Research & Analysis

Observations and Lessons for the I‐SIP Methodology from Pakistan

CGAP has been developing a methodology that aims to understand how policy making changes with the addition of financial inclusion as the fourth core objective to the traditional objectives of financial stability, financial integrity, and consumer protection—and more specifically how the four policy objectives are linked and how the linkages can be optimized. The emerging methodology is referred to as the I-SIP Methodology. An initial proposal for the I-SIP Methodology was developed in 2012, with South Africa being the first country studied. The South Africa investigation was conducted using a rapid research exercise: collecting evidence by analyzing available data, reviewing secondary sources, and interviewing policy makers and other informed parties. Pakistan was chosen as the second country for an I-SIP rapid research exercise because of its unique history in championing innovative financial inclusion initiatives for more than a decade and a central bank, the State Bank of Pakistan, that has been leading these initiatives.

The outcome of the Pakistan research is revised I SIP Propositions reflecting the collective evidence from South Africa and Pakistan. They are intended to support regulators and policy makers—both in the design and implementation of a policy intervention—in identifying, managing, and optimizing the potential linkages among the I-SIP objectives.

  1. Clear definitions for each of the I-SIP objectives at the national level and at the level of specific policy interventions are needed to guide policy makers in policy design. The definitions on the policy intervention level should be detailed enough to allow for measuring the effects of the intervention with regard to I-SIP objectives.
  2. A structured approach to identifying material linkages among I-SIP objectives that may arise in the implementation of a specific policy intervention helps to manage and optimize linkages, thereby avoiding false or unnecessary tradeoffs between objectives and maximizing synergies among them.
  3. Inter- and intra-agency collaboration is critical to design, monitor, and adapt policy interventions to optimize the linkages among I-SIP objectives, as well as linkages with national objectives beyond I-SIP objectives.
  4. Regularly collected and analyzed data based on indicators and targets specific to a given policy intervention enable the monitoring of its effects on I-SIP objectives and the calibration of linkages over time.
  5. Periodic structured consultation with providers in proportion to the scale of the proposed changes helps to identify and manage linkages as the market develops.
  6. Optimization of I‐SIP linkages requires a commitment by policy makers to manage I-SIP linkages by adapting policy and regulation as necessary in light of the data and other evidence collected and effects observed.