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Closing Financial Inclusion Gaps: The Regulator’s Role in the Solomon Islands

In the Solomon Islands, women face significant barriers to accessing financial services, exacerbating existing gender gaps. According to a recent study by the Alliance for Financial Inclusion (AFI), 88% of women reported not taking out a loan in a given year, citing lack of need or desire (60%) and concerns about repayment (58%).

The Current State of Financial Inclusion

The study also found that:

  • 76% of borrowing is for daily living expenses
  • 67% of women turn to friends and family if they need funds
  • Moneylenders are often used due to ease of accessibility, but this comes with a cost: interest rates range from 50-250%, with significant penalties for defaults

Alternative Options

Savings groups, which are relatively common in the Solomon Islands, provide an alternative option for women in rural areas who cannot access formal institutions. With 21,441 participating as of March 2020, 88% of whom are women, these groups offer a community and way to save money outside the home.

The Regulator’s Role

However, the study highlights the need for regulators to play a key role in closing financial inclusion gaps. The Central Bank of Solomon Islands (CBSI) can facilitate this by:

  • Promoting digital payments: With low-value person-to-person (P2P) and utility payments being made via mobile banking or e-wallet providers, regulators can encourage greater adoption of digital payment methods.
  • Improving access to formal insurance products: Low insurance uptake in the Solomon Islands is a concern, with limited or no access to affordable products and a lack of understanding among consumers. Regulators can work to promote formal insurance products and educate the public about their benefits.
  • Enhancing financial literacy: Financial literacy programs can help empower women with the knowledge and skills needed to make informed financial decisions.

Conclusion

By taking these steps, regulators can help bridge the gap in financial inclusion between men and women in the Solomon Islands, ultimately promoting greater economic empowerment for all citizens.

Sources:

  • Alliance for Financial Inclusion (AFI)
  • Central Bank of Solomon Islands (CBSI)
  • Pacific Financial Inclusion Programme (PFIP) - PoWER Assessment Report