The Big Push into Rural Fiji

Feature article from Island Business on Small and Micro-Enterprises by Dionisia Tabureguci

Could the days of rhetoric in the development of Fiji’s Small and Micro-Enterprises (SMEs) be really over?
Could the country be truly witnessing an era where policymakers have stopped all wishful thinking about what to do with this segment of the economy and are finally ‘walking the talk’?
If trends are anything to go by, it could be looking more and more likely to be the case. Take for instance the spate of recent developments leaning towards this area—
• Mobile money services from the country’s two mobile telephone service providers, considered a quantum leap in efforts to provide affordable basic financial services to the unbanked;
• An SMS banking service now available to customers of BSP bank, again, using mobile telephone technology to deliver fast and affordable financial services, widening financial inclusion albeit at a very basic level at this stage;
• A financial literacy programme piloted in Fiji by the United Nations Development Programme and delivered in tandem with ANZ Bank’s rural banking project. Since its launch in 2004, the project has made available lessons on money usage to thousands in Fiji’s rural and remote communities and has perfectly complemented ANZ’s micro-credit and micro-savings services; and lately,
• The setting up of a National Financial Inclusion Taskforce (NFIT) with the express support of the Reserve Bank of Fiji—among its many objectives is the strengthening of micro-finance through appropriate policies to promote greater financial inclusion. 
No doubt, these are interesting times for the SME sector and the crusade to reduce and eliminate poverty, not to mention developing rural Fiji.

Necessary intervention
But rather than this being a result of natural progression in financial market maturity, it has come about due to some very strong measures by Fiji’s monetary authority. 
The deputy governor of the Reserve Bank of Fiji Barry Whiteside referred to this in his address at last month’s seminar on Fiji’s economy.
He hinted at a radical change in the way things are done at the central bank—in terms of the role it plays in the local economy. 
“Enabling the participation of our people in the financial sector is a crucial part of development and an exciting challenge for the Reserve Bank,” Whiteside said.
“This may mean taking on development roles that may not necessarily be part of RBF’s core mandates. The question of whether such a role should be played by the RBF or someone else is not something that we should debate about. I am of the view that in a small and open island economy like ours, the central bank can play a more influential development role aside from its traditional monetary policy role to influence prices and ensure we have adequate reserves to pay our foreign bills.”
The challenge, Whiteside added, was in “finding the right balance in our interventions that will complement the efforts of others, including government.
“More often than not, the Reserve Bank prefers to play a facilitating and supporting role while encouraging our stakeholders, such as the banks, to come to the party. 
“However, there have been times where a leadership role has been required, at least to start the ball rolling.”
While it is indeed a far cry from the historically conservative stand taken by the central bank, Fiji’s economy seems to be ready for it.
The key word being “financial inclusion,” efforts by stakeholders, government included, appear to be coming together to give a new dimension to development.

