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    RESERVE BANK OF FIJI

    UPDATE OF 2018 FINANCIAL INCLUSION INDICATORS FOR FIJI

     

    A. Background

      1. The Alliance for Financial Inclusion (AFI) have established a common measurement framework for member countries to track, analyse and report appropriate indicators for financial inclusion in their respective countries. These indicators have been designed to support public policy development on financial inclusion, measure the impact of financial inclusion policies by government and incentivise the financial sector to develop appropriate products and business models to meet the needs of financially excluded population. 
      2. Fiji’s financial inclusion indicators are adopted from AFI’s Core Set of indicators, Quality Indicators, Digital Financial Services indicators and Pacific Islands Regional Initiative’s Core Plus indicators – all of which were designed for AFI members to benchmark and compare their progress across the global network. Refer to Annex for list of indicators and calculations.  
      3. The financial inclusion indicators track the progress of Fiji’s financial inclusion initiatives and targets set within the National Financial Inclusion Strategic (NFIS) Plan 2016-2020 and are published annually in the Fiji Financial Inclusion Annual Report, the RBF and National Financial Inclusion Taskforce (NFIT) websites and AFI Data Portal.
      4. In 2018, Fiji’s financial inclusion indicators recorded mixed performances. While positive progress is evident in some areas (insurance, credit and access to financial services), others have made little progress and are lagging behind the mid-term NFIS targets.   In addition, due to the unavailability of supply side data, 2018 updates were only recorded for nine (56%) out of the 16 indicators.  
      5. The outturn is expected to improve in the coming year following implementation of the recently issued disaggregated data policy (Financial Sector Development Policy Statement No. 1: Minimum Requirements for the Provision of Disaggregated Data) that came into effect on June 1, 2019. The first set of disaggregated data (2018 annual data) is expected to be received by the RBF in September and will allow for the reporting of all access and usage indicators and against the NFIS mid-term targets.
      6. This paper provides an update on and seeks approval to publish the 2018 financial inclusion indicators.
    1.  
    2. B.   Defining the Indicators

    7.   Fiji’s financial inclusion indicators focus on two key broad aspects: access and usage. Access refers to the ability to access financial services and products offered by formal financial institutions.[1] The access dimension is reported using the supply side data provided by financial institutions.

    8.   Usage refers to the depth or extent that individuals use financial services and products1. Determining usage requires gathering details about the regularity and frequency of use over time.

    9.   The quality dimension, while important, is a more complex aspect both conceptually and in terms of measurement, typically requiring demand-side surveys and the use of qualitative indicators.

    10.  The overall indicators also assess different channels at different geographic areas to illustrate the outreach and depth of financial products and services.

    C.  Access Indicators

    11.  Access indicators are updated from the monthly returns data received by the Financial Institutions Group, mobile money returns received by the Financial System Development Group, information on credit unions from the Ministry of Justice, data on cooperatives from the Ministry of Industry, Trade and Tourism and administrative units and population data from the Fiji Bureau of Statistics.

    C.1. Access Points

    Access Point[2] data reveals mixed performance during the review period

    12.  The 2018 data reported mixed performances underpinned by the growth in the number of EFTPOS machines, ATMs, bank agents and cooperatives combined with the decline noted in the number of bank branches, credit unions and mobile money agents nationwide (refer to Table 2). The main contributor to the overall decline in number of cash-in cash-out access points is due to mobile money agents.

    Table 1: Number of access points available per 10,000 adults

    ACCESS per 10,000 adults

    2016

    2017

    2018

    %∆

    Number of access points[3]

    125.17

    122.27

    126.16

    3.19

    Number of cash-in and cash-out access points i.e. deposits and withdrawals[4]

    21.42

    23.13

    22.57

    (2.35)

    Access Points by Channel

    Table 2: Number of access points available per 10,000 adults by channel

    ACCESS per 10,000 adults

    2016

    2017

    2018

    %∆

    Number of branches

    1.13

    1.10

    1.09

    (1.45)

    Number of ATMs

    5.28

    5.20

    5.41

    4.00

    Number of EFTPOS

    98.47

    93.94

    98.18

    4.51

    Number of bank agents

    1.54

    1.90

    2.02

    5.88

    Number of mobile money agents

    5.68

    6.72

    5.87

    (12.62)

