BRINGING SMART POLICIES TO LIFEHAITI: DIGITAL FINANCIAL SERVICES (SFD) MEMBER SERIES: FINANCIAL INCLUSION JOURNEY INTRODUCTION 3FOREWORD 4SUMMARY 5CONTEXTUAL ELEMENTS 5The Central Bank of Haiti (BRH) innovates on payment system issues 5The cell phone: A new payment method in Haiti 5The new actors 5Legislation in force 6Options are geared towards a Bank-Led Model 6Strategic financial transactions are authorized 6THE DEVELOPMENT OF DIGITAL FINANCIAL SERVICES IN HAITI: THE MAIN ACHIEVEMENTS 7The BRH provides a framework for Digital Financial Services in Haiti 7New partnerships for financial inclusion 7The mobile wallet as an alternative to cash 7The evolution of the digital market in figures 8LESSONS LEARNED AND PERSPECTIVES 10Key factors for the dissemination of Digital Financial Services (SFD) in Haiti 10Limitations and challenges for Digital Financial Services in Haiti 10Lessons learned and perspectives 11© 2018 (August), Alliance for Financial Inclusion. All rights reserved.CONTENTSLIST OF ACRONYMS USEDAFI Alliance for Financial Inclusion ATM Automatic Teller MachinesBM World Bank BNC National Credit BankBRH Central Bank of Haiti CRS Catholic Relief Services EDH Haitian Electricity CompanyHIFIVE Projectforintegratedfinancing“tovaluechains and entrepreneurs” in Haiti HMMI Haitian Mobile Money Initiative NICTs New information and communication technologies IMF MicrofinanceInstitutionsWFP World Food ProgramPRONAP National processor of paymentsRTGS Real-Time Gross settlement systemSFD Digital Financial Services SPIH Haitian Interbank payment system USAID United States Agency for International DevelopmentBIBLIOGRAPHICAL REFERENCESLEGISLATIVE TEXTS> Electronic Exchange Act, of March 17, 2017> Law on the electronic signature of March 17, 2017 > Lawonbanksandotherfinancialinstitutions,May14,2012> Guidelines relating to online banking in September 2010> Additional note to the guidelines on online banking in February 2011> NationalRetailPaymentsystemtosupportfinancialinclusion,AFI2017> Circular 101-3, of August 11, 2017> Circular 109, April 3, 2017> HaitianConstitutionof1987modifiedARTICLES> Max Etienne, Haitian Monetary and Financial Code, C3 Editions, 2013> Law establishing the Central Bank of Haiti (BRH) > BEAULIEU Charles A., The Haitian banking system, Ediciones Natal, 1987> BERTRAND Michel G., Guide to the Haitian banking circuit, Ediciones Natal, 2002> Thierry BONNEAU, Banking Law, Montchrestien, 2009WEB SITES CONSULTED > brh.ht May 11, 2018> afi-global/May11,2018> cgap/sites/default/files/eg2p_Haiti.pdfMay11,2018> unglobalcompact/system/attachments/15660/original/120531_Dalberg_UNGC_COP_2012.pdf?1338447178May11,2018> Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar, and Jake Hess, The Global Findex Database 2017: Measuring Financial Inclusion and the FinTech Revolution, World Bank: Washington, DC, 2018.STUDIES AND PRESENTATIONS> Mapping Digital Financial Services Systems: Sector update and recommendation, USAID/DAI, February 20183AFI MEMBER SERIES HAITIINTRODUCTIONThe Alliance for Financial Inclusion (AFI), a network owned and driven by members with acommonobjectiveofscalingupfinancialinclusion at country level, has been able to facilitate the implementation of impactful policy changes at country level through its cooperative model that imbeds peer learning and peer transformation. It has been a decade now since the network began this quest to addresstheglobalchallengeoffinancialexclusion. We have witnessed tremendous achievementsinfinancialinclusionfromourmembership, driven by practical policy solutions that draw on lessons across the network. AFI members have been focusing on ways to support countries in designing and implementing high-impact, tailor made solutions that meet their needs and challenges. These country-led approaches have created ownership and a sense of pride as ever more ambitious targets are set and achieved. It is imperative that such lessons are highlighted from each members perspective on how AFIs peer learning approach and in-country implementation have been instrumental in facilitating transformation. Thus, we feature such practical lessons in this Members Series publication.The Members Series serves to elevate the members financialinclusionachievementsandbringtothefore,keypolicylessonsthatwillbenefitothermemberswhoarepursuing similar objectives. AFIs ethos of cooperation and knowledgesharingisservedbetterwhenthefinancialinclusion journeys of our members are recorded and shared amongst the network, and beyond. AFI membership, which represents about 85% of global unbanked, is uniquely positioned to tackle the global financialinclusionchallenges.Wehaveenormouslessonsfrom the network that need to be highlighted and amplified.Theserangefromtheeffectiveuseoftechnology, application