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Friday, September 21, 2012

Posts facilitate financial inclusion

 Postal financial inclusion brings people excluded from the formal financial sector into a financial system using the postal network as a gateway. Either the Post offers its own financial services or partners with a financial institution to give access to such services.
With more than 600,000 post offices in the world, the postal presence in rural areas is unmatched by any other network. The UPU is building on that strength to help Posts provide rural citizens in developing countries with financial services such as postal savings accounts, government payments, loans and insurance, as well as a secure, reliable, efficient and affordable service for international and national electronic money orders. Offering such services to the unbanked can lead to poverty reduction and increased economic participation.
Several Posts are already key players in financial inclusion: the Postal Savings Bank of China has 475 million customers; Brazil’s Correios opened 11 million accounts in 10 years through a partnership with a bank; Namibia Post banks 20% of the country’s total population; India Post holds 240 million savings accounts and covers risks for more than 20 million people through its postal life insurance policy; Papua New Guinea Post offers a mobile wallet and is one of three main national competitors for mobile financial services; Serbia Post makes 150 million financial transactions a year in a country of 10 million inhabitants.
The UPU is also helping Posts develop and expand their electronic money transfer services. The remittance market is hampered by restrictive laws, low levels of competition and costly fees, leaving customers, especially migrant workers, vulnerable. There is a strong need for a more streamlined system of sending remittances.
The UPU has entered into valuable partnerships with the International Fund for Agricultural Development (IFAD), the World Bank, the Alliance for Financial Inclusion and the Bill & Melinda Gates Foundation, as well as others, to research and develop financial inclusion through the postal network.

Major projects

  • Nearly 700,000 USD from the Bill & Melinda Gates foundation is helping the UPU fund work on how Posts can enter into partnerships with financial institutions and mobile-money operators to better serve the underprivileged, the exchange of know-how among stakeholders and initiating pilot projects
  • A UPU-IFAD project in West Africa, involving Benin, Burkina Faso, Mali, Mauritania, Niger and Senegal, connected 355 post offices in rural areas to the UPU's worldwide electronic payment network. Rural post offices have been providing the service since October 2009, while currently, a total of 453 post offices in the six countries offer fund transfer services. According to postal officials in those countries, the time for receiving remittances and the transfer costs have been reduced.
  • IFAD is financing two additional development projects for postal payment services in South East Asia and Central Asia to the tune of 750,000 USD. The aim is to help designated operators in these countries to develop their money transfer services in rural regions.
  • With the World Bank, the UPU is helping the Posts of West and Central Africa countries improve the quality of their money transfer services. 
 Facts and figures

  • Only 8% of the world’s Posts do not offer financial services (UPU survey)
  • 51 Posts worldwide hold 1.6 billion savings and deposit accounts
  • One billion people are banked through the Post
  • Several hundred million people, often without an account, use the post to send and receive domestic and international transfers, and make government payments and utility payments
  • Remittances to developing countries in 2011 reached 372 billion USD, 12% more than in 2010 (World Bank)
  • 30 to 40% of remittances go to rural areas, while in many countries the value of remittances exceeds foreign direct investment (IFAD)

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