The Philippines ranks third out of 55 countries for having the best enabling environment for financial inclusion, a report by the Economist Intelligence Unit (EIU) said.
According to the EIU’s “Global Microscope 2014” report, the Philippines scored 79, an improvement from its 67.9 score at fourth place last year.
The Philippines followed first-placer Peru and second-ranked Columbia, and bested other countries in the top 10 including Chile, India, Mexico, Bolivia, Pakistan, Cambodia and Tanzania.
The report, which assesses the regulatory environment for financial inclusion across 12 indicators, highlighted the efforts made by the Bangko Sentral ng Pilipinas (BSP) in promoting financial inclusion in the Philippines.
“The BSP continues to promote an enabling environment for financial inclusion through the issuance of various regulations and circulars, which seek to encourage new entrants of financial services providers and products that serve the poor, while also ensuring the safe provision of such services,” it said.
Through the BSP’s microfinance strategy, the Global Microscope 2014 also noted that the private sector played a greater role in the provision of financial services, resulting in a wider range of products, including micro-deposits, micro-enterprise loans and micro-insurance.
The EIU report also acknowledged other recent developments in the country aimed at promoting financial inclusion, such as the establishment of an Inclusive Finance Steering Committee; approval of a general consumer-protection framework in May 2014; and the establishment of the Credit Information Corporation, which is expected to be fully operational by December 2014.
Large ‘unbanked’ population
However, the publication stressed that while there has been a sustained increase in the number of financial-services providers and products, distribution of these is skewed toward highly populated and urbanized areas.
“There is still much to be done, as only 26.6 percent of the adult population (over age 15) has a deposit account, according to the 2011 World Bank Global Financial Inclusion (Global Findex) Database,” it said.
“In an archipelago made up of more than 7,000 islands, there are huge financial, security and logistical challenges in reaching the poor and unbanked,” it said.
“Lastly, financial literacy continues to be a problem, as many Filipinos do not understand or value the importance of savings,” the report concluded.