    Number of MFI access points

    6.36

    6.64

    6.80

    2.41

    Number of Cooperative access points

    6.35

    6.40

    6.46

    1.00

    Number of Credit Union access points

    0.36

    0.35

    0.34

    (4.55)

    13.  ATMs, bank agents, Cooperatives and MFI access points have gradually increased over the last three years. While bank agents provide a convenient and affordable opportunity for financial institutions to serve those in the rural and maritime areas, the growth in this segment has been slower-than-expected.  This is mainly due to weak network connectivity in most rural and maritime areas. In addition, there are only three banks involved in branchless banking activities (Bank South Pacific using Post Offices, WBC using in-store retail merchants and HFC Bank using Vodafone agents). 

    14.  The number of EFTPOS machines continues to outnumber all other financial access points and noted an increase over the review period. The expansion of EFTPOS machines are from all commercial banks except for ANZ[5] and are mainly to hotels, restaurants and retailers.  This is consistent with the increase in the number and value of transactions by 16 percent and 17 percent, respectively in the review period.   

    15.  On the other hand, the decline in the number of bank branches is attributed to the closure of Westpac Banking Corporation (WBC) branch at the corner of Mark Street in 2018. No new commercial bank branches were opened during the review year.

    16.  Similarly, the number of Mobile money agents declined by nearly 13 percent (from 420 to 367)[6] in 2018. The outturn is due to decline in Digicel Mobile Money (DMM) agents. Some DMM agents have ceased operations while others stopped transacting as there was no demand within the area of operations.   

     Administrative Units[7] with Access Points show favourable outcomes in both urban and rural areas.

    17.  No change was recorded from the previous year. All urban and the majority of rural administrative units (89.53%) have access to at least one financial access point (refer to Table 3). The remaining nine administrative units with no access point include Namosi: Wainikoroiluva, Macuata: Cikobia, Lau: Fulaga and Rotuma: Itumuta, Juju, Pepjei, Noatau, Oinafa, Malhaha.  These areas have weak to no mobile coverage and setting up network coverage is currently unfeasible. 

    Table 3: Percentage of administrative units (tikina) with a financial access point

    Percentage of administrative Units with Access Points

    2016

    2017

    2018

    %∆

    Urban

    100

    100

    100

    0

    Rural

    88.37

    89.53

    89.53

    0

    D.   Usage Indicators

    18.  Measuring usage has been a challenge due to the lack of a unique identifier to avoid multiple counting of individuals that have more than one account. Therefore a conservative figure is reported by applying a discount factor that assumes a certain percentage of those that have opened a bank account have at least one other account.

    Bank Account Ownership[8]– discounting method applied to account for those who own more than 1 account.

    19.  The new bank account data is captured through the RBF’s Monthly-Micro Deposit (MMD) returns. New bank accounts are discounted by 20 percent to account for individuals with more than one account.

    Table 4: Percentage of administrative units with a financial access point

    Percentage of adults with formal financial institution account

    2016

    2017

    2018

    %∆

    Formal financial institution account

    68.41

    71.62

    74.86

    4.52

    Formal financial institution account – Women

    n.a

    56.80

    n.a

    Formal financial institution account – Youth (aged 15–30)

    n.a

    57.00

    n.a

    Formal financial institution account – Eastern Division

    n.a

    32.70

    n.a

    Formal financial institution account – Northern Division

    n.a

    54.90

    n.a

    Formal financial institution account – Western Division

    n.a

    66.60

    n.a

    Formal financial institution account – Central Division

    n.a

    64.60

    n.a

    Other Usage Indicators reveal generally positive performance

    20.  Active mobile money[9] users increased by 9 percent (1,736) during the year. These can be attributed to a few initiatives that were introduced during the year such as, the RBF staff’s direct salary deduction to mobile wallets, VFL partnership with Fiji Airways allowing customers to purchase tickets using their mobile wallets, eTransport card top via M-PAiSA and a new remittance platform for Australia and New Zealand markets.

