Stakeholder Engagements: Key Issues and Recommendations

Pakistan Microfinance NetworkSeptember 19, 2013

Presentation Outline

• Background

• Key issues identified

• Recommendations

Background

• Stakeholder consultations by PMN (July – Sept 2013)– Commercial banks involved in G2P payments– Provincial government departments in Balochistan,

Khyber-Pakhtunkhwa, Punjab & Sindh• Planning and Development, Finance, Health, Education,

Social Welfare, Labor, Zakat and Ushr, Bait ul Maal, PDMAs

• Provincial roundtables

Balochistan‒ Religious and Minority

Affairs: PKR 502 million

Scope of G2P Payments: Some Examples

KPK– Education:

• Three programs, totaling almost PKR 1 billion

– Health: • Two programs, totaling PKR 500

million• Health insurance program, EUR

10 million– Youth:

• Three programs, totaling almost PKR 1.1 billion

Punjab‒ Education:• School education: PKR 1.0

billion• Higher education: PKR 750 m

‒ Pensions: PKR 66 billionSindh• Income support program: PKR 2 billion

Enabling Factors

Government

Banks

Donors Recognition of benefits within Government

Banks have experience of working with the unbanked

Understanding of challenges and limitations

Key Issues Identified (I/III)

1. Policy direction on G2P Payments and use of technology needs to be developed at the highest levels

2. Who will be the ‘Champion’ within provincial governments?

3. One-size-fits-all – not going to work

PO

LIC

Y

Key Issues Identified (II/III)

1. Capacity of provincial government in evaluating and implementing technology based payments is limited

2. Lack of financial literacy and awareness is a curtailing factor

3. Thinness of financial infrastructure in certain regions

4. Business case for banks of focusing on ultra poor as a segment

EC

O S

YS

TEM

Key Issues Identified (III/III)

1. High verification costs to financial institutions (as required by regulations) are a limiting factor

2. Interoperability in branchless banking

3. Move towards biometric verification for enhanced transparency and accountability has its advantages but also challengesO

PER

ATIO

NA

L

Recommendations (I/II)

• National and provincial level policies on use of technology based payments for G2P programs may be considered

• Continued support from SBP and NADRA to facilitate banks in reaching out to the unbanked

• Donors and multilaterals should consider developing technical assistance programs for provincial governments

• Need to invest in financial literacy at a much greater scale and including the ultra poor as a target segment; co-ordination of efforts

Recommendations (II/II)

• Technical guide on the different payment technologies

• Exploring the deployment of biometric verification systems as a next step towards transparency and accountability

Thank You