Regulation to Foster Postal Financial Inclusion

Apart from the European Commission studies and the work carried out by the European Regulators Group for Postal Service at European Union (EU) level, little comparative work has been carried out recently on the legal and regulatory framework underpinning postal financial services,and still less on how effective this framework is in fostering financial inclusion. In order to understand how a legal and regulatory framework can impact the role of the post office (post) in promoting financial inclusion, four case studies were conducted. They relate to developing countries whose organizational and regulatory frameworks are significantly different, despite a number of common country features, as follows. • The contribution of the posts of Morocco, Algeria, and Tunisia to financial inclusion is significant. Initially, they had strong similarities due to the French influence. Since the beginning of the millennium, each country has adopted different approaches to modernize their postal infrastructure, as well as to tackle financial inclusion. • Viet Nam has the fastest growing economy in Southeast Asia. Its postal organization was also originally influenced by the French model. Unlike the three Maghreb countries in which posts and postal financial institutions are in state hands, financial service activities were transferred under an exclusive distribution agreement to a private bank of which the post is a small shareholder. The four analyses, with their limitations, especially in relation to the opacity of data and the desk research nature of the project, relate to four developing countries endowed originally with a relatively dense postal network, quasi-universal delivery service and benefitting from the trust of the citizens, especially those on low-income. In each country the postal network has been seen as an asset for financial inclusion and not a liability. Governments have been committed to financial inclusion although it has translated into very different policies and the use of different tools. Each post is fully state owned with Viet Nam the exception, being a post bank that is private. The policies adopted clearly show that politics trumps economics. Reforms, to be successful, have to fit into the distinctive political economies and priorities and, throughout the evolution process, involve the whole political spectrum of measures: state interventionist, pro-market or pro-private.