of national and regional coordinatingstructures,tothepursuitofspecificfinancialinclusion enablers that are unique to countries and regions. We are proud of the leaders in our member institutions, who through their unwavering efforts have been able to steernational-widesupportinaddressingfinancialinclusion challenges. This Member Series publication will continue to feature the unique journeys of our members in addressing their financialinclusionchallenges.Thediversityofthenetworkhas the advantages of highlighting multiple approaches to tacklethecommongoaloffinancialexclusion.Join me in this Series and lets journey with our member Banque de la Republique dHaiti (Central Bank of Haiti) as theychampionthetransformationofthefinancialinclusionlandscape in Haiti. Dr. Alfred HannigExecutive Director, Alliance for Financial Inclusion4AFI MEMBER SERIES HAITIFOREWORDFinancial institutions play an essential role in economic life because of their capacity for monetary creation, mobilizing savings, as wellasfinancialintermediationrelationshipsthrough the products and services they offer their clients. The access to, and use of, adequatefinancialproductsandservicesallowshouseholds to improve their living conditions, and lets companies develop their activities in a better way. It is true, however, that lack of accesstofinancialproductsandservicescanlimit the ability of economic agents to take full advantage of certain market opportunities. Unfortunately,despiteeffortstomodernizethefinancialsector in Haiti, a large part of the population lacks access tobasicfinancialservices.ThenumberofHaitianswhoareincludedfinanciallyisstillrelativelylow.Accordingtothe Financial Inclusion Survey (Global Findex)1carried out by the World Bank (WB), the percentage of the population with a bank account increased from 22% in 2011 to 32% in 2017.2Similarly, because of the high costs of creating branchesoffinancialinstitutionsinremoteanddifficult-to-access areas, these areas continue to have an inadequate level of coverage or simply lack services altogether. Through the Central Bank of Haiti (BRH), the country is a member of the Alliance for Financial Inclusion (AFI). Encouraged by the exchanging of information, availability of data and the feedback provided on the different strategiesusedbyothercountriestopromotefinancialinclusion at the level of different AFI platforms, and motivated by the trainings provided with the support of the Alliance, the Haitian representatives managed to comply with the commitments of the Maya Declaration. Through the launch of the National Financial Inclusion Strategy(NFIS)in2014,theHaitianCentralBankmanagedtomeetoneofthefirstcommitments.In2018,itassumedfour Maya commitments focused on different issues. The commitments were generated around the following topics: financialeducation,financialdatacollection,genderandDigital Financial Services (SFD). In relation to these issues, Haiti pledged to achieve the following objectives:1 Develop a National Financial Education Strategy (February 2019);2 Tocarryoutageospatialmappingoffinancialinclusion.This was carried out in May 2018;3 Generate disaggregated data on the access to and use of financialproductsandservicesforspecificgroups,suchas womens;4 Continuewiththemodernizationofthe“NationalProcessor of Payments” (PRONAP) payment system.Today, more than ever, it is important to ensure access tofinancialproductsandservicestothevastmajorityofthe population, in order to promote sustained economic growthandworktowardsfinancialstability.TheCentralBankofHaitiisconvincedthattheobjectivesoffinancialinclusion cannot be achieved without the participation of the different national actors. The path to travel requires both an individual and collective effort. BRH is also convinced that advances in New Information and Communication Technologies (NICTS) can help to reduce thefinancialexclusiongapbynotonlyallowingmoreimportantaccesstothefinancialsystem,butalsobypromotingtheavailabilityofinnovativefinancialproductsadapted to the everyday reality of families living in isolated communities, and for whom the level of service is insufficient.For the Central Bank of HaitiGeorgette Jean-Loui Director General1 Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar and Jake Hess. 20182 databank.worldbank/data/reports.aspx?source=global-financial-inclusion5AFI MEMBER SERIES HAITIWith the Maya Declaration of 2011, we opted for the use of technological tools in SFD. To this end, new business models have been created, which allow more people not in the banking systemtobeabletocarryoutfinancialtransactions. This is focused on developing a series of mechanisms and means to facilitate accesstocredit,savingsandotherfinancialservices. These technological innovations also enable the provision