates”—as this will result in menting stakeholders and to be consistent in the level a lengthy action plan and delay the NFIS development of detail used. Ideally, actions would not be overly process. The actions listed in box 2.16 are good exam- broad or high-level—for example, “improve the ples of actions that are specific without being overly national payments system”—as these are better detailed or granular. A lack of consistency in how regarded as NFIS objectives and do not provide a actions are defined and described can make it difficult road map for NFIS implementers to follow. Nor should to monitor and evaluate NFIS progress. TABLE 2.3: Example Action Plan Template IMPLEMENTING STAKEHOLDERS POLICY AREA ACTION PRECONDITIONS PRIORITY TIME FRAME PRIMARY SECONDARY Policy area 1 Action 1 High 2019–2020 Action 2 Action 1 to be Medium 2020 completed Action 3 Low 2020–2021 Policy area 2 Action 4 Action 5 Action 6 Action 7 Policy area 3 Action 8 Action 9 Action 10 40   Developing and Operationalizing a National Financial Inclusion Strategy 2.7 RISKS AND MITIGATION MEASURES BOX 2.20 The inclusion of a section on risks and mitigation mea- sures can be useful to NFISs that are generally ambitious Tip: A Lean NFIS documents that address challenging, multistakeholder A lean NFIS approach may also be of interest to issues and extend over several years. In that sense, many stakeholders if a framework and strategy are barriers can constrain the complete and effective imple- required but stakeholders do not have the time mentation of such strategies. It is therefore useful to enu- or available resources to develop, implement, merate these risk factors, the level of each risk (for or operationalize a full NFIS. A lean NFIS example, high, medium, or low), and measures to miti- approach can be used to develop a core frame- gate these risks. Clear identification and discussion of work but with a reduced scope of policy areas these risks can be useful to keep these risks front of mind or action items in order to initiate and opera- for all stakeholders and develop effective mitigation mea- tionalize the NFIS more quickly. Once the NFIS sures. (See box 2.20.) is launched, a lean NFIS may add on new ele- ments over time. An example template of a risk table is provided in table 2.4. TABLE 2.4: Example Risk Table Template RISK LEVEL MITIGATION MEASURES Risk 1 [High, medium, low] [Mitigation measure 1A] [Mitigation measure 1B] Risk 2 [High, medium, low] [Mitigation measure 2] Risk 3 [High, medium, low] [Mitigation measure 3A] [Mitigation measure 3A] [Mitigation measure 3A] BOX 2.21 Country Example: Addressing NFIS Implementing Risks in Zambia Zambia’s 2017–22 National Financial Inclusion Strategy includes a section entitled “Risk and Mitigation Approaches” that identifies the following risks: • Deterioration in the macroeconomic conditions leading to high interest rates, tight liquidity, and diversion of financial sector policy prioritization away from financial inclusion • Tight fiscal conditions limiting availability of government resources to support implementation • Slow process of legal and regulatory reforms • Public and private sector commitment needed to advance the financial inclusion agenda is not sustained throughout the implementation period 3 OPERATIONALIZING THE NFIS The purpose of this chapter is to provide guidance on and the broader public informed of NFIS progress. A operationalizing key NFIS elements, including the NFIS communication strategy and periodic reports are useful governance arrangements, action plan, and M&E system. approaches. This guidance can be used by relevant stakeholders in the lead-up to the NFIS launch and immediately thereafter, in The timely and effective implementation of NFIS actions order to ensure that momentum is maintained in the early by responsible stakeholders is at the heart of effective stages of implementation. The desired result is an effec- NFIS implementation. Guidance on the technical imple- tively implemented NFIS, wherein NFIS actions are mentation of various financial inclusion actions that may advanced in a timely manner, progress is monitored and be included in an NFIS Action Plan (for example, how to assessed, and bottlenecks are surfaced and addressed. strengthen the legal framework for financial consumer This chapter refers to an NFIS structure and terminology protection) is not the focus of this chapter, as a range of consistent with that outlined in chapters 1 and 2. relevant technical resources exist on these topics. (See table 2 in chapter 1.) This chapter includes four sections: The first six months of NFIS implementation are import- Section 3.1: Operationalizing the NFIS Governance ant for maintaining momentum, securing “quick wins,” Arrangements. This section provides guidance on the and ensuring that the various elements of the NFIS are operationalization of the typical NFIS governance entities operating effectively. Afterward, roles and responsibilities as outlined in chapter 2. These include a high-level NFIS of NFIS stakeholders take effect and facilitate continued Council, an NFIS IC, an NFIS Secretariat, and working implementation of the NFIS and tracking of progress. groups. Table 3.1 provides a summary of core tasks that help to operationalize an NFIS and track progress after its launch. Section 3.2: Operationalizing the NFIS Action Plan. This The tasks are intended to be repeated on an annual basis section provides guidance on how to shift from the typi- as needed. Each of these tasks are discussed in further cally high-level actions described in the NFIS to an opera- detail throughout the chapter. tional work plan, based on a theory-of-change approach. Section 3.3: Operationalizing the NFIS M&E System. This section provides guidance on how to track imple- OPERATIONALIZING THE NFIS 3.1  mentation progress, strengthen financial inclusion data GOVERNANCE ARRANGEMENTS infrastructure, monitor high-level national financial inclu- sion progress, and evaluate the impacts of select NFIS Following the approval and launch of the NFIS, stakehold- actions. ers should prioritize the timely establishment and conven- ing of NFIS governance entities. Such entities typically Section 3.4: Communicating NFIS Progress. This section include a high-level NFIS Council, an NFIS IC, an NFIS highlights the importance of keeping NFIS stakeholders Secretariat, and working groups. Typically, the individuals   41 42   Developing and Operationalizing a National Financial Inclusion Strategy TABLE 3.1: Operationalizing an NFIS after Its Launch MONTHS AFTER NFIS LAUNCH –2 –1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Identify members/staff for NFIS governance entities Develop terms of reference for NFIS governance entities Mapping of Secretariat functions to dedicated staff Initial convening of NFIS IC, working groups Capacity building of Secretariat staff (as needed) Coordination with primary implementing stakeholders (as defined in action plan) to develop implementation plans for respective actions Develop action plan tracker and associated reporting templates Primary implementing stakeholders implement their respective actions Periodic convening of working groups Collect implementing stakeholder progress and update action plan tracker Prepare internal NFIS action progress report Communicate feedback from action progress report and adjust actions/resources as needed [operationalize an NFIS feedback loop] Regular convening of other NFIS governance entities (IC/Council) as needed Develop financial inclusion