Insurance key to financial inclusion

Business
Insurance is a key component of the financial inclusion strategy of Papua New Guinea. However, insurance coverage in the country is very low. Cefi executive director SALIYA RANASINGHE discusses the feedback, plans and other updates with business reporter CLARISSA MOI
Saliya Ranasinghe

It has also been revealed that less than five per cent of the country’s population is insured.
This was due to a reliance on the “wantok” system, a lack of awareness and financial ignorance.
Based on that, the Centre for Excellence in Financial Inclusion (Cefi) and insurance service providers started an insurance awareness campaign last October with the theme: Get insured, rest assured.

Q. Could you give us an update of the insurance awareness campaign which was launched last October?
Ranasinghe: We felt that there was a lack of awareness in this area (insurance) hence the insurance campaign was launched last October by the Bank of PNG governor Loi Bakani, in partnership with all the insurance providers such as the Insurance Council, commissioner for insurance, commissioner for workers insurance and UN Capital Development Fund (UNCDF).
We developed 10 videos to release each week so that people will get to know about insurance and what is available.
People can also go onto the Cefi website and watch the videos as well as they can go to any of the insurance service providers for additional information.
We released five videos last October and then we stopped because we felt that due to the festive season, people will not be much interested in these things.
We started again this month.
During the first five weeks, the response we got was very good.
We generated a lot of interest in that.
We have now started the second phase of the insurance campaign and we are planning to release the other five videos which will cover motor vehicle insurance, health insurance, life insurance and other insurance products that are available in the market.
All in all, we are very positive in whatever feedback we have received and what we are now trying to do is that once the campaign is over, in the first week of March we will do a report to find out the outcome of this exercise and what are the steps that we need to take to the next level.

What are some of the responses/feedbacks that you’ve received from this campaign?
One of the early responses that we’ve received is that the products that we have in Papua New Guinea does not suit the requirements of the people.
So we might consider focusing on that in the future where we can provide some technical assistance usually for the mass market.
For instance, if an SME (small-medium enterprise) wants to take a fire policy, burglary policy, those policies are not offered right now, these are new things that are coming out from this campaign and we would like to see whether we can work towards getting much more people-friendly products in the market place.
One of the things that has also emerged is that one of the partners in this campaign, BSP Life, has used this campaign to start an online platform so now people can get life insurance online as well.
So these are some of the positive outcomes that have come.

Cefi has established a partnership with the Fresh Produce Development Agency (FPDA) and the Government under the market for village farmers (MVF) project to improve their access to financial inclusion. Could you give us an update of this partnership?
The market for village farmers’ project is funded by International Fund for Agricultural Development (IFAD) and comes under the Department of Agriculture targeting 25,000 families in six provinces who are mainly in vegetable farming: Morobe, Eastern Highlands, Jiwaka, Western Highlands, Chimbu and East New Britain.
ENB will be concentrating on galip nut.
It’s an innovative project where they will look at a farming household/family and will provide training for the family and build it as a family business.
There are some unique features in this project.
We are providing training, we are also teaching them on financial literacy, also look at nutrition of the member.
So it’s a holistic approach and the next thing is to help these people design business proposals. In addition to that, Cefi’s role is to link these people into the formal banking sector.
We have got an international firm to work with the financial institutions in the country to help farmers get into the banking sector.
And we would like them to get use to digital financial services like the mobile phone banking.
For few reasons the first one is that once you use that account, all your transactions get recorded automatically so your credibility is built through that account so when you apply for a loan, your bank will know your record and it’s easy to evaluate.
The second one is that we can use this network later to provide market information.
So these are new things.
There is a component which is run by FPDA to do market linkages, improve their yields and also there are feeder roots.
So it’s a comprehensive project and we hope that these 25,000 families will receive a very positive outcome from this partnership.
We have dedicated three staff who are working on that particular project and Cefi has already opened an office in Goroka for this purpose as well.

The Covid-19 has affected much of the business activities last year. What has 2020 been like for Cefi?
Cefi only closed for two weeks when there was a total lockdown.
We are very fortunate that we got to operate all of last year.
We also developed a business continuity plan.
There were certain things that were beyond our control such as the travel restrictions.
One of the programmes that was really affected was the provincial government roll out.
We started working with the provincial governments in 2019 where we feel that if we want to reach the very remote parts of the country, it has to be through the provincial governments.
So that programme was disrupted last year but we are now trying patch it up in 2021.
The second one is the National Financial Inclusion Strategy 2016-2020.
We could not achieve some targets such as the number of new accounts to be opened, the deposits, due to the Covid-19.
For example, the banks were reluctant to open new accounts and people were withdrawing their savings to manage their day to day affairs, because of those things, we had certain adverse implications.
All in all, we have achieved quite great results last year.

What are some achievements last year worth noting?
We:

  • ESTABLISHED the partnership with FPDA for the market for village farmers project;
  • CONDUCTED a digital financial service symposium online;
  • STARTED working with the Training Council of PNG to register Cefi and instil discipline in financial literacy;
  • ESTABLISHED partnership with the National Volunteer Services and trained all the volunteers so they can conduct financial training to the people; and,
  • STARTED working with the Apec Secretariat to develop a Fintech (financial technology) incubator to look at innovative solutions to reach remote parts of the country.

What are some plans that Cefi hopes to achieve in 2021?
The agreement with the Education Department signed on Jan 6 to introduce financial literacy into the school curriculum will be one of our priorities for 2021:

  • THE National Financial Inclusion Strategy (2021-2025) to elevate financial inclusion agenda in the country through closer dialogue, partnership and cooperation with the Government, private sector and the civil society is expected to be launched in June;
  • INTRODUCE a digital platform to conduct training for the staff of Institute of Banking and Business Management on micro-financing;
  • INTRODUCE the green finance policy towards end of 2021;
  • WORK with the Asian Development Bank to launch the improving financial access and enterprise development project in the latter part of the year; and,
  • CEFI will be supporting the Credit Guarantee Corporation in expanding digital financial services.