    21.  Data to measure adults using digital payments is not available, however the required information will be captured through the recently issued Disaggregated Data Policy. Current data available on digital payment channels other than mobile money is based on volume and number of transactions.  EFTPOS recorded an increase of 622,160 transactions (17%) in 2018 while value of transactions surpassed the $1 billion mark for the first time.  Internet banking also increased by 208,022 transactions (13%) although overall transaction value declined by $80,434 (8%) indicating a growth in lower value transactions during the review year.  The disaggregated data policy is expected to improve reporting of this indicator by 2019.

    22.  The total number of savings accounts is used as a proxy for number of adults using formal savings products. The data is captured from commercial banks Savings[10] and Time[11] Deposit accounts. Approximately 25 percent of the adult population have a savings account averaging nearly $20 per account.     

    23.  Formal credit products are reported by all commercial banks and credit institutions and are discounted by 20 percent.[12] The slow outturn (decline by 0.49 percentage points) in the usage of formal credit products can be attributed to the movements in weighted average lending rate which increased slightly compared to the preceding year (refer to Table 5).

    24.  Insurance for 2018 reported a total of 761,401 persons covered by an insurance policy either life (104,436) or general (582,070). The data reported for general insurance policies include multiple counting of the bundled insurance product which is reported separately for the four different classes of insurance (fire, personal accident, term life and funeral) and have been accounted for in the calculation of the insurance indicator. 

    Table 5: Percentage of adults using other financial services

    Other Usage Indicators

    2016

    2017

    2018

    %∆

    Percentage of adults that have an active mobile money account (used in the last 90 days)

    2.56

    3.04

    3.32

    9.14

    Percentage of adults using digital payments other than mobile money

    n.a

    n.a

    n.a

    Percentage of adults using formal savings products

    29.62

    24.79

    25.09

    1.22

    Percentage of adults using formal credit products

    17.49

    16.03

    15.54

    (3.08)

    Percentage of adults with an insurance product

    19.89

    22.17r

    42.02

    89.53

    Percentage of remittance sent through mobile money

    1.25

    1.72

    2.41

    40.12

    Percentage of adults with a FNPF membership account

    65.75

    66.85

    68.78

    2.88

    Note: r – Revised

    25.  Remittances sent through mobile money increased by $4.4 million in 2018 and is a reflection of the new remittance platforms in Australia and New Zealand. In September 2018, the RBF gave approval for VFL to launch RIA[13] service in Australia and New Zealand.  The positive trend from these two markets is expected to continue in 2019. 

    26.  The percentage of FNPF membership accounts increased by 1.93 in 2018 registering approximately 12,000 new accounts.

    E.  Global Trends for 2018

    Core Performance Indicators

    Fiji

    Malay-sia

    Tanza-nia

    Ghana

    Russia

    Number of access points per 10,000 adults

    126.16

    n.a

    144.41

    n.a

    n.a

    Number of bank branches per 10,000 adults

    1.09

    1.30

    0.29

    1.88

    3.00

    Number of ATMs per 10,000 adults

    5.41

    4.50

    0.71

    1.20

    16.70

    Number of Agents per 10,000 adults

    7.89

    2.70

    143.40

    103.40

    n.a

    Number of Mobile Financial Services access points per 10,000 adults

    5.87

    n.a

    143.40

    226.98

    n.a

    Percentage of adults with an account(s) at a formal financial institution

    74.89

    95.00

    36.10

    n.a

    38.60

    Percentage of adults using formal credit products

    15.5

    39.00

    n.a

    n.a

    26.80

    Percentage of adults that have an active mobile money account (used in the last 90 days)

    3.3

    n.a

    24.70

    40.11

    n.a

    27.  Due to data unavailability, we have not included comparisons with similar income countries or within the region. Comparisons are limited to those countries that have reported data on the AFI Data Portal.

    28.  Ghana and Tanzania are leaders in mobile money in both access and usage. This is not surprising given that the African countries have been at the forefront of the mobile money developments. This has resulted in mobile money as the preferred channel to collect wages, pay invoices, save money or access loans through the mobile phone and hence the high mobile money usage in these countries.[14]

    29.  Interestingly Fiji ranks ahead of Malaysia, Tanzania and Ghana in regards to bank branches and ATM access points. Notably, Russia is the highest with 16 access points per 10,000 adults.  