data infrastructure (as needed) Draft and publish annual NFIS report involved in the NFIS development process—particularly terms of reference for each entity. The terms of reference the lead and drafting stakeholders—will have key roles in should expand on the role and functions of each entity as the NFIS governance entities. For example, members of outlined in the NFIS. At a minimum, the terms of reference an NFIS drafting committee may transition to a role on an should cover (i) the objectives of the entity, (ii) the functions NFIS IC or the NFIS Secretariat. Consulting stakeholders of the entity, (iii) the members/staff and procedures of the should also continue to be engaged, including through entity, (iv) the available resources/budget of the entity (as leadership and participation in working groups. Many of appropriate), and (v) the work program of the entity. these stakeholders will also have been tasked as primary implementing stakeholders for specific actions in the 3.1.1 Establishing the NFIS Secretariat action plan. The timely establishment and staffing of an NFIS Secre- For each entity, the identification of members and/or staff tariat can help facilitate effective NFIS implementation. prior to or immediately following the NFIS launch is the As discussed in chapter 2, an NFIS Secretariat is often first step. This often begins with the establishment and tasked with executing critical functions, such as support- convening of the NFIS IC, as it is typically the governance ing the NFIS Council, the NFIS IC, and working groups entity that has the authority and accountability to set in and executing the NFIS M&E system. Therefore, a Secre- motion the establishment of other governance entities. To tariat should ideally be staffed prior to or just after the the degree that it is not clear from the NFIS action plan, launch of the NFIS to ensure the smooth transition to the NFIS IC should use its first meeting to establish priori- implementation. ties and expectations for the first three to six months of implementation. Although NFIS Secretariats are often formed and staffed in the context of resource and capacity constraints, it is Once the members and/or staff of each governance entity recommended that the NFIS Secretariat be staffed by full- are identified, they should work together to develop clear time staff with relevant technical expertise, even if this Operationalizing the NFIS    43 results in a small team. (See box 3.1.) FIGURE 3.1: Illustrative Example of an NFIS Secretariat Staffing Structure At a minimum, a Secretariat should include staff responsi- ble for NFIS coordination activities and staff responsible Head of Secretariat for NFIS M&E activities. Staffing both coordination and M&E functions should be prioritized in order to facilitate 1 staff member the smooth implementation of the NFIS. A Secretariat can also employ research staff (including full-time or, by lever- Research staff/ aging institutional research departments or consultants, Coordination staff M&E staff Technical experts part-time staff) if specific policy or economic research is needed to support the NFIS. In addition, some Secretari- 2–4 full-time staff 1–2 full-time staff Engaged as needed ats also employ senior technical experts to guide the implementation of strategically important NFIS actions. The NFIS Secretariat should be led by a director who can regularly) and those who support M&E activities (for effectively serve as a financial inclusion champion and example, collecting and tracking relevant indicators for convene relevant stakeholders as needed. Administrative NFIS outputs and outcomes). However, in some instances, or analyst staff can also be employed to support the work Secretariat responsibilities may be cross-cutting and staff of the above coordinators. Figure 3.1 provides an illustra- may be required to work together and share responsibili- tive example of an NFIS Secretariat staffing structure. ties for particular Secretariat functions (for example, reporting). In addition, technical experts (for instance, The staffing of a Secretariat can be done all at once or via those hired on a part-time, consultant-like basis) may also a phased approach, by which certain positions are priori- overlap with Secretariat functions when providing guid- tized based on immediate needs, and additional positions ance and direction to working groups, developing imple- are added over time as NFIS activities and Secretariat mentation plans for actions, or conducting specific responsibilities grow. sectoral work as needed by the Secretariat. Developing clear and concrete terms of reference for Secretariat staff When staffing the NFIS Secretariat, it is important to and related stakeholders is critical to ensuring the smooth understand the distinct job functions between various functioning of the Secretariat and complementarity of Secretariat staff. There is often a clear distinction between Secretariat staff. An illustrative example of some Secretar- Secretariat staff that support coordination activities (for iat staff responsibilities is available in table 3.2. example, supporting working groups to form and meet TABLE 3.2: Illustrative Example of Secretariat Staff Responsibilities SECRETARIAT JOB FUNCTION COORDINATION STAFF M&E STAFF Administrative support to coordinate convening of governance entities, ✔ including NFIS Steering Committee, NFIS IC, and working groups Communication support across stakeholders to enable synergies and ✔ learnings Technical support to ensure consistency and quality of NFIS action ✔ implementation plans Developing and implementing an action plan tracker (and associated reporting templates) to monitor implementation progress of NFIS ✔ ✔ actions (that is, outputs and outcomes) Consolidating and analyzing the implementation progress of NFIS ✔ actions (based on the action plan tracker) Tracking national financial inclusion progress through collection and/or ✔ analysis of demand-side survey data or supply-side data Implementing or coordinating the implementation of evaluations of ✔ strategically important NFIS actions Preparation of internal NFIS progress reports for the NFIS Steering ✔ ✔ Committee and NFIS IC Preparation of public NFIS progress reports (that is, on an annual basis) ✔ ✔ Developing and implementing a communications strategy for the ✔ ✔ NFIS (for example, via a public website) 44   Developing and Operationalizing a National Financial Inclusion Strategy BOX 3.1 Country Examples: NFIS Secretariats in Indonesia, Zambia, and Jamaica The size and functions of NFIS Secretariats vary across deputy ministers to lead the Secretariat and calls for a countries. total Secretariat staff of 10, including representatives from various stakeholders (for example, Bank Indone- In Zambia, the NFIS Secretariat is housed within the sia, Financial Sector Authority). Ministry of Finance’s Financial Sector Strategy team, which is made up of six full-time staff. The Secretariat In Jamaica, the NFIS Secretariat is housed within the includes both coordination staff whose duties include Bank of Jamaica and includes a director, a research supporting the convening of working groups and analyst, and an administrative staff member. The Sec- M&E staff whose duties include the development of retariat is responsible for coordination of NFIS gover- an action plan tracking system. Each working group nance entities, assisting in the development of also has a Secretariat that is housed in the relevant institutional capacity of the implementing stakehold- regulator (for example, Bank of Zambia). ers (including via the procurement of technical assis- tance resources), and M&E. The Secretariat is also In Indonesia, Coordinating Ministry for Economic supported by staff from other divisions within Bank of Affairs Decree 93, 2017, formally established the NFIS Jamaica on a part-time basis, as needed. Secretariat within the ministry. The decree tasks two Technical guidance on the M&E function of the NFIS Sec- actions forward in a given sector or priority area. (See box retariat is further discussed in section 3.3. 