Stakeholder Engagements: Key Issues and Recommendations Pakistan Microfinance Network September 19, 2013

Presentation Outline Background Key issues identified Recommendations

Background Stakeholder consultations by PMN (July – Sept 2013) – Commercial banks involved in G2P payments – Provincial government departments in Balochistan, Khyber-Pakhtunkhwa, Punjab & Sindh Planning and Development, Finance, Health, Education, Social Welfare, Labor, Zakat and Ushr, Bait ul Maal, PDMAs Provincial roundtables

Balochistan ‒Religious and Minority Affairs: PKR 502 million Scope of G2P Payments: Some Examples KPK – Education: Three programs, totaling almost PKR 1 billion – Health: Two programs, totaling PKR 500 million Health insurance program, EUR 10 million – Youth: Three programs, totaling almost PKR 1.1 billion Punjab ‒Education: School education: PKR 1.0 billion Higher education: PKR 750 m ‒Pensions: PKR 66 billion Sindh Income support program: PKR 2 billion

Enabling Factors Government Banks Donors Recognition of benefits within Government Banks have experience of working with the unbanked Understanding of challenges and limitations

Key Issues Identified (I/III) 1.Policy direction on G2P Payments and use of technology needs to be developed at the highest levels 2.Who will be the ‘Champion’ within provincial governments? 3.One-size-fits-all – not going to work POLICY

Key Issues Identified (II/III) 1.Capacity of provincial government in evaluating and implementing technology based payments is limited 2.Lack of financial literacy and awareness is a curtailing factor 3.Thinness of financial infrastructure in certain regions 4.Business case for banks of focusing on ultra poor as a segment ECO SYSTEM

Key Issues Identified (III/III) 1.High verification costs to financial institutions (as required by regulations) are a limiting factor 2.Interoperability in branchless banking 3.Move towards biometric verification for enhanced transparency and accountability has its advantages but also challenges OPERATIONAL

Recommendations (I/II) National and provincial level policies on use of technology based payments for G2P programs may be considered Continued support from SBP and NADRA to facilitate banks in reaching out to the unbanked Donors and multilaterals should consider developing technical assistance programs for provincial governments Need to invest in financial literacy at a much greater scale and including the ultra poor as a target segment; co-ordination of efforts

Recommendations (II/II) Technical guide on the different payment technologies Exploring the deployment of biometric verification systems as a next step towards transparency and accountability

Thank You