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BRINGING THE INFORMAL SECTOR ONBOARD
LESSONS LEARNED Without coordination we cannot have an ecosystem that includes the informal sector into initiatives like e-wallet... The different institutions are like pieces of a puzzle, and we need dialogue and coordination to put together the solutions.”
1. COORDINATING POLICIES Successful implementation of financial inclusion policies requires buy-in and coordination across various government arms and non-government stakeholders.9 Although increased access to formal finances can accelerate formalization, it is only part of a more comprehensive process for better engagement by government and stakeholders with the informal sector.10 All of the multiple avenues towards formalization need to work in tandem with an integrated strategy and policy coherence.11 Coordination on policies and action is a key ingredient for the successful onboarding of the informal sector. It also faces numerous challenges, including fragmentation and the lack of communication between different governance bodies and external informal sector, and financial inclusion stakeholders. A common experience amongst financial inclusion policymakers has been the difficulty of working across different government arms, including between different ministries or departments, regulatory bodies, and legislatures. The Banco Central de Reserva de El Salvador described the challenge as a puzzle with many different pieces. These pieces include different Ministries such as the Ministry of Finance, the Regulatory Agency for the Financial System (Superintendencia del Sistema Financiero), and Congress (the legislature), with political decisions being outside the hands of the Central Bank and financial inclusion policymakers. This leads to gaps in the formulation and implementation of regulations, policies, and programs.
Otto Boris Rodriguez, Banco Central de Reserva de El Salvador
The same sentiment is echoed by the Bangko Sentral ng Pilipinas, which notes a lack of end-to-end coverage in terms of regulations impacting consumers and businesses. Deficits also arise in coordination with relevant actors outside of government, such as informal sector associations, unions, and non-governmental organizations (NGOs). How to best link up policy areas that fall under different government purview at the same time? Despite the challenges of harmonizing actions relating to the informal sector, experiences on successful coordination abound. The first step is to formally acknowledge the informal sector’s importance. In Ecuador, one of the main pillars for successful policymaking regarding the informal sector has been its recognition in legal and regulatory frameworks with an all-of-government approach. Ecuador includes the informal sector, called the “Popular and Solidarity Economy” (Economía Popular y Solidaria), as part of their constitution alongside the private sector and non-governmental organizations (NGOs).
9 AFI Guideline Note on Coordination 10 GSMA Key Informant Interview 11 The ILO outlines seven avenues that require coherent action across all of them. These are (1) Growth strategies and quality employment generation; (2) Regulatory environment, including enforcement of international labour standards & core rights; (3) Organization, representation and social dialogue; (4) Equality: gender, HIV status, ethnicity, race, caste, disability, age; (5) Entrepreneurship, skills, finance, management, access to markets; (6) Extension of social protection, social protection floors and social security systems, and; (7) Local (rural and urban) development strategies. ILO (2015). Policy Responses to the Informal Economy. ILO National Employment Policies: A guide for workers’ organizations.