3.2.) The role and functions of working groups will natu- rally vary across countries, but stakeholders should be careful not to overload the working groups such that they 3.1.2 Establishing the NFIS Working Groups create a bottleneck for implementation. Working groups should convene soon after the launch of the NFIS and periodically (for example, quarterly) thereaf- A common pitfall is to hold working groups accountable ter throughout the NFIS implementation period. To for the implementation of NFIS actions under their remit. establish and convene successful working groups, NFIS A more effective approach can be to identify a single stakeholders, most often the NFIS IC and/or Secretariat, stakeholder as the primary implementing stakeholder for should (i) identify responsible institutions and stakehold- each NFIS action, as feasible (ideally in the NFIS action ers for each group, (ii) draft and send letters of invitation plan). That stakeholder will ultimately be responsible for to group members, (iii) draft relevant materials, such as the implementation of that action and can use the work- agendas and the terms of reference, to facilitate the ing group as a coordination and consultation forum. For working group meetings, and (iv) maintain the working example, if an NFIS action plan denotes that the Central group meeting cycle as detailed by the NFIS. Bank is responsible for developing a key facts statement for deposit products, the Central Bank will be responsible The working group members should include a mix of pub- for advancing that action but can use the working group lic and private sector stakeholders to ensure diversity of to receive feedback on draft key facts statement regula- perspectives, stakeholder buy-in, and ownership of tion and templates, as well as to coordinate with other actions. Working groups should include representatives regulators who may be implementing similar actions. If from implementing stakeholders (such as government no stakeholder yet exists to capture the mandate of the institutions or ministries, financial service providers, and activity, a working group can also assign subtasks to par- so forth) to ensure adequate buy-in and ownership of ticular stakeholders or a task force as needed. NFIS actions and related implementation plans. In addi- tion, representation of a combination of different stake- holders in each group will be important to facilitate OPERATIONALIZING THE NFIS 3.2  brainstorming and the development of new and innova- ACTION PLAN tive solutions for the NFIS. The actions included in an NFIS action plan are typically Working groups operate most effectively when they serve high-level (for example, “digitize social transfer pay- as coordination and consultation platforms to move NFIS ments” or “draft a regulation to enable agent banking”). Operationalizing the NFIS    45 BOX 3.2 Tip: Effective Working Group Meetings To ensure the smooth functioning and convening of working group meetings should focus more on con- working groups, prior to each meeting, a meeting sultation and coordination of NFIS actions being agenda should be sent to each working group mem- implemented by working group members. This can ber. In general, the first few meetings and agendas include providing feedback on implementation plans, may be the most difficult to structure and should be coordinating the sequencing of related actions, or prepared well in advance. The first working group discussing shared implementation challenges. Devel- meeting should focus on reviewing and finalizing the oping a clear understanding of the objectives of the terms of reference, electing working group chairs, working group and each meeting is important to its and discussing NFIS actions to be implemented in the successful functioning. first six months of NFIS implementation. Subsequent While this approach is useful to expedite the NFIS devel- opment process and adhere to a strategic approach, it BOX 3.3 also means that implementing stakeholders must invest time in determining how to implement NFIS actions once Tip: Determining Accountability the NFIS is launched. Therefore, the primary implement- and “Champions” within Each ing stakeholder responsible for a given action (ideally Implementing Stakeholder indicated in the NFIS action plan) should develop a Following the launch of the NFIS, each imple- detailed implementation plan following the NFIS launch, menting stakeholder should appoint a senior in consultation with other entities involved in implemen- executive to be responsible for the implementa- tation. (See box 3.3.) tion of the NFIS actions allocated to that institu- tion in the NFIS action plan. This individual A detailed implementation plan breaks down an NFIS should also be responsible for embedding NFIS action into a set of sequenced, time-bound activities and actions into the institution’s operational plans, as outputs, with clear delineation of roles and responsibilities well as creating the relevant operational strategic and indications of resource requirements. (See table 3.3.) goals to inform resource allocation, staff incen- The NFIS Secretariat can be a useful resource to ensure tives, and timelines for NFIS implementation. In that implementation plans are developed in a coherent many cases, this may be the same individual who represents the agency on the NFIS IC or another and consistent manner across primary entities, and it may governance entity. want to develop and circulate a template to facilitate this process. Working groups should also be leveraged in this process as a coordination and consultation forum to pro- vide feedback on detailed implementation plans as outcomes and impacts. Figure 3.2 illustrates a theory of appropriate. change containing the following four steps: • The first step in the theory of change is the NFIS A detailed implementation plan should outline (i) the action, which is typically outlined in the NFIS action overarching NFIS action, (ii) the activities required to com- plan. plete the action, (iv) the outputs expected for each activ- ity, (iii) the anticipated timelines for delivery of each activity • This action is then broken down into a set of outputs and output, (v) financial and human resources needed for (which may be organized by an intermediate category each activity and output, (vi) the stakeholders responsible of activities). The outputs represent what is produced for the delivery of each activity and output, and (vii) related or delivered by the implementing stakeholder(s). outcomes and KPIs. A template is provided in table 3.3. Examples of outputs include a draft regulation, a diag- nostic report, a financial education curriculum, a work- A detailed implementation plan should be grounded in a shop, or a new financial product. theory of change. (See figure 3.2.) A theory of change is a • Outcomes represent the changes directly attribut- useful concept for developing detailed implementation able to outputs. For example, an outcome