Policies for financial inclusion of elderly vital

By Gamini Warushamana

Demographic changes with the increasing elderly population in developing countries has compelled us to bring policies for financial inclusion of the elderly and give them the opportunity to contribute to economic development, senior financial adviser, Medical Committee Netherlands-Vietnam (MCNV), Tran Le Heu He told a seminar in Colombo last week.

The seminar on the theme ‘Effectiveness of micro finance for senior citizens’ was organised by HelpAge Sri Lanka and the Microfinance Practitioners’ Association. Heu said that on the issue of aging population, Sri Lanka and Vietnam have lot of similarities and Sri Lanka has already felt its impact.

The elderly population has been increasing in both countries due to various economic and social changes. Therefore, Sri Lanka needs to develop the microfinance sector and help elderly people to contribute to the country's economy.

Financial inclusion means development of appropriate financial services for marginalised people.

For financial inclusion there should be accessibility to financial services.

Access should be easy without barriers. It should also be affordable and not too expensive.

It must be ensured that these services are only used by the marginalised people and not others.

Clients' ability to manage the finance, diversification of financial products for different marginalised groups such as women, senior citizens and disabled and simplicity of the service delivery are the other features, he said.

Sri Lanka's elderly population was 13.1 percent according to the 2011population census and has been projected to increase to 17.8 percent in 2021 and 21.9 percent in 2031 and the age dependency ratio too is increasing.

There is a similar trend in Vietnam and today, the pension and other allowances received by senior citizens is only sufficient for 20 percent of their expenses. Therefore, people in the age group 60-69 should be allowed to work if they are willing.

Give them land and capital for self-employment and help contribute to the economy, he said.

In most countries, age has become a barrier for microfinance lending and lending agencies are reluctant to lend to senior citizens. Although there are risks when considering all factors, lending to senior citizens is effective.

Elders need good health, social and economic inclusion.

In Vietnam, a micro lending program to the grandparents of the HIV-infected families has proved to be a success. There are different models that can be used to minimise risk such as forming credit groups with senior citizens and young people, Hue said.

Executive director of HelpAge Sri Lanka, Samantha Liyanawaduge said that the microfinance sector in Sri Lanka is growing fast and the value of the sector is estimated at Rs.60 billion with over 14,000 financial institutions involved.

However, in Sri Lanka financial institutions do not lend money to people above 60.

HelpAge Sri Lanka last year launched a pilot project with Berendina Microfinance and the project has been successful and the repayment rate is 100 percent, he said.