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Opinion

Embracing financial inclusion and financial health for national progress

H.M. Queen Maxima of the Netherlands - The Philippine Star

In the heart of Southeast Asia, the Philippines is poised at a pivotal juncture, with the power to significantly reshape its economic landscape. As I prepare for my visit to the Philippines, in my role as the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), it is vital to discuss two critical pillars that can drive this transformation: financial inclusion and financial health. These are not just economic terms but are foundational to empowering Filipinos in every corner of the archipelago, fostering resilience against economic uncertainties and natural disasters, which the country often faces.

Why financial inclusion matters for the Philippines

Financial inclusion means that every Filipino – whether a fisherperson on a remote island or a small business owner in Metro Manila – has access to and can use essential financial services. This includes savings accounts, insurance, credit and payment services. Fortunately, since my previous visit to the Philippines as the UNSGSA in 2015, account ownership has increased from 31.3 percent (World Bank Global Findex 2014 Report) to 51.4 percent since last measured in 2021. Despite significant progress, about 37.6 million Filipino adults remain without a bank account, hindering their potential to invest, save and protect themselves against economic and climate shocks like floods, droughts or the loss of a breadwinner in the family.

The importance of this was underscored during the COVID-19 pandemic, when those with access to digital payments could receive aid swiftly, highlighting how essential financial services are in times of crisis. Ensuring that every Filipino has access to these services is not just about economic metrics but about real lives and the ability to withstand and recover from crises.

Financial health as a pathway to prosperity

Beyond access to financial services, financial health is about effectively using these services to improve living standards. It reflects a person’s ability to meet daily expenses, absorb financial shocks and have some money left for savings or future goals. For many Filipinos, financial health means the difference between vulnerability and stability, between an uncertain future and a prosperous one.

In the Philippines, while more people are now banked than a decade ago, many still struggle with financial health. Only 20.8 percent of adults use formal accounts to save, and a significant portion lacks the financial buffers to withstand economic shocks. This precarious situation calls for urgent action to integrate financial health into the national agenda, ensuring that Filipinos are not just included in the financial system but are actively benefiting from it.

The road ahead: key strategic initiatives

Developing inclusive financial psroducts. The financial sector can innovate responsibly to meet the diverse needs of its consumers. Products designed with the user’s financial health in mind can help build long-term stability and growth.

Regulatory frameworks to support financial health. I encourage policymakers to create and enforce regulations that protect consumers and encourage fair practices in the financial industry. This will ensure that financial services contribute positively to the lives of Filipinos.

Inclusive finance for disaster resilience. Given the Philippines’ vulnerability to natural disasters, there is a profound need for financial products that can help citizens recover and rebuild. This includes affordable insurance and savings products tailored to the needs of the most vulnerable.

Enhancing digital public infrastructure. As the UNSGSA, I advocate for the development of robust digital infrastructure, which are crucial for increasing financial inclusion and financial health, especially in a safe, secure and private manner. The Philippines has an opportunity to enhance these systems to ensure they are accessible and affordable for all, including those in remote areas.

In conclusion, financial inclusion and financial health are not merely goals but are gateways to equitable development and prosperity for the Philippines. They are essential for building a resilient economy that can not only withstand future crises but also thrive in their aftermath.

As I meet with leaders across the nation, I am looking forward to exploring how my partners and I can support their effort towards these aims, championing a financially inclusive and financially healthy future for all Filipinos.

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Queen Máxima is the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA). She is visiting the Philippines May 21-23 and is scheduled to meet with key public and private sector leaders to explore ways to support efforts to promote financial inclusion and financial health in the country.

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