of a regu- plans and, in particular, for linking outputs to expected lation that enables nonbanks to issue e-money could 46   Developing and Operationalizing a National Financial Inclusion Strategy TABLE 3.3: Detailed Implementation Plan Template NFIS ACTION 1: Description: Activity 1 Deadline 1 Primary implementing stakeholder 1 Budget 1 Outcome indicator 1 Activity 2 Deadline 2 Primary implementing stakeholder 2 Budget 2 Outcome indicator 2 Activity 1 Deadline Primary entity Budget Outcome Output 1.1 Deadline 1.1 Primary implementing stakeholder 1.1 Budget 1.1 Outcome indicator 1.1 Output 1.2 Deadline 1.2 Primary implementing stakeholder 1.2 Budget 1.2 Outcome indicator 1.2 Activity 2 Deadline Stakeholders Budget Outcome Output 2.1 Deadline 2.1 Primary implementing stakeholder 2.1 Budget 2.1 Outcome indicator 2.1 FIGURE 3.2: Theory of Change Diagram Actions Outputs Outcomes Impacts What is being What is Changes National goals done produced/ directly contributed to/ delivered attributable to aligned with outputs be the number of nonbanks licensed to issue e-money outcomes where possible. An effective indicator for the or the volume of e-money transactions processed by above output might be “number of industry participants nonbanks. attending workshops,” and an effective indicator for the above outcome might be “number of new providers • Finally, impacts are national goals that are contributed entering the market” or “volume of e-money transactions to or aligned with the outputs and outcomes. These processed by new providers.” In some cases, such as for a impacts are often articulated as national indicators in regulation, an output indicator may be as simple as “not the NFIS results framework, and so it is often simply a yet initiated/initiated/complete.” Each indicator should matter of connecting outputs and outcomes to exist- be derived from an existing, reliable data source or based ing impacts as articulated in the NFIS document. It on realistic expectations of soon-to-be-available data. may not be possible to estimate the precise contribu- tion of a given output to a high-level impact like the Once detailed implementation plans are developed for percentage of adults with an account, but it should be each action, these plans should be reported to the NFIS possible to indicate whether a given output aligns with Secretariat and consolidated into a comprehensive moni- a given impact indicator. toring tool—that is, an action plan tracker—to be updated regularly. The objectives of an action plan tracker are (i) to The final step in the process is defining effective indicators provide an overview of ongoing and planned activities and data sources for outputs and outcomes. (See box 3.4.) and outputs to track overall NFIS implementation prog- Detailed implementation plans based on a theory of ress over time and (ii) to define and monitor progress change are typically first developed in descriptive, qualita- toward expected outcomes linked to NFIS actions. An tive language. For example, an output may be listed as NFIS action plan tracker should contain similar elements “workshops with industry,” and an outcome may be as the detailed implementation plans—including output described as “new providers entering the market.” How- and outcome indicators—but at a level of detail that can ever, to facilitate robust M&E, it is necessary to develop be managed effectively by the NFIS Secretariat. effective quantitative indicators to measure outputs and Operationalizing the NFIS    47 BOX 3.4 Tip: Developing SMART Indicators When developing detailed implementation plans and in connection to programmatic deliverables, out- an overall action plan tracker, primary implementing puts, and impacts); entities and Secretariat staff should ensure that • Attainable and reasonable given the constraints selected and identified indicators are SMART, mean- of the social cash transfer program, limitations, ing that they are: and already-existing infrastructures; • Specific to overarching program goals, often mea- • Relevant to key target beneficiaries, program- suring either the gains of the beneficiaries or the matic staff, and participating stakeholders; and delivery of programs; • Time-bound based on the roll-out plans and • Measurable and feasibly collected by program according to implementation goals. staff (these indicators should be directly attributed and calculated through a standardized approach, OPERATIONALIZING THE NFIS M&E 3.3  system is underpinned by core cyclical activities that SYSTEM require the Secretariat to periodically collect, analyze, and report varying levels of data and progress. The over- Operationalizing the NFIS M&E system requires focused arching goal of the system is to inform NFIS governance efforts in each of its four main components, as outlined in entities of NFIS progress and receive guidance and feed- chapter 2: back to help push forward the implementation of the NFIS. This section will discuss in greater detail operation- ➤ The action plan tracker (a comprehensive action plan alizing the various foundations needed to enable these monitoring tool) and reporting mechanisms must be cyclical functions. Figure 3.3 provides an example of the developed and operationalized in order to monitor application of these functions in operationalizing an NFIS implementation of NFIS actions, including key outputs M&E system. and outcomes. ➤ The financial inclusion data infrastructure will typically 3.3.1 Operationalizing the Action Plan Tracker require strengthening to provide relevant, reliable, and comprehensive data to assess the access, usage, and As noted in the previous section, the primary entities quality of financial services. Targeted efforts are often responsible for implementing NFIS actions should required to improve both demand-side and supply-side develop detailed implementation plans for each action. A data, as well as to consolidate enabling environment summary of these detailed implementation plans should data and program-level data from a range of sources. be reported to the NFIS Secretariat and consolidated into a comprehensive action plan tracker, to be updated reg- ➤ The national results framework will typically be devel- ularly. The objectives of an action plan tracker are (i) to oped as part of the NFIS itself, but the Secretariat will provide an overview of ongoing and planned activities need to update KPI values periodically in order to track and outputs to track overall NFIS implementation prog- national progress. ress over time and (ii) to define and monitor progress ➤ The Secretariat should pursue—in collaboration with toward expected outcomes linked to NFIS actions. An research entities and international organizations— NFIS action plan tracker should contain similar elements evaluations of key NFIS actions and programs to gen- as the detailed implementation plans—including output erate insight into the efficiency, effectiveness, and and outcome indicators—but at a level of detail that can impact of these actions. be effectively managed by the NFIS Secretariat. The NFIS Secretariat is typically tasked with operational- The consolidation of key implementation plan informa- izing the NFIS M&E system and will ideally be given suffi- tion into an action plan tracker can be facilitated through cient staff and financial resources to do so. The NFIS M&E a reporting template. Such a reporting template can 48   Developing and Operationalizing a National Financial Inclusion Strategy FIGURE 3.3: Cyclical M&E Functions Typical of a