ofmoreattractiveandfasterbanking,andfinancialservices through a multitude of programs and applications. This is how it is possible to collect secure and reliable data tomeasurethestateoffinancialinclusion,establishnewobjectives, identify obstacles, develop effective policies, and conduct monitoring and the evaluation of policy impacts. At the international level, these digital initiatives are gaining momentum. In 2017, the number of registered mobilemoneyaccountsincreasedby24.6%,thevolumeofmobilemoneytransactionsincreasedby24.8%andthevalue of transactions using mobile money in US dollars was 21.3 percent. The number of mobile money accounts registeredworldwidehasmultipliedbyafactoroffive,increasing from US$150 million to $7003million between 2012 and 2017.WhentheBRHlaunchedtheNFISin2014,accesstofinancialproductsandserviceswasscarcecomparedtoother economies in the region. The strategy has been adapted to the needs of the Haitian population and structuredaroundcredit,financialservicesofconvenience,education, consumer protection, and the strengthening of financialinstitutions,aswellassupportinfrastructure.The objectives developed from this strategy aim to optimize the capacity of the population to generate income in order to improve quality of life, promoting economic growth and individual empowerment. The said objectiveswereidentifiedandsomeareintheprocessofimplementation. In parallel, the BRH implemented modernization works for the payments system by means of the creation of a “nationalswitch”:thePRONAP,in2007.Transactionsmadewith existing payment methods, such as debit cards, prepaid cards, credit cards, cell phones, among others, was processed through the PRONAP. Likewise, the BRH initiated a process of continuous adaptation to the regulations applicable to the new technological tendencies, within the framework of the SFD.However,thelowrateoffinancialliteracyremainsasignificantobstacletoovercome,inorderforSFDtodrivefinancialinclusioninHaiti.Consumerprotectionandfinancialeducationarechallengestobefacedinordertobuildconfidenceinfinancialproductsandservices.SUMMARY 3 GSMA report, 20184 Source:BRHTHE CENTRAL BANK OF HAITI (BRH) INNOVATES ON PAYMENT SYSTEM ISSUESDigital Financial Services (SFD) in Haiti dates back to at least 1996, with the introduction of Visa and Mastercard credit cards into the market. As part of the modernization of the payments system in the country, the BRH launched a project called the National Payments Processor (PRONAP) in 2007. This project allowed the bank to establish a “Real-timeGrosssettlementsystem”(RTGS),knownastheHaitian Interbank payment system (SPIH). The SPIH allowed electronic funds transactions to be carried out between all banks, in order to facilitate customer access to electronic payment services at affordable rates.THE CELL PHONE: A NEW PAYMENT METHOD IN HAITIIn Haiti, the cell phone market is led by two operators: Digicel and Natcom. These two operators have more than six million SIM cards in circulation and more than four million subscribers. Therefore, according to estimates, the penetrationrateis62.5%ofthepopulation,with42%subscribers. This market represents a great opportunity for financialinclusion,consideringonly32%ofthepopulationhas a bank account.Until 1996, credit card transactions in Haiti were executed through the Visa and MasterCard networks and complied with the international standards that they established.Debit cards issued by local commercial banks only allow transactions in local currency. Their operation is governed by modalities established by the issuing banks, in accordance with the prudential rules established by the BRH.However,thefinancialtransactionsprocessedthroughthe SPIH can be made in different currencies, and the costs are pre-established by the BRH.4With the exception of these initiatives, SFD is not very common in Haiti. However, after the earthquake of 2010, the panorama changed. The phone became the new mediumusedforcertainauthorizedfinancialtransactions.THE NEW ACTORS Following the January 2010 earthquake, the Bill > Full wallet with an initial maximum amount of 10,000.00 HTG (approximately $153.00 USD, with an exchange rate of 65 gourdes for $1);> Maximum deposit balance per individual account: 10,000.00 HTG (approximately $220.00 USD, with an exchange rate of 65 gourdes for $1);> Maximum amount for daily debit transaction: 10,000.00 HTG (approximately $153.00 USD, with an exchange rate of 65 gourdes for $1);> The cumulative monthly transaction cannot exceed 60,000.00 HTG (approximately $923.00 USD with an exchange rate of 65 gourdes for $1).Itshouldbenotedthatthelegalprovisions,thedefinitionof the model and the presence of agents are appropriate, especially in rural areas and even in urban areas, for the distribution of convenient s