CAIRO: Financial inclusion is currently a hot topic all over the world. Her Royal Highness Princess Máxima of the Netherlands — also the United Nations Secretary General’s Special Advocate for Inclusive Finance for Development — has been promoting the issue relentlessly.
The Princess is currently on her second visit to Egypt as part of her global advocacy to raise awareness and to promote universal financial access — at reasonable costs — to a wide array of services provided by a diverse grouping of sound, sustainable institutions. These services include insurance, savings, payments, remittances, and loans.
In his introduction of Her Royal Highness at the American University in Cairo on Wednesday, United Nations General Coordinator in Egypt James Rawley described Princess Máxima as “a truly global hero” when it comes to financial inclusion.
Princess Máxima has been presenting the idea of financial inclusion all over the world as a means of ending poverty and improving the world’s overall quality of living, said Rawley, noting that the Princess has traveled to the likes of India, Turkey, Rwanda, Kenya and Belgium in order to spread this message.
“We are not [only] talking … about microcredit,” said Princess Máxima, “[We’re talking] about financial inclusion, which includes microfinance, SME (small and medium enterprise) finance, and other provisions of financial services to poor individuals — people who nowadays are excluded from these services.”
She also noted that these financial services are a means to an end rather than an end in and of themselves, “so we really have to think [about] how these financial products will make a difference in people’s lives.”
One of the most important elements of financial inclusion that is currently in high demand in Egypt is microfinance; 1.3 million Egyptians are currently being served by microfinance institutions. However, micro-entrepreneurs’ demand for financial inclusion is at least three times greater, according to Princess Máxima.
“In order to meet this demand, we need to keep developing the microfinance sector in a regulated manner,” she said.
Princess Máxima stated that, in the long run, people will need more than loans; they’ll need savings, the most empowering tool of all.
“Yesterday I was visiting farmers in the Delta region,” said the princess. “Through an interesting discussion, it became clear that only [very] few [people] have a bank account. But they do have savings. They have cows, crops in the field, [they make additions] to their house as soon as they can afford materials, and [they store] cash under their mattress.”
Princess Máxima highlighted that an inclusive financial system in Egypt would be one with a wide array of institutions that provide services and products that all clients need.
“An inclusive financial system must be responsible, trustworthy, and protect consumers. This begins with good information and financial education, so clients can choose what products are right for them. Transparency and good customer service also help build trust, as well as good collection practices. And trust is an important factor when it comes to dealing with other people’s money,” Princess Máxima stated.
With the notion that Egypt needs the right financial infrastructure to provide the essential platform that all services rest upon, Princess Máxima introduced the Head of the Egyptian Financial Supervisory Authority (EFSA) Ziad Bahaa El-Din, who discussed the draft guidelines for the microfinance industry.
“Microfinance plays a great role in alleviating poverty,” said Bahaa El-Din. “It’s not just a source of money, but [also] a source of dignity and independence. Therefore, we need a legal framework with guidelines to protect the borrower. Information is a source of power and protection, as [it allows] the borrower … to negotiate better terms.”
Although its specific guidelines can be found on the EFSA’s website, the EFSA still does not have the full mandate needed to legally enforce these guidelines, as they have yet to be presented to the People’s Assembly.
Concluding her presentation, Princess Máxima highlighted the importance of access to financial services for poverty alleviation and sustainable development and growth, and pointed out that any system implemented must be competitive, transparent, and should protect consumers.
“Financial inclusion is about providing every Egyptian with the right product in the right place … at the right price,” she said. “This can only be achieved when it is included [within] the bigger framework of the whole financial system.”