    F.  Tracking Against NFIS Mid-Term Targets

    Financial Inclusion Dimension

    Core Performance Indicators

    Baseline Data[15]

    2018

    Mid-Term Target 2018

    Target

    2020

    Access to formal Financial Products and Services

    Number of cash-in cash-out financial access points per 10,000 adults

    21

    22.6

    25

    30

    Percentage of rural administrative units with at least one access point

    88

    89.5

    89

    90

    Percentage of account(s) at a formal financial institution

    64

    74.9

    75

    85

    Percentage of account(s) at a formal financial institution – Women

    52

    n.a

    60

    72

    Percentage of account(s) at a formal financial institution – Youth (aged 15–30)

    51

    n.a

    65

    80

    Percentage of account(s) at a formal financial institution – Eastern Division

    44

    n.a

    55

    70

    Percentage of account at a formal financial institution – Northern Division

    55

    n.a

    65

    80

    Percentage of account(s) at a formal financial institution – Western Division

    62

    n.a

    75

    85

    Percentage of account(s) at a formal financial institution – Central Division

    73

    n.a

    80

    90

    Usage of Products and Services

     

     

     

    Percentage of adults that have an active mobile money account (used in the last 90 days)

    2.16

    3.3

    8

    15

    Percentage of adults using digital payments other than mobile money

    8.1

    n.a

    12

    15

    Percentage of adults using formal savings products

    38

    25.1

    40

    45

    Percentage of adults using formal credit products

    6.9

    15.5

    10

    15

    Percentage of adults with an insurance product

    12

    42.0

    15

    25

    Percentage of remittance sent through mobile money

    0.51

    2.4

    5

    10

    Percentage of adults with a FNPF membership account

    65

    68.8

    70

    75

    Notes:

     

    Unlikely to meet 2020 NFIS targets

     

    Underperforming but likely to meet 2020 NFIS targets

    30.  The Overall target of the NFIS Plan 2016-2020 is to increase the formally served adult population from 64 percent to 85 percent (by 130,000 adults) of which at least 50 percent are women. As at 31 December 2018, 74.9 percent of the adult population were formally served achieving its mid-term target (75%) and on track to achieve its 2020 end goal.

    31.  Overall performance of the indicators are mixed. Four indicators (adults with a formal financial account, administrative units with financial access point, credit and insurance) have either achieved or surpassed mid-term targets (18.75%), five indicators are underperforming (31.25%) and seven indicators could not be updated as information is not reported from the financial institutions.

    32.  The indicators that are not available relates to data at the disaggregated level (women, youth and division) and digital payment platform other than mobile money.

    33.  The underperforming indicators include (1) Number of cash-in cash-out access points, (2) Percentage of adults that have an active mobile money account, (3) Percentage of adults using formal savings products, (4) Percentage of remittance sent through mobile money and (5) Percentage of adults with a FNPF membership account. Efforts to improve on these indicators are reported on the next section.  

    G.  Way Forward

    34.  The set of financial inclusion indicators provide useful information about access and use of financial services by the adult population. The progress of many of the indicators has been slow but positive except for credit and number of bank branches and mobile money agents.

    35.  Going forward, the following initiatives are expected to address some of the data challenges and some of the underperforming indicators.

         (i)   Data Availability and LimitationsA Financial Sector Development Policy Statement No. 1: Minimum Requirements for the Provision of Disaggregated Data was issued to the industry on June 1, 2019. The Policy Statement will allow for reporting of women, youth, division and digital payment platform other than mobile money and address challenges of multiple counting of accounts by minimising the discount factor applied to formal financial account, credit account and insurance.

                (ii)      Underperforming indicators:

    • Underperforming indicators but likely to meet 2020 NFIS target – these indicators are slightly below NFIS mid-term targets.

