Speech by Shixin Chen, ADB Vice President (Operations 1), at the 13th Informal Meeting of the South Asian Association for Regional Cooperation (SAARC) Finance Ministers on 2 May 2019 in Nadi, Fiji

Introduction

Thank you, Chair. It is great to see you again after the highly successful Nepal Investment Summit. Allow me to express my appreciation to the Government of Nepal for serving as Chair of SAARC in the last several years. I also thank the SAARC Secretariat for its great contribution to the Informal Meetings of SAARC Finance Ministers.

Before I begin my statement, let me first convey my condolences and sympathies to the people and Government of Sri Lanka for the loss of lives in the tragic attacks on the 21st of April.

Overview of progress and achievements of SAARC

Honorable Ministers, Secretary General of SAARC, colleagues, ladies and gentlemen:

Since its founding more than 33 years ago, SAARC has achieved a lot in promoting the welfare of its peoples and accelerating economic growth of its member countries. SAARC cooperation covers a broad spectrum. The cooperation has furthered regional integration among its members. ADB is proud to have partnered with SAARC.

I am happy to inform you that ADB operations in SAARC countries were once again remarkable last year. ADB committed a total of almost $8.7 billion of sovereign and nonsovereign operations, representing over 40% of the ADB’s total commitments.

ADB’s operations in 2018 helped SAARC countries improve urban development, environmental protection, job creation, rural connectivity, climate change and disaster resilience, as well as health and education services. For example, in Nepal, our urban water and waste management projects are supporting 20 municipalities to benefit about 320,000 people; in India, 4 million people will benefit from our urban projects in Tamil Nadu; in Pakistan, 214 km of provincial roads will be rehabilitated; and in Bangladesh, 18.6 million pupils will benefit from our primary education assistance.

In 2018, SAARC countries actively participated in activities under SASEC and CAREC.

Under SASEC, we continued to implement and update the SASEC operational plan by working on transport, energy and trade facilitation. We hope the operational plan will support the SASEC Vision’s goal.

Under CAREC, we started assisting the implementation of CAREC 2030 strategy. The 17th CAREC Ministerial Conference endorsed the Integrated Trade Agenda 2030 and its Rolling Strategic Action Plan 2018- 2020. These will help CAREC countries integrate into global markets.

Why financial inclusion?

Honorable Ministers, Secretary General of SAARC, distinguished delegates:

The economies of developing Asia continue to register strong growth. We are happy to note that South Asia has remained the fastest growing subregion. In 2018, GDP growth averaged 6.7%.

We expect this trend for SAARC to continue, although the region, as a whole, is facing downturn pressure. The subregion’s GDP will grow by 6.8% and 6.9%, in 2019 and 2020. Bangladesh and India will expand by over 7%, while Maldives, Nepal, and Bhutan by about 6%. GDP growth in Pakistan, and Sri Lanka, however, are expected to hover below 4% as they continue to address macroeconomic imbalances. Afghanistan’s growth will strengthen to about 3%.

Notwithstanding this remarkable progress, the 12.4% poverty rate in South Asia is still higher than the global average of 10%. This is why I believe that the theme of this meeting, financial inclusion, is both timely and relevant.

Financial inclusion is a potent weapon for fighting inequality and poverty, especially in rural areas. Better access to banking services can increase savings, empower women, boost household consumption and raise productive investment. Lack of access to finance is a major constraint to doing-business, especially for small and medium sized enterprises.

South Asia faces several challenges in achieving financial inclusion. Many people still do not have a legal form of identity, leaving them financially and socially excluded. Many people live in remote, rural areas without reliable internet and electricity, beyond reach of financial services. There is also a lack of financial and technical literacy, especially in rural communities and among women. Consequently, both consumer demands and credit facilities are constrained.

How to support financial inclusion in SAARC?

We in ADB recognize the importance of financial inclusion in SAARC countries, and have supported programs in this regard. In India, we have supported mobile credit processing for low income women in remote areas. In Sri Lanka, our loans supported banks to grow their SME portfolios. In Pakistan, we are working with Khushali Bank to support agri-borrowers.

Our microfinance programs support the poor to access credit and insurance, manage risk, and increase incomes. ADB’s Regional Microfinance Risk Participation and Guarantee Program shares risks of local currency lending with microfinance institutions to promote more private sector investments.

There is no doubt that we need to do more. We need more innovations for the underserved population, stronger collaboration between financial industry and public sector, enhanced digital identity, active financial education, and growing fintech efforts.

SAARC is an excellent platform to find solutions for financial inclusion. I believe that this meeting will be a good starting point to promote our efforts in future SAARC cooperation in financial sector.

Conclusion

Honorable Ministers, Secretary General of SAARC, distinguished delegates:

Under ADB’s Strategy 2030, our future financial inclusion programs will be further sharpened for poverty reduction. ADB will emphasize greater equality in banking access. Moving forward, we hope to further enhance SAARC-ADB cooperation through a research and knowledge agenda for financial inclusion, as well as other shared development issues.

I am excited to hear more from you on ways to make this fast-growing subregion more prosperous, more inclusive, more resilient, and more sustainable. I am sure you will agree with me that the development horizon for the SAARC subregion is definitely looking brighter. However, we cannot rest on our laurels. We should continue to adopt “smarter” approaches to bring us closer to sustainable development goals.

ADB is strongly committed to be your partner in this process. We stand ready to support SAARC members—collectively and individually.

I wish us all a successful meeting. Thank you.

Speaker

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