Secretariat Consult on detailed implementation plans (as needed) Receive feedback, resources, and policy guidance from NFIS Issue periodic governance as needed action plan tracker reporting templates Collect action plan tracker reports Draft periodic internal from implementing NFIS progress reports stakeholders Analyze action plan progress, KPIs, and M&E data to assess NFIS progress solicit information similar to what is contained in the 3.3.2 Strengthening the Financial Inclusion Data detailed implementation plan but likely at a less granular Infrastructure level (that is, it may not be necessary to report on budget A robust financial inclusion data infrastructure is neces- breakdowns for each output). In order to ensure that the sary to support an effective NFIS M&E system. Data infra- Secretariat has up-to-date information about overall NFIS structure and requisite indicators for NFIS tracking are implementation progress, primary entities and/or work- often required on two levels: (i) the national level, to track ing groups should be required to report progress on their consistent progress toward national financial inclusion implementation plans regularly—that is, quarterly—using objectives, and (ii) the action level, to develop and track a reporting template. Such an approach can ensure that indicators on outputs and outcomes for each action or set information is collected and consolidated in a consistent of actions. (See section 3.2.1.) These indicators are manner across a variety of NFIS actions, primary entities, sourced through the four types of data summarized in and working groups. section 1.3. Typically, the Secretariat M&E staff should be in charge of In most countries, it is likely that efforts will be required to the development and operationalization of the action strengthen the financial inclusion data infrastructure to plan tracker and associated reporting templates, while the support the NFIS M&E system. Ideally, some of these NFIS Secretariat coordination staff can provide guidance efforts will have taken place in the NFIS development pro- and quality control to ensure that primary entities and cess to inform a baseline assessment of financial inclusion working group members accurately report implementa- and identify constraints and opportunities for further tion updates, outcome indicators, and so forth. progress. However, it is likely that improvements to the data infrastructure will also be needed during NFIS imple- Operationalizing the NFIS    49 mentation, and some of these may be highlighted in the exist, it may be worth considering implementing a new NFIS action plan. survey that can be conducted periodically. Figure 10 pro- vides a decision tree to help practitioners identify an One common area where additional efforts are needed is appropriate approach to collecting periodic demand-side the improvement of the scope, quality, consistency, and data. frequency of supply-side data collected from financial ser- vice providers, often through regular off-site supervision A final area where additional efforts may be needed is the reports. Financial sector supervisors typically collect data regular collection and consolidation of various pro- relevant to financial inclusion via off-site supervision gram-level and enabling environment data relevant to reporting systems. However, it may be necessary to financial inclusion. Beyond supply-side data collected by include additional financial inclusion indicators depend- supervisors and demand-side data collected via surveys, a ing on data gaps. range of other data is likely to be relevant to financial inclu- sion associated with a particular program or institution. For example, stakeholders might work with relevant supervisors to add indicators on account dormancy or For instance, a nongovernmental organization running a gender-disaggregated indicators to existing templates. financial education program will likely have data on num- Efforts might also be made to shift counting from the ber of beneficiaries reached and perhaps data on changes number of accounts to the number of unique customers, in behavior. A ministry of social affairs may also have data leveraging national ID data. Efforts may also be needed to on the percentage of social transfers delivered via elec- ensure that data is collected in a consistent manner across tronic/digital instruments. A financial sector ombudsman providers or regulators to facilitate aggregation at the will have valuable data on the trends in complaints national level. In addition, it may be required to boost rel- between consumers and financial service providers. And a evant indicators from particular sectors (like pension) that credit reference bureau will have useful data on the num- may be less developed than the banking sector. In some ber of individuals and/or MSMEs covered, as well as the cases, the bottleneck relates to information sharing across range of institutions reporting or accessing information. institutions—for example, in the case where the Central While these are just a few examples, they serve to illus- Bank collects supply-side data but the Ministry of Finance trate that a Secretariat can usefully strengthen the finan- is the lead NFIS entity. In such instances, it can be useful cial inclusion data infrastructure by regularly collecting to develop data-sharing agreements and/or use data-shar- and consolidating these scattered sources of data to ing platforms. inform the development and tracking of indicators at the national and action level. Another common area of focus in strengthening the finan- cial inclusion data infrastructure is demand-side survey data. This might result in the establishment of a periodic, 3.3.3 Operationalizing the National Results nationally representative demand-side survey on financial Framework inclusion or integrating a financial inclusion module into an existing survey effort. Ideally, financial inclusion demand- A key function of the data discussed in the above section side data should be collected every two to three years. is to support the operationalization of the national results framework. This framework, typically outlined in the NFIS, Many countries already employ a range of household sur- includes national-level KPIs that serve to quantify and veys, and, ideally, a mapping of data sources should be measure progress toward national financial inclusion conducted as part of the NFIS development process. (See objectives. Depending on the source, updated data for chapter 1.) Based on the mapping of data sources, a Sec- different KPIs will be available with varying frequency. For retariat, for instance, may consider leveraging any existing example, some supply-side information collected by reg- surveys to incorporate underlying NFIS KPIs. Although ulators may be available monthly or quarterly. Demand- country-owned surveys (often conducted by a national side survey data, on the other hand, will likely be available statistics agency) are ideal to integrate financial inclusion only every two to three years. As a rule of thumb, the indicators, privately owned financial inclusion survey com- values for each KPI should be updated as often as the panies are also often willing to embed indicators for policy data is available. making. For instance, surveys such as the BMGF/Interme- dia Financial Inclusion Insights Survey, the World Bank’s While a typical national results framework will include Living Standards Measurement Study, and FinScope may 10–20 indicators, many of these indicators can be