    Indicator

    2018 Progress

    2020 Target

    Required to meet 2020 Targets

    Number of cash-in cash-out access points per 10,000 adults

    22.6

    30

    465 access points

    Percentage of adults with a FNPF membership account

    68.8

    75

    38,888 new FNPF accounts

    a)  Cash-in cash-out access points – The current dataset does not include insurance and credit institutions access points. The FSDG will work closely with FIG to include these access points in its calculations. In addition, VFL in partnership with PFIP have deployed 68 Mobile Village Agents (MVAs) as of June 2019 and will roll-out approximately 300 MVAs by 2020. The MVAs are strategically selected taking into account the agent’s role in the community, trust and mentorship at the village level. 

    b)  Percentage of adults with a FNPF membership account –As of June 30, 2019, this indicator had surpassed its mid-term target. Effective awareness sessions to promote retirement planning and voluntary FNPF scheme resulted in 11,728 new accounts opened in the first six months of 2019.  The Financial Literacy Working Group in partnership with FNPF plans to organise a retirement exposition in the second half of 2019 raising awareness on planning for retiremen  Furthermore, the Ministry of the Agriculture plan to establish FNPF account for farmers who trade through agricultural aggregators

    • Underperforming indicators unlikely to meet 2020 NFIS target – these indicators have made minimal progress and only reaching halfway through the mid-term targets.

    Indicator

    2018 Progress

    2020 Target

    Required to meet 2020 Targets

    Percentage of adults that have an active mobile money account

    3.3

    (20,733)

    15

    73,032 active mobile money accounts

    Percentage of adults using formal savings products

    25.1

    (156,827)

    45

    124,468 adults with savings account

    Percentage of remittance sent through mobile money

    2.4

    ($13.6 million)

    10

    $59.8 million

    a)  Percentage of adults that have an active mobile money account – While VFL has been proactive in opening new payment platforms and remittance markets for M-PAiSA, the mobile money usage has yet to gain traction. There is a need to leverage traditional circles of trust e.g. village savings/loans clubs and the MVA model could be utilised to build trust to ensure that subscribers can confidently access their cash from a nearby agent anytime. Consumer education is also crucial and agents are very valuable in advising and guiding the consumer on the usage of mobile money. Agents can act as ambassadors and educators for consumers. The NFIT Secretariat in close collaboration with VFL will train the agents to drive consumer education at the village level.   The close collaboration will be extended to raise awareness on an M-PAiSA app currently developed by VFL with QR code based retail payments that is expected to be taken up mainly by young people and many small businesses.  As the NFIT monitors and reviews the current mid-term goals, discussions and agreements may need to focus on whether to revise some of these targets.

    b)  Percentage of adults using formal savings products – Performance have been low and still lags behind the mid-term target. The indicator only include savings accounts with commercial banks, hence the next phase will be to capture adults with a savings account with credit unions. In addition, the Financial Literacy Working Group and Inclusive Products and Services Working Group of NFIT will work together to strategise and raise awareness on the savings products available in order to drive usage. 

    c)  Percentage of remittance sent through mobile money – should total remittance continue on the current trend, $59.78 million of remittance needs to be transmitted via mobile money in order to achieve 2020 NFIS target. 2018 registered $13.6 million.

    VFL’s on boarding of RIA in quarter 3, 2018 resulted in strong growth of remittance from Australia and New Zealand market in the first six months of 2019 (47% for Australia and 58% for New Zealand when compared with the same period in 2018).  Remittance sent through mobile money increased by 40 percent from January to June 2019 when compared to the same period in the preceding year[16]. This is expected to continue into the next six months positively contributing to total remittance sent through mobile wallet. Whilst the MNOs are making good progress in remittance send through mobile money, other channels are also experiencing increase in value. Awareness will play a key role as the mobile money platform provides a cheaper and faster option compared to other channels such as money transfer operators and commercial banks.  The secretariat will work closely with MNOs to discuss way forward.     

     

