Helen Wernik Nascimento in based in Brazil and is a technical advisor for CGAP’s Technology Program. Her work focuses around the implementation of branchless banking, in particular how beneficiaries of Bolsa Familia, the country’s largest federal conditional cash transfer relate to financial products. She holds an MA in public policy from Victoria University of Wellington and a bachelor’s degree in political science from Universidade de Brasília.
Photo Credit: Janildo de Oliveira. Courtesy of the Central Bank of Brazil On May 9th, the Central Bank of Brazil (BCB) launched its action plan for the strengthening of the institutional environment under the National Partnership for Financial Inclusion. This special event held in Brasilia at Sebrae (The Brazilian support network for micro and small enterprises) was attended by Her Royal Highness Princess Máxima of the Netherlands, United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development and Honorary Chairman of the G20 Global Partnership for Financial Inclusion (GPIF).
Princess Máxima spoke about her global engagement in the field of financial inclusion and praised Brazil for the progress the country has made over the last decade in increasing financial access. She highlighted the need to provide a wider range of financial services beyond microcredit to low-income customers, and encouraged peer-to-peer learning between countries as way to further advance the financial inclusion agenda. The National Partnership for Financial Inclusion (NPIF) was launched last November at the BCB’s Third Forum on Financial Inclusion. Its action plan aims to create an appropriate institutional environment in order to promote adequate financial inclusion for Brazilians, and is an important step in setting an agenda for progress, coordination and partnership. The NPFI is aligned with the G20 principles for innovative financial inclusion, and is the result of increased awareness amongst the public and private sector that financial inclusion is complimentary to financial sector development, economic growth and poverty alleviation. According to BCB, “Financial inclusion in Brazil has traditionally been associated with access to credit, and it is important that it is seen as more than this. There is a universal need for savings, payment, and transfer services, and access to them empowers less advantaged social groups to grow or stabilize their incomes and become more resilient to economic shocks”.
Princess Máxima highlighted the success of the Business Correspondent (BC) model in the country and its notable results in expanding access to financial services to all municipalities. Its success has served as a model for other countries and is currently being replicated around the world. However, for the model to achieve its potential, improvements need to be made to ensure that Brazilians use it as a channel for safe and reliable financial services beyond bill payments, as these are essential to achieve greater social and economic impact. In addition, Princess Máxima spoke of the need to improve the usage of simplified accounts. At present, 30% of account holders use these accounts solely for cash withdrawal; therefore further research needs to take place in order to have a more textured understanding of how low-income people use financial services.
Nearly 40% of Brazilians lack access to bank accounts and while a process of formalization is rapidly taking place, there is a need to better understand the suitability of these financial products in the context of low-income customers. “We know people manage a huge number of financial tools so they have money when they need it. They take precious time managing their money. Therefore, there is an opportunity for technical assistance to understand these financial behaviors”. The Princess also highlighted that further work needs to be done in the area of impact assessment in order to accurately understand the benefits of having access to financial products such as savings and insurance. Financial education is a key part of this as it can help prevent over-indebtedness which is a growing issue in the country. Given the event was hosted at Sebrae, the need for entrepreneurial skills in financial education was raised given the pivotal role that small enterprises play in driving economic growth worldwide. Finally, Princess Máxima concluded her remarks by highlighting that an efficient, inclusive and sustainable financial system depends on good quality data and education; therefore encouraging other stakeholders to drive policy with a data-driven approach.
- Helen Wernik -
For a Portuguese version of this post and other resources in the field of financial inclusion in Brazil, please visit the blog “Inclusão Financeira”. This blog is a joint effort by CGAP and the Centro de Estudos em Microfinanças (CEMF) at Fundação Getúlio Vargas.