disag- have the scope and mandate to incorporate financial gregated by various dimensions. For example, a demand- inclusion indicators for an NFIS M&E system. If no surveys side KPI such as percentage of adults with a transaction 50   Developing and Operationalizing a National Financial Inclusion Strategy account can be disaggregated by gender, income level, titative approaches such as impact evaluations and age, education level, and region. A supply-side KPI such cost-benefit or cost-effectiveness analyses. Impact evalua- as number of agents per 100,000 adults can be disaggre- tions seek to understand the causal impact of a program gated by region, financial service provider, and activity by measuring changes in outcomes against a counterfac- level. While granular segmentation can sometimes result tual. The gold standard in impact evaluation are random- in an overwhelming quantity of indicators, the data to sup- ized controlled trials. These offer a robust approach to port such segmentation should be collected by the Secre- understanding the causal impact of an intervention but tariat and leveraged to assess progress for certain policy can also be costly and time-consuming and may not be priority areas (for example, closing the gender gap, appropriate given methodological, political, or logistical improving physical access for rural residents). constraints. That said, much of what we know about the effectiveness of financial inclusion interventions comes Responsibility for operationalizing the national results from impact evaluations and randomized controlled trials framework typically lies with the NFIS Secretariat. The in particular. updated national results framework will also be a key ele- ment of internal and external progress reports. It may also Another approach to evaluation is more qualitative and be useful to make the national results framework—with process focused. These studies seek to understand the updated KPIs—publicly available via an online website or effectiveness of an intervention by examining its rele- data portal. (See box 3.5.) vance, operations, decision-making processes, and use of resources in the context in which it is operating. 3.3.4 Evaluating the Impact of Key NFIS Actions What types of interventions should be evaluated? An Much of the above discussion has focused on monitoring. NFIS is implemented in a resource-constrained environ- But it is also valuable to understand the effectiveness, ment, so evaluation funds should be used strategically. In efficiency, and impact of NFIS actions to build up an evi- considering which NFIS actions to evaluation, stakehold- dence base for what works (and doesn’t work) to advance ers may ask themselves the following questions: financial inclusion in a given country. Evaluations also • Which NFIS actions are in pilot phase or scalable? allow stakeholders to understand how a specific NFIS An evaluation of a program in its pilot phase or of an action contributes to broader national financial inclusion intervention that may be further scaled up can provide objectives. Most NFIS action plans or related NFIS activi- useful information to inform the next phase. One ties may contain explicit evaluation components or be example may be a pilot of a new approach to digitizing conducive to rigorous evaluations. The exact scope of social transfer payments. these evaluation activities will naturally depend on the availability of resources, the evaluation questions being • Which NFIS actions are innovative? An innovative asked, and the appropriate methodology for capturing intervention is likely to be one for which stakeholders the intent of the evaluation. have limited evidence of efficacy, and so an evaluation may be useful. A new regulation on digital disclosure is There exist a range of tools, methods, and approaches for an example of an innovative NFIS action that could conducting evaluations. (See box 3.6.) They include quan- usefully be evaluated. BOX 3.5 BOX 3.6 Country Example: Financial Key Resources: Impact Evaluations Inclusion Web Portal in India A range of resources exist to inform and support evaluation activi- The Indian government created a web portal ties, including the World Bank’s Impact Evaluation Toolkit, which to publish and track headline financial indica- provides guidance and templates for terms of reference, research tors by state and throughout the implemen- protocols, questionnaires, training manuals, and fieldwork supervi- tation period of its National Mission on sion manuals, and the World Bank’s Toolkit for the Evaluation of Financial Inclusion. Such practices can be Financial Capability Programs in Low- and Middle-Income replicated to publish financial inclusion prog- Countries, which provides tools for monitoring and evaluating ress externally. financial capability programs, and recommendations on choosing appropriate methods and their proper application. Operationalizing the NFIS    51 • Which NFIS actions are resource intensive? NFIS A periodic progress report differs in both structure and actions that require significant resources are good can- nature from the annual report. A periodic report should didates for evaluation, to determine whether those aim to showcase successes and identify bottlenecks or resources are being put to good use. A national finan- slowed actions, which, in effect, will allow for stakeholders cial literacy program is one example. (including Implementation Committees) to respond quickly to bottlenecks and provide policy guidance as needed, including by appropriately reallocating funds or 3.4 COMMUNICATING NFIS PROGRESS other resources. The objective of the annual report is to provide a comprehensive overview and analysis of the Communicating NFIS progress is an important element financial inclusion landscape and progress. (See box 3.8.) of the implementation process. Stakeholders and the This includes both national-level progress and general public benefit from understanding that the NFIS is being progress on NFIS implementation (such as key actions implemented, what actions are linked to it, what suc- that have taken place and core successes). If relevant cesses have been achieved, and what challenges remain. national demand-side indicators are frequently available This approach helps ensure broad-based support and (like reoccurring financial inclusion surveys or indicators buy-in for the NFIS. Some countries have developed an available), a Secretariat should have access to consistent NFIS communication strategy for this purpose, including financial inclusion data. This provides the opportunity for sponsored events, publications, “branding,” press a Secretariat to develop and draft annual reports with releases, websites, and public reports. in-depth demand-side growth trends and statistics. Internal and public reports are two approaches to com- Properly communicating NFIS progress ensures that a municate NFIS progress. Although reporting require- wide range of stakeholders with varying technical exper- ments vary between countries, NFIS stakeholders at least tise gain an understanding of NFIS successes and chal- periodically should consider developing (i) a more fre- lenges over time. However, original NFIS objectives, quent (and often quarterly) internal progress report and (ii) policy areas, targets, or actions can become outdated an annual report. Periodic reporting can often include over time. As a result, some countries opt to conduct NFIS both external and internal publications, such as an exter- midterm reviews or assessments