POLICY RESPONSES FOR CRISIS MITIGATION AND RECOVERY TO PROMOTE YOUTH FINANCIAL INCLUSION

Overview Of Policy Responses

There are three stages of building resilience: prevention, mitigation and transformation or recovery.

AFI’s Statement on post-COVID-19 recovery includes some of the following policy responses that support the recovery, resilience and restoration of financial inclusion:6

1. Develop financial inclusion policies and regulations that support the recovery, resilience and restoration of initiatives or programs that facilitate sustainable access and usage of formal financial services for segments most affected by COVID-19.

2. Implement collaborative financial inclusion policies to ensure quick outreach to the most affected population segments.

3. Promote adoption and usage of technological innovation for digital financial services, supervision and regulatory compliance.

4. Facilitate cross-agency collaboration with other regulators and government agencies to enhance policies that strengthen recovery, build resilience and restore sustainable financial inclusion.

5. Promote peer learning on how to devise and implement financial inclusion policies that strengthen recovery, build resilience and restore sustainable financial inclusion post-COVID-19 (e.g. regional and global benchmarking exercises).

6. Leverage public and private sector collaboration to facilitate effective implementation of policies that support recovery, resilience and restoration of financial inclusion post-COVID-19.

7. Advance policies that incorporate recovery, resilience and restoration as part of programs that support sustainability and adaptability for the excluded population and their enterprises.

There are various policy responses to promote youth financial inclusion depending on the stage of the COVID-19 crisis. Lessons learned from policy responses in Africa can be applied to promote crisis preparedness, mitigation and recovery in the future.

During the mitigation stage it is important to identify pain points and rapid solutions, quick wins or ‘lowhanging fruit’ to mitigate the negative impact in the short term. For example, during COVID-19, the mitigation phase included emergency monetary and fiscal measures that cushion the economic impact and restore financial stability, provide social welfare and benefits and address liquidity concerns, especially for MSMEs (AFI, 2021d). It also included policy responses such as changes to the payments infrastructure, relaxation of DFS regulations (e.g tiered KYC and e-KYC), moratoriums on traditional and digital credit, interventions in DFS transaction costs, mass G2P welfare payments and mass opening of e-money accounts (AFI, 2021d). For example, Ghana, Kenya, Liberia and Mozambique waived mobile money fees and increased the transaction limits to promote the use of digital payments, Guinea relaxed the ID requirements for e-money transactions and Zambia declaring agents as essential workers. Government to person (G2P) payments were digitized in Uganda, Namibia and Zambia while they were digitized and prioritized for SMES and vulnerable groups in Ivory Coast and Togo. Uganda provided debt moratoriums and loan restructuring for individuals and enterprises (World Bank, 2020a; AFI 2020b).

The recovery stage should include policy responses such as institutionalizing youth-sensitive regulatory and legislative frameworks such as the NFIS/NFES (AFI, 2021d).