Indonesian ambitions to work on Financial Inclusion
The World Development Report 2017 focuses on the impact of governance and institutions on development. As I mentioned in the last blog, changes in ‘the way things are done’ in society are founded in frictions between institutions, organizations and agents. Ideally, these changes are instigated from the bottom-up, then come in to practice in larger groups and, finally, are formalized in a new or reformed institution. Then we looked at the Indonesian ambitions to work on financial inclusions as an example of the ways in which this could work.
For institutional changes to become sustainable, (N.B.!) they have to be community-based.
In our case of the financial inclusive system in Indonesia, thus, there would have to be a genuine shout out by the people to include disempowered members of society in mainstream financial services. But this, unfortunately, is where the political arena is letting us down. The players in the political arena do not coordinate their interests, they commit only to their own goals. In the end, however, their dynamics decide what is going to happen. Collaboration towards a policy agenda is missing.
The booklet on Financial Inclusion published by the Bank Indonesia (2011) aims at giving -now excluded- groups:
· The ability to save/· Access to credit/· Fulfilled insurance needs/· Fulfilled remittance needs/· Financial literacy/· A financial identity
Ambitions whose achievement are difficult to assess and ascertain.
What we do know, however is that.
Power asymmetries do not allow the voice of disempowered groups to carry much weight in the public debate.
If the issue cannot make an impact and hold its own in the political arena, it is never going to lead to the desired development outcome or be transformative enough to change the rules.
It works the other way around as well.
Imagine that the aspired development outcome is planned from the top-down. The people in power change the formal rules and throw their ambition to empower marginalized groups into the political arena. But they do not step in there themselves to lobby for it and sway the public opinion. Again, it is probably not going to happen. The political arena is just that: an imagined public space that is ruled by ‘the survival of the fittest’, the most powerful voices are the ones that get heard.
The World Development Report tells us the way to get out of these two conundrums is to support the need for change with commitment, coordinated action and in collaboration with stakeholder partners. This can give power to the disempowered. This can add strength to a desire for change. This can surpass short-term interests and lead to long-term change. Very true in this case.
It is exactly what has ailed the financial inclusion strategies of the Indonesian government so far. While plans were made and tools identified, the long-term commitment in a coordinated collaboration between powerful and less powerful partners has not materialized (yet).
But all is not lost (yet) either.
Another way to make change happen is by the introduction of new technologies and finding a creative method of delivery. In the financial sector such changes has been brought about by the mobile phone. Mobile finances have brought about access to financial services by groups of people that have never before been included. Being connected not only opens up opportunities to collaborate and coordinate action in strategic networks, it also levels the playing field for delivery and payment of services. Mobile connectivity has changed the rules.
Time will have to tell if this new game will better achieve the results we have been aiming for. I hope to report on this in part 4 of this blog in the years to come 🙂