to update or refresh their nal newsletter to highlight NFIS successes and a separate, NFIS efforts. (See box 3.9.) This may include the issuance internal progress report to monitor actions and identify of a fully revised strategy or the updating of specific NFIS bottlenecks. Frequent, internal progress reports should sections. Enabling midterm reviews and assessments often include action-level progress, gaps, bottlenecks, helps realign strategy goals, objectives, and actions to the and the progression of KPIs. It is important to standardize current market, ensures its relevance, identifies new the periodic reporting to monitor progress more effec- opportunities, and can even revive strategy momentum. tively over time. (See box 3.7.) BOX 3.7 Tip: Periodic Internal Reports A periodic reporting template should consistently 2. A high-level overview of major NFIS action achieve- contain the following key elements to provide a com- ments and challenges, and areas that require guid- prehensive picture of NFIS progress, and to enable ance easy comparisons with past reports over time: 3. A section that lists all NFIS actions and overall 1. An overview of NFIS governance progress such as progress (that is, on track, not yet initiated, delayed) (i) relevant Secretariat achievements and chal- 4. A section that lists the KPIs in the national results lenges, (ii) number of working group meetings and framework, including updates based on recently respective dates, and (iii) key highlights, chal- available data (which will vary by KPI) lenges, or next steps summarized from the minutes of working group meetings 52   Developing and Operationalizing a National Financial Inclusion Strategy BOX 3.8 Tip: Annual Public Reports Many countries have begun to develop annual reports, 1. Executive summary which are often public in nature and contain detailed 2. The financial inclusion landscape overviews and analyses of NFIS progress by sector, including action-level achievements and progress. The a. Recent macroeconomic developments in the Philippines often provides quarterly updates, annual financial sector reports, and data dashboards publicly, and Mexico b. Overview of the current access and usage of develops a report every year. An annual report can financial services be thematic, written to follow the NFIS framework, or 3. A high-level overview of major NFIS action achieve- divided by working groups to more easily map prog- ments and progress toward NFIS targets ress and constraints. Although a report can be devel- oped many ways, the following sections should be 4. Sector- or theme-specific overviews, as relevant to considered within an annual report structure: recent market developments 5. NFIS priorities for the following year BOX 3.9 Country Example: An NFIS “Refresh” in Nigeria The Nigerian authorities launched an ambitious aimed to refresh the NFIS and reassess the remaining national financial inclusion strategy in October 2012, obstacles to financial inclusion in the context of the with an implementation period extending until 2020. current financial sector landscape. In particular, the With the development of the financial sector and evo- review (still under way at the time of publication of lution in financial inclusion trends, some NFIS actions this toolkit) will allow NFIS stakeholders to focus became outdated. As a result, in 2018, the Nigerian efforts on opportunities provided by innovative pro- authorities called for an NFIS review. The review viders, products, and delivery channels. GLOSSARY OF TERMS Action plan tracker: A comprehensive monitoring tool that tracks outputs and outcomes for each NFIS action. Typically maintained by the NFIS Secretariat and updated with regular reporting by primary entities and/or working groups. Consultation stakeholder: Stakeholders who will not play an active drafting role but will be consulted regularly and asked to provide feedback at key intervals during the drafting process. Demand-side data: Collected from current and potential users of financial services, typically via surveys of individuals, households, and/or firms. Particularly valuable for measuring uptake and usage of financial services, and for assessing the distribution of financial services across key consumer segments (for example, women, rural residents) and the relationship between financial behaviors and other factors (for example, poverty, employment, and so forth). Detailed implementation plans: A plan that breaks down an NFIS action plan into a set of sequenced, time-bound activities and outputs, with clear delineations of roles and responsibilities and indications of resource requirements. Drafting stakeholder: A stakeholder that plays an active role in drafting the NFIS. These stake- holders typically include all institutions involved in financial sector policy making and regulation. Enabling environment data: Information supplied by institutions that provide the enabling legal, regulatory infrastructure for the financial sector. Can include, for example, information from credit reporting entities as well as alternative dispute resolution mechanisms. Lead stakeholder/NFIS champion: The stakeholder that manages the entire NFIS development process and acts as NFIS “champion.” Responsible for propelling the NFIS development process forward as well as engaging other stakeholders and holding them accountable for their agreed-on contributions. NFIS action plan: A list or table of actions, reforms, and initiatives to be undertaken within the time frame of implementation of the NFIS. Can include the following: (i) a description of the action to be implemented; (ii) the primary implementing stakeholder—that is, the entity responsible for its execution—(iii) a timeline for implementation; and (iv) a priority level (high, medium, or low). NFIS Council: The entity that provides overall policy guidance and assures that financial inclusion remains a key policy priority in their respective institutions. Members of the NFIS Council are typically high-level figures and include ministers, governors, and executives (or their deputies) of financial sector authorities.   53 54   Developing and Operationalizing a National Financial Inclusion Strategy NFIS drafting model: Identifies how each stakeholder will contribute to the NFIS development process, including how stakeholders will organize themselves—for example, via a drafting committee or working groups—and the processes through which they will engage with one another (such as via drafting retreats or consultation workshops). NFIS drafting road map: A planning tool that provides structure to the drafting process and keeps it on track. A drafting road map should provide stakeholders with a set of clear and sequenced steps to be followed when developing the NFIS, including their respective responsibilities. NFIS governance arrangements: The set of entities that facilitate the leadership, coordination, and day-to-to management of the NFIS. These typically include (i) an NFIS Council, (ii) an NFIS Implementation Committee, (iii) an NFIS Secretariat, and (iv) a set of working groups. NFIS Implementation Committee: The entity that oversees the day-to-day implementation of the NFIS. Typically composed of director-level representatives from institutions involved in the implementation of the NFIS; may also include the chairs of the working groups and/or private sector representatives. NFIS M&E system: A monitoring and evaluation system to support the measurement of action-level and national-level progress. A robust