AusAID, Financial Inclusion & Remittances Sydney, 18 July 2012 Ruth Goodwin-Groen, Senior Sector Specialist

Outline >Why International Remittances Matter for Development >AusAID context >Financial Inclusion priorities >Pacific Financial Inclusion >Remittances - Pacific >Remittances - Global

Why International Remittances matter >Remittances contribute to poverty reduction >Reducing the cost of remittances is needed to increase the amount of money in poor people’s hands >Reducing remittance costs is a global & Pacific issue - >as are improving remittances’ development impact and increasing financial inclusion >It takes a multi-faceted and ‘joined up’ approach to reduce costs, increase financial inclusion and have a long term impact on poverty.

AusAID: An Effective Aid Program: >The purpose of Australian aid: to help people overcome poverty >5 strategic goals:  Saving lives  Promoting opportunities for all  Investing in food security, sustainable economic growth and private sector development  Supporting security, improving the quality of governance, and strengthening civil society  Preparing for and responding to disasters and humanitarian crises

Financial Inclusion: >Financial inclusion means expanding appropriate and affordable financial services to poor or low income people, previously unable to gain access. >Borrowing, saving or buying insurance allows planning for the future - risk management. >Building up assets and investing in education and health – contributes to job creation, reduces inequality >Financial services helps families cope in times of need - consumption smoothing >AusAID’s FI Strategy targets: policy change, institutions and infrastructure building, innovation and financial education – all of which are important to reducing the cost of remittances and increasing their developmental impact

AusAID & Financial Inclusion in Pacific >Support Coombs declaration and Money Pacific Goals >Multi-country programs through multilateral partners  Pacific Financial Inclusion Program (PFIP)  Private Sector Development Initiative (PSDI – ADB)  Pacific Microfinance Initiative (PMI – IFC)  IFC & World Bank work, eg. credit bureaus, payment systems >Single-country: many with those same partners  Fiji Financial Education Project (PFIP)  PNG Microfinance Expansion Project – ADB

AusAID & Remittances: Pacific 1. Product Innovations – PFIP, AsDB, PMI  E.g. Mobile wallets and agents (Reuben) 2. Competition: Send Money Pacific  Results – Fiji MTO reduced by 50% (Jonathan) 3. Financial infrastructure: Payments systems  Four assessments plus Australia moving ahead (John) 4. Client Financial Education  To achieve Money Pacific Goals (Kim) 5. In collaboration: FEMM Remittance Road Map  In collaboration with development partners and countries

AusAID & Remittances – G20, CHOGM >Australia leads the G20 remittances work with Indonesia and Italy  Target of 5% by 2014 in global average cost  Currently 9% (weighted approx. 7%)  G20 Remittance Toolkit  Endorsed General Principles (Carlo next) >CHOGM – Trust Fund  AUD 3.5 million for Commonwealth countries to take action to reduce the cost of remittances  Major challenge - some of highest cost corridors

Conclusion >Remittances contribute to poverty reduction >Reducing the cost of remittances is needed to increase the amount of money in poor people’s hands >Reducing remittance costs is a global & Pacific issue - >as are improving remittances’ development impact and increasing financial inclusion >It takes a multi-faceted and ‘joined up’ approach to reduce costs, increase financial inclusion and have a long term impact on poverty

Thank you.

AusAID in the Pacific >Total Australian aid budget $5.2 billion in >Pacific (incl PNG): est. A$1.17 billion in  Half of all aid to Pacific is from Australia  Nearly a quarter of Australia’s aid is to the Pacific >Commitment to scale up ODA to 0.5% in