Toily Kurbanov: Opening Speech at the UNDP Microfinance Project's Agreement Signing & Project Closing CeremonyJun 4, 2014
Toily Kurbanov, UNDP Country Director in Myanmar
Opening Speech at the UNDP Microfinance Project's Agreement Signing & Project Closing Ceremony
Your Excellency, U Kyaw Hsan, distinguished colleagues, friends, guests, ladies and gentlemen,
It is a privilege to represent UNDP Myanmar as we mark the end of one of the longest projects that UNDP has ever supported and we do so on a successful and future-oriented note. The first 17 year chapter of the history of microfinance in Myanmar is over and it has made a significant contribution to poverty alleviation in Myanmar and the development of the country’s microfinance sector.
In 1997, international microfinance industry was still in a relatively early stage, but there was already sufficient evidence of significant impact it could have, what led UNDP to decide to include a microfinance project as part of our Human Development Initiative (HDI) in Myanmar. From humble beginnings, the project grew from strength to strength to a point where by the end of 2013 it served some 630,000 clients in over 6000 villages with a total disbursement of USD 150 million. It formed one of the largest providers of microfinance in Myanmar.
This is indeed a remarkable achievement of the Government, UNDP and implementing partners. Grameen from Bangladesh, Gret from France, EDA Rural Systems from India, Save the Children from UK and of course Pact, which has been the sole implementing partner since 2006 and the principal engine driving the project’s success. For this I would like to extend special thanks to all hard-working staff of Pact.
Above all, the project’s success is a remarkable achievement of the hundreds of thousands individuals, mostly women of Myanmar who through their hard work used the funds they borrowed to generate necessary income to improve the lives of their families and to almost all loans they received with interest. Some of their stories are on display here today.
All this has been made possible with funding not only from UNDP, and since 2009 also from other donors: Lift, USAID, DFID and DANIDA. We are grateful for the support they have provided over years and through them, ordinary tax payers in their countries.
Apart from its contribution on the human level, our primary work on microfinance differentiates at the sectoral and national level. The project essentially served not only to introduce microfinance in Myanmar, but also to show that it can operate on a sustainable basis, generating sufficient revenues to grow and expand. This has provided an important demonstration effect for the microfinance institutions that have subsequently entered the market and, by contributing to the level of financial inclusion in Myanmar and laid a strong foundation for the development of the sector across the country.
But there is even more work ahead, as we were reminded at a conference here in Nay Pyi Taw last month which presented the results of a wide-ranging study of Financial Inclusion in Myanmar known as MAP. The study was carried out by UNDP’s sister agency UNCDF and provided the most current and comprehensive data on financial demand and supply, and regulatory conditions in the country.
The reality today is that around 70% of working-age adults in Myanmar (and an estimated 2.5 billion adults globally) still have no access to formal financial services and rely on unregulated providers, such as money-lenders, at substantially higher cost than regulated providers.
Ladies and gentlemen, the significance of greater Financial Inclusion in Myanmar has been acknowledged by His Excellency President U Thein Sein, who recognized the development of micro savings and credit enterprise as two national development priorities aimed at reducing poverty. In fact, President U Thein Sein endorsed the development of the microfinance sector as early as May 2011. Dramatic increase in the development of the microfinance sector was further sparked with the passing of the microfinance law later that year.
Through contribution to financial inclusion in Myanmar, UNDP and partners have supported the Government’s objectives of poverty reduction and rural development in the country as its services targeted primarily at poor households in rural areas.
The agreements to be signed today put Pact/PGMF on a solid financial foundation and provided the basis to continue sustainable expansion to new areas and to an increasing number of clients. It also brings the project operations under the umbrella of a licensed MFI, regulated under the microfinance law, which will provide greater security to clients.
As part of our continuing responsibility, UNDP will follow the implementation of the agreement jointly with its partners to ensure that the former project funds continue to be used in the best interests of the target population in rural areas.
The signing of the Project-End Memorandum of Understanding with the government and the Asset Transfer Agreement with Pact also mark the achievement of a key objective in the UNDP CPAP - to exit from the provision of retail microfinance. UNDP, mainly through UNCDF, will continue its engagement in the financial sector in Myanmar, providing policy support for a Financial Inclusion Agenda and promoting the development of the sector and the institutional strengthening of service providers.
As an illustration of this support, I would like to mention here the first of a proposed series of knowledge products to be released by UNDP, which is appropriately focused on microfinance. I am pleased to announce the publication of this issue brief by Ko Heinz Willems of UNDP and Ko Paul Luchtenburg of UNCDF and hope it will make a useful contribution to the discussions around the future evolution of the sector.
On behalf of UNDP, I look forward to the evolution of the financial sector in alignment with national priorities.