Technology push
The two mobile telephone operators, ready for value-adding opportunities on their networks, launched their own mobile money projects immediately after the go-ahead from RBF. 
“To-date, the RBF has provided commercial licences to both mobile network operators, Vodafone and Digicel, to launch their mobile money transfer services,” said Whiteside. 
“Vodafone took the lead and launched its M-PaiSA brand a month ago and had 50,000 signed-up users as of 15th July 2010. 
“Digicel followed suit with its Digicel Mobile Money launch and had 2000 users sign up after just two days.
"There is no question this new service has the capability of expanding the reach and accessibility of financial services to the unbanked and rural areas. There are an estimated 750,000 mobile users in Fiji at this time, covering 90 percent of the population.”
Technology itself—in this case mobile telephone technology—was even mature enough for Fiji to explore new and innovative ways to deliver development goals.
The future appears to be rife with opportunities.
“Digicel Mobile Money is available nationwide, is safe, secure and affordable,” said Stephen Breen, Digicel Pacific’s Mobile Money Director.
“It is already proving to be an ideal tool for small businesses and is driving customers to Digicel Mobile Money agents, bringing an extra revenue stream. 
“In time, SMEs can accept payments from customers using Digicel Mobile Money. There are no large fees so it is a perfect choice for the unbanked population, which is nearly 70 percent of the population. 
“In time, we will be linking the wallet with bank accounts and we expect this will be the first step for many of the unbanked to get into the formal banking sector,” Breen told FIJI BUSINESS. 
Launching alongside the mobile telephone operators’ mobile money services was the SMS banking service from newcomer Bank South Pacific (BSP), allowing BSP customers to perform banking basic transactions through their mobile phones.
Aside from being a new competitive force in Fiji’s banking market when it launched here last year, the Papua New Guinea headquartered BSP has a fate decreed in SME development, in particular, the provision of much needed finance to this sector.
In June, BSP formed a new alliance with the International Finance Corporation (IFC)—the commercial of the World Bank.
IFC, as BSP’s new shareholder, would invest US$140 million in BSP “to promote and enable growth of the financial services sector by increasing access to finance for SMEs.
“Additionally, it will enable BSP to expand service delivery platforms, such as mobile phone banking to rural communities,” IFC told FIJI BUSINESS of this partnership.
“The bank aims to attract up to 375,000 new customers by the end of 2014 through mobile banking, many of which are underserved in the area of financial services.”
Also coming into the mix were local insurance companies, who, through a new working partnership with the Reserve Bank and the Pacific Financial Inclusion Programme (PFIP), were urged to extend their insurance services to low-income households in Fiji.
“Micro-insurance works to decrease a family’s vulnerability to unpredictable economic shocks,” said PFIP representative, Mike McCaffrey at last month’s gathering, the first of its kind, for these stakeholders.
“It has the potential to increase social protection in Fiji while also being profitable for insurance providers.”
PFIP research estimated that around 85,000 people have insurance policies in Fiji and this leaves almost 250,000 not protected from unpredictable events causing financial hardship.
With RBF indicating it will tweak the Insurance Act if needed inorder to accommodate this new product, at least one insurance provider has confirmed it would have a micro-insurance product out in the market before the year-end. 
“The costs will have to be absorbed by us at first but we are definitely launching such a product at the later part of the year,” said Krishnan Narasimhan, General Manager Fiji Operations at the Life Insurance Corporation of India.
Because its parent company is one of the three biggest micro-insurance providers in India, LICI Fiji is not short of expertise in this field. 
“Our ultimate goal is to reach 200,000 people within seven years. We will bring in the skills from our parent company in India to help us develop this product,” Narasimhan told FIJI BUSINESS. 
Like companies already riding on mobile telephone technology to reach their customers, LICI also has plans, although early at this stage, to use mobile companies as channel partners for the necessary transactions linked to its micro-insurance product.
“This way, the fisherman out in the islands or the farmer up in the interior would not have to travel far to pay their insurance premiums. All they have to do is use their mobile phones,” Narasimhan said. 

New era for SMEs?
If one were to feel the pulse of development in recent times, there is an unmistakable rush of innovation in the air. 
The necessary push from RBF in the promotion of financial inclusion and government’s foray into unlocking the potential in rural Fiji as well as its liberalisation of the local economy are coinciding with a gradual evolution in Fiji’s mobile telephone market.
The general picture that is emerging out of this is that those who benefit would ultimately be Fiji’s ordinary people, that they can now find opportunities in a business climate where policies are friendly to small enterprises and also foster innovation through service delivery via new technology. 
It would for example benefit the yaqona farmer who finds it more convenient to carry out transactions through his mobile phone rather than travel miles to sell his crop, or the group of village women who, instead of having to spend days in town trying to sell their honey, would close a deal at just a touch of a button. 
“We have taken on the challenge of promoting financial inclusion in Fiji and ensuring a financial system geared towards supporting this critical area. 
“Our intention is to see the poor, or those considered unbankable, being provided access to savings and credit facilities that will ultimately help in reducing poverty,” said Whiteside.

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