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Since 2005, Paraguay’s economy had grown 4 percent annually. However, while the economy grew, poverty levels remained stubborn; particularly extreme poverty in the rural areas. Among several factors, low access to formal financial services was identified as a huge part of the problem.

With approximately 3.2 million people without accounts at a formal financial institution (nearly 71% of the population), the government recognized that increasing access to financial services is critically important to the nation’s economic growth, poverty reduction, and reducing income disparities. Thus, financial inclusion was placed at the core of Paraguay’s poverty reduction strategy, and has become one of the pillars of the National Development Plan.

In 2013, the Central Bank of Paraguay (BCP) began collaborating with the World Bank and FIRST Initiative to develop a National Financial Inclusion Strategy (NFIS). The strategy was officially launched at a public event on December 2, 2014, and over the past year, has generated momentum across the country by coordinating existing financial inclusion programs, and introducing new initiatives.

Watch this interview with Paraguay’s Minister of Finance, Mr. Santiago Peña, and learn how Paraguay was able to develop their national strategy to expand financial inclusion, with support from the FIRST Initiative and the World Bank. (Interview Date: April 17, 2015)

Q1: How important is the Financial Inclusion Agenda for Paraguay’s broader social economic goals?

Financial Inclusion has been at the center of Paraguay’s programs on poverty reduction. During the last decade, Paraguay has made major improvements in reducing inequalities. Economic growth has benefited positively the country’s poverty reduction.

Two years ago, we started to develop this idea of having a national strategy on financial inclusion. And it was amazing how we found a lot of efforts of public institutions, private sector institutions that were moving toward this objective, but on an uncoordinated basis.

So, we put this together—and it was amazing how there was a lot of traction and interest to participate on a coordinated effort. So we bring together all this effort and we came to preparing and approving a national strategy that has all these institutions that have already been working, and targeting specific goals, with specific targets for the common interests of the country.

Q2: What are some of the challenges the country faced to achieving its Financial Inclusion Agenda?

I think that the biggest challenge that we faced during this process was capturing the attention of the private sector, which sometimes had a short-term objective, while we were looking towards a long-term objective.

And in the process, we have had to face a lot of resistance from financial institutions. But at the end, they understood that given Paraguay’s characteristics, a country that is large but the density of the population is very small, it makes a lot of sense to use these new technologies that have proven to be successful in other parts of the world.

Q3: What are the next steps to implement the National Strategy for Financial Inclusion (NSFI)?

On the next steps, the National Strategy’s approval in December was just the beginning of the work. Now the challenge is to implement and we still have several areas to move.

There are focus groups that are working to implement and we are all very eager. I think that we will make progress relatively soon on some changes in legislation. We have sent already a draft legislation to upgrade the banking law that will also promote the development of new instruments that promote financial inclusion.

Also, a draft bill that has been prepared for the regulation of a credit bureau. I think that we are more anxious to start measuring the results.  Paraguay has began its report on the global Findex in 2013 and we are very eager to see how the implementation of the Financial Inclusion national strategy is reflected in the improvements on these indicators.

Q4: What has been your experience working with FIRST?

FIRST has played an important role in Paraguay’s effort to first have approved a National Strategy on Financial Inclusion. And we really look forward to continue to engage with the World Bank, with other multi-lateral institutions. There’s a lot of traction. There’s a lot of interest.

The experience with the technical assistance has been amazing in the case of Paraguay. We were able to put together the support of the World Bank and have the National Strategy approved in less than 12 months. And this was amazing not only for us, but also for the staff of the World Bank. They realized the strong commitment, strong ownership from the side of the government of Paraguay in putting this together.

What we can mention about this, is that the staff of the World Bank was up to the challenge of having the momentum and implementing this national strategy with the speed and the intensity that we wanted.

Q5: What are the key lessons you’d share with other countries regarding Financial Inclusion?

On the key lessons that I would mention to other countries that are looking to implement a national strategy, I think that the most important thing is to look inside. To look at the initiatives that are already being put in place, either by public institutions or private institutions.

In the case of Paraguay, moving towards more financial inclusion is one of the pillars in our policy on poverty reduction. So, it is amazing how by achieving or looking to one objective, you are achieving several targets and bringing together coordinated efforts.