Regional workshop on Fostering financial inclusion, digital financial services and MSMEs access to finance for Sustainable Development in the Least Developed Countries of Asia and the Pacific

21 Nov 2019 to 22 Nov 2019
Phnom Penh, Cambodia
By invitation only

The Least Developed Countries (LDCs) of Asia and the Pacific are a geographically diverse group that includes small island development States (Kiribati, Solomon Islands, Timor-Leste, Tuvalu and Vanuatu), landlocked developing countries (Afghanistan, Bhutan Lao PDR and Nepal), and other countries (Bangladesh, Cambodia and Myanmar). Despite their heterogeneity, their economies share common characteristics such as low productivity, small economic bases, highly concentrated export structures, lack of employment opportunities for the youth or vulnerability to natural disasters, among others. These countries also have the highest financial requirements for the achievement of the Sustainable Development Goals (SDGs). According to ESCAP estimates, they would need to invest as much as an additional 16 per cent of their GDP per year, relative to the current investment levels, compared to a regional average of 5 per cent of GDP per year.

While public resources such as tax revenues or ODA are much needed to fill this gap, it is important to consider private financial resources as well. Among them, financial inclusion holds much promise.
Financial inclusion is defined as access to useful and affordable financial products and services such as payments, savings, credit or insurance, and it is an important target of the United Nations Sustainable Development Goals (SDGs). Within financial inclusion, an expansion in the access to finance among micro, small and medium-sized enterprises (MSMEs) in LDCs can create new opportunities for businesses and employment, contributing to structural transformation, economic growth or poverty reduction, among others.

In recent years, the emergence of digital financial services (DFS) has been providing a cost-effective solution to enhance access to financial services such as transfers, bill payments or savings by segments of the population that lack conventional bank accounts. Moreover, by allowing financial institutions to collect transactions data, the expansion of such services can reduce information asymmetries between MSME borrowers and lenders, therefore facilitate the expansion of credit to MSMEs. However, the expansion of DFS also comes with new challenges to financial regulators, such as the need to enhance consumer protection and data privacy, supervise providers licensed or improve cyber-security standards.