    Annexure 2: Key Financial Inclusion Data

    Key Information

    2016

    2017

    2018

    Adult Population

        617,571

        625,099

         625,099

    Land Area in square kilometers

          18,270

          18,270

           18,270

    Total Number of administrative units

               110

               110

     110

    Total Number of urban administrative units

                 24

                 24

    24

    Total Number of rural administrative units

                 86

                 86

    86

    Financial Access Points

    Number of Banks

                   6

                   6

    6

    Number of Bank Branches

                 70

                 69

    68

    Number of Cash Out only ATMs

               326

               325

    338

    Number of Cash In and Cash Out ATMs

                  –  

                 –  

    0

    Number of EFTPOS Outlets

            6,081

            5,872

    6137

    Number of Cash In and Cash Out Bank Agents

                 95

               119

    126

    Number of MNO agents offering mobile financial services – cash in and cash out

               351

               420

    367

    Number of Cooperatives cash in and cash out points

               392

               400

    404

    Number of Credit Union cash in and cash out points

                 22

                 22

    21

    Number of regulated Microfinance Institution (MFI) cash-in, cash-out points

               393

               415

    425

    Number of urban administrative units with at least one access point

    24

    24

    24

    Number of rural administrative units with at least one access point

    76

    77

    77

    Usage of Financial Services

    Number of mobile financial services active accounts

          15,812

          18,997

    20,733

    Number of regulated deposit accounts

        999,081

     1,118,050

      1,104,771

    Number of regulated credit accounts

        134,998

        125,256

         121,395

    Number of savings accounts

        182,931

        154,943

         156,827

    Number of persons covered by an insurance policy

        409,543

        461,938

         761,401

    Number of pension accounts

            7,974

            7,410

             7,555

    Number of FNPF membership accounts

        406,065

        417,886

         429,936

    Total Remittance

     $541.79m

     $533.19m

    $564m

    Total Remittance sent through mobile money

     $6.77m

     $9.2m

    $13.6m

    Annexure 3: Weighted Average Lending Rates

     

    2016

    2017

    2018

    Commercial Banks

    5.80

    5.65

    5.69

    Credit Institutions

    11.22

    12.19

    12.72

    [1] Financial Inclusion Data Working Group (FIDWG): Measuring Financial Inclusion Core Set of Financial Inclusion Indicators, Guideline Note 4, 2013.

    [2] An access point is any physical entity where an individual can perform cash-in and/or cash-out transactions with a regulated financial institution, such as traditional bank branches, any type of banking office, ATMs, agents and EFTPOS devices.  ATMs that allow for withdrawals and deposits were not captured separately in the FIG returns and a request have been made to report this in future.

    [3] The first indicator as per Table 1 provides a snapshot on the number of financial access points available in the country for every 10,000 adults.

    [4] The second indicator reflects those access points that allow for both withdrawals and deposits.  EFTPOS and ATM transactions are excluded from the calculations as they only provide withdrawal services.   EFTPOS machines used for cash-in and cash-out purposes are reported separately under bank agents and mobile money agents.

    [5] ANZ cleaned their system in 2017 removing 338 inactive EFTPOS machines. 

    [6] Digicel Fiji Ltd mobile money agents declined by 59 while VFL increased by 6.

    [7] Administrative units are divided geographically, making reference to AFI’s definition1 (e.g Tier 1: Nation, Tier 2: region/state/division, Tier 3: county/town/province, Tier 4: municipality/district and Tier 5: village).  Fiji’s administrative units are reported at Tier 4 – district level.

    [8] In 2018, the commercial banks did not report bank account ownership at the disaggregated level. 

    [9] Annual figures are calculated by averaging the results for the four quarters. 

    [10] Savings Deposit Accounts – interest bearing deposits without a stated maturity and are not transferable by cheque, draft, direct debit/credit, automatic teller machine, internet banking, or other direct payment facilities.

    [11] Time Deposit Accounts – interest is paid for a fixed period of time and which cannot be withdrawn before maturity without giving notice and incurring an early withdrawal penalty.

    [12] Credit accounts include private (housing, motor vehicle, credit card, personal unsecured, etc.) and public non-financial corporations.  The discount factor was applied assuming that 20 percent of those with a credit account have more than one account.

    [13] Continental Exchange Solutions Inc. doing business as RIA Financial Services.

     

    [14] http://analytics.dkv.global/data/pdf/Financial-Inclusion-Developing-World.pdf

    [15] Baseline Data is from the Demand Side Survey and Supply Side data for 2015.

    [16] Remittance received from mobile money for the period January to June 2018 recorded $6 million while the same period in 2019 recorded $8.4 million.  Total remittances (include commercial banks and money transfer operators) on the other hand increased by 6.6% (January to June 2018 recorded $275.1million while the same period in 2019 recorded $293.2million).

    [17]http://data.worldbank.org/indicator/IT.CEL.SETS/countries/1W?display=default