NFIS M&E system consists of four elements: (i) financial inclusion data infrastructure, (ii) a national results framework, (iii) an action plan tracking system, and (iv) evaluations of strategically important NFIS actions. NFIS Secretariat: A dedicated staff responsible for day-to-day administration, coordination, and M&E of the NFIS. Primary implementing stakeholder: The stakeholder or institution with primary responsibility for implementing an NFIS action. Program data: Information collected by programs relevant to financial inclusion, including, for example, government-to-person transfer programs, financial education programs, or credit guarantee programs. Supply-side data: Information collected from providers of financial services, often through off-site supervision reporting systems. Particularly valuable for measuring levels of physical access (for example, number of branches, agents, automated-teller machines, and so forth) and transaction numbers and volumes. REFERENCES Listed below are sources referred to in the text and additional tools and sources of information that policy makers, regulators, and partner development agencies may find useful in the process of formulating a national financial inclusion strategy, setting up a national financial inclusion coordination mechanism, and/or designing a national financial inclusion M&E framework. Many of these resources are available online at the World Bank Group’s National Financial Inclusion Strategies Resource Center, which also includes links to all publicly available NFISs and additional resources pertinent to financial inclusion–related policy areas. CPMI (Committee on Payments and Market Infrastructures) and World Bank Group. 2015. Consultative Report: Payment Aspects of Financial Inclusion. Washington, DC: Bank for International Settlements and World Bank Group. https://consultations.worldbank.org/Data/ hub/files/consultation-template/payment-aspects-financial-inclusionopenconsultationtemplate/ phases/pafi-report-final-consultative-draft.pdf. ———. 2016. Payment Aspects of Financial Inclusion. Washington, DC: Bank for International Settlements and World Bank Group. https://www.bis.org/cpmi/publ/d144.pdf. Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar, and Jake Hess. 2017. The Global Findex 2017: Measuring Financial Inclusion and the Fintech Revolution. Washington, DC: International Bank for Reconstruction and Development/The World Bank. https:// globalfindex.worldbank.org. GPFI (Global Partnership for Financial Inclusion). 2013a. “G20 Financial Inclusion Indicators.” http:// www.gpfi.org/sites/default/files/G20%20Set%20of%20Financial%20Inclusion%20Indicators.pdf. ———. 2013b. “Financial Inclusion Targets and Goals: Landscape and GPFI View” (note to Global Partnership for Financial Inclusion prepared by CGAP and IFC for GPFI Data and Measurement Sub-Group, October 2013). http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resou rces/282884-1339624653091/8703882-1339624678024/8703850-1368556147234/Financial- Inclusion-Targets-and-Goals-Landscape-and-GPFI-View.pdf. ———. 2014. “Burundi: Using National Survey Data to Formulate a Financial Inclusion Strategy” (case study prepared by Banque de la République du Burundi and AFI Financial Inclusion Data Working Group, January 2014). http://www.gpfi.org/sites/default/files/documents/The%20 Use%20of%20Financial%20Inclusion%20Data%20Country%20Case%20Study_Burundi.pdf. ———. 2016. G20 High-Level Principles for Digital Financial Inclusion. Chengdu, China: GPFI. https://www.gpfi.org/sites/default/files/documents/G20%20High%20Level%20Principles%20 for%20Digital%20Financial%20Inclusion%20-%20Full%20version-.pdf.   55 56   Developing and Operationalizing a National Financial Inclusion Strategy Maimbo, Samuel Munzele, and Martin Melecky. 2014. Financial Sector Policy in Practice: Benchmarking Financial Sector Strategies around the World. Policy Research Working Paper 6746. Washington, DC: The World Bank. https://openknowledge.worldbank.org/ handle/10986/16832. Pacific Islands Working Group. 2011. “Lessons Learned for National Financial Inclusion Strategy Development.” Bangkok, Thailand: Alliance for Financial Inclusion. https://www.afi-global.org/ sites/default/files/publications/afi%20piwg%20national%20strategy%20lessons.pdf. PMI (Project Management Institute). 2013. A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th ed. Newtown Square, Pennsylvania: Project Management Institute, Inc. Prochaska, Klaus. 2014. “Financial Inclusion Strategies: Global Trends and Lessons Learnt from the AFI Network” (Powerpoint presentation, Istanbul, Turkey, June 3, 2014). https://www.worldbank. org/content/dam/Worldbank/Event/ECA/Turkey/tr-fin-incl-confer-klaus-prochaska.pdf. Suri, Tavneet, and William Jack. 2016. “The Long-Run Poverty and Gender Impacts of Mobile Money.” Science 354, no. 6317 (December 9, 2016), 1288–92. http://science.sciencemag.org/ content/sci/354/6317/1288.full.pdf. World Bank. 2013. Global Financial Development Report 2014: Financial Inclusion. Washington, DC: World Bank Group. http://documents.worldbank.org/curated/en/225251468330270218/ Global-financial-development-report-2014-financial-inclusion. World Bank Group. 2012a. Developing a Comprehensive National Retail Payments Strategy. Washington DC: World Bank Group. http://documents.worldbank.org/curated/ en/839121469729131991/Developing-a-comprehensive-national-retail-payments-strategy. ———. 2012b. Financial Inclusion Strategies Reference Framework (prepared by World Bank for G20 Mexico Presidency, August 2012). Washington, DC: International Bank for Reconstruction and Development/The World Bank. http://siteresources.worldbank.org/EXTFINANCIALSECTOR/ Resources/282884-1339624653091/8703882-1339624678024/8703850-1339624695396/ FI-Strategies-ReferenceFramework-FINAL-Aug2012.pdf. ———. 2013. Coordination Structures for Financial Inclusion Strategies and Reforms. Washington, DC: World Bank Group. http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/ 282884-1339624653091/8703882-1339624678024/8703850-1368556147234/Coordination- Structures-for-Financial-Inclusion-Strategies.pdf. ———. 2014a. “National Financial Inclusion Coordination Structures: Country Examples.” Wash- ington, DC: World Bank Group. http://siteresources.worldbank.org/EXTFINANCIALSECTOR/ Resources/282884-1339624653091/8703882-1339624678024/8703850-1368556147234/ 9184715-1415329740180/FI-CoordinationStructures-CountryExamples.pdf. ———. 2014b. “National Financial Inclusion Strategies.” Washington, DC: World Bank Group. http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resour ces/282884-1339624653091/8703882-1339624678024/8703850-1368556147234/National- Financial-Inclusion-Strategies-BRIEF-by-WBG.pdf. ———. 2017a. Global Financial Inclusion and Consumer Protection Survey, 2017 Report. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/28998. ———. 2017b. Good Practices for Financial Consumer Protection, 2017 Edition. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/28996. ———. 2018. “National Financial Inclusion Strategies Resource Center” (web page), http://www. worldbank.org/en/topic/financialinclusion/brief/financial-inclusion-strategies-resource-center. ———. Forthcoming. Monitoring and Evaluation for Financial Inclusion Strategy Development and Policymaking. Washington, DC: World Bank. World Bank Group and People’s Bank of China. 2018. Toward Universal Financial Inclusion in China: Models, Challenges, and Global Lessons. Washington, DC: World Bank. https:// openknowledge.worldbank.org/handle/10986/29336.