UN development finance talks should include access to banking services

Those gathering at the United Nations General Assembly in New York later today for the High-level Dialogue on Financing for Development will be acutely aware that the global migration crisis is getting worse rather than better.

Nowhere is this problem more prevalent than at the southern border of the United States, where Central American families continue to gather in great numbers.

Part of the solution to stemming migration lies with giving small businesses the financial services they need to succeed. I hope that today's discussion on financing for development features concrete ways that the United Nations can help.

Small and medium enterprises (SMEs) are integral to economies around the world, but particularly so in Central America. SMEs generate jobs, incomes and tax revenues, and enable individuals to escape poverty — crucial in a region that faces significant socioeconomic challenges. Often the breeding grounds for aspiring entrepreneurs, SMEs bring new products and services to market, drive technological advancements and promote competition. They enable countries to diversify from traditional industries, helping economies to be more resilient. They drive exports to new markets, earning foreign currencies. Crucially, SMEs can emerge anywhere, bringing economic activity to underdeveloped areas and, in the case of Central America, discouraging migration to the U.S. border. In short, they are the lifeblood of Central America.

But in Central America, SMEs face small domestic markets, poor transportation networks, unreliable power supplies and patchy Wi-Fi, all compounded by high crime rates, corruption, social unrest and political instability. The United Nations and its member countries — particularly the United States — can help by enabling financial institutions in Central America to provide small businesses with access to better financial services.

Indeed, encouraging the growth of financial services in developing countries supports the U.N.'s 2030 Agenda for Sustainable Development. Expanding financial inclusion is a critical part of reducing poverty and inequality. Banks' support for farmers can help eliminate hunger. By promoting financial products and services that cater specifically to women, banks can ensure more gender equality in the financial sector. Banks support job creation and foster entrepreneurship. They finance infrastructure investment and support renewable energy projects.

But they could be doing more.

The U.N. ought to provide more technical assistance and capacity building to strengthen the regulatory framework and governance of Central America's financial sector, ensuring its stability, resilience and usefulness to small businesses. With its network of specialized agencies and resources, the U.N. can encourage greater collaboration on technology transfers and support for entrepreneurs. Helping to eliminate technological barriers would enable Central American banks to create products better suited to local markets, including digital marketing, e-commerce and financial education platforms.

Promoting initiatives to increase financial inclusion — such as basic banking services, microcredit facilities and digital financial services — would help marginalized and underserved populations. The U.N. is well positioned to provide expertise and support in this area.

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Microfinance is a powerful tool for alleviating poverty and encouraging economic development, especially in low- and middle-income countries. The United Nations should support the expansion of microfinance by encouraging member countries to promote favorable policies and regulations, helping Central America set up or improve its microfinance programs and directly investing in or providing grants to microfinance institutions.

Through agencies like the United Nations Environment Program (UNEP), the U.N. can provide guidelines and best practices for sustainable banking, helping banks in Central America to finance projects that are both profitable and environmentally responsible.

Central America would benefit from better harmonization of international rules and regulations, and in the improved design of incentives for investment in green energy projects and public infrastructure. The U.N. can foster collaboration among Central American countries to create a harmonized banking and financial system, facilitating cross-border trade and investments.

We need better international cooperation to fight against illicit financial flows and strengthen good practices in banking matters. Given Central America's challenges with organized crime and corruption, the U.N. can provide expertise and resources to strengthen AML (anti-money-laundering) and CFT (combating the financing of terrorism) frameworks, ensuring a clean and credible financial sector.

The lack of capital markets and investment finance in Central America continues to be a problem. Western nations ought to provide assistance to Central American banking systems, financial regulation authorities and stock exchanges to advance our financial markets. But rather than simply reproducing U.S. capital markets, we need inclusive and sustainable systems that cater to the capital and financing needs of small businesses, thereby boosting economic growth, supporting job growth and reducing poverty.

The U.N. can support trade agreements that provide greater support for small businesses by promoting their products, reducing tariffs, simplifying custom procedures and providing access to new markets.

International capital flows are of vital importance for Central American banks. We need stronger strategic alliances with financial institutions in the United States and Europe in order to offer more opportunities and financial services to Central American business owners and their families.

Finally, the United Nations has the authority to collaborate with international financial institutions, like the World Bank or the International Monetary Fund (IMF), to provide monetary support, expertise and policy recommendations. And as a powerful international network of aid agencies, the United Nations ought to be acting as a champion of small businesses.

The United Nations General Assembly will debate many issues in New York this week. None is more important than today's High-level Dialogue on Financing for Development. Helping Central American banks to better support their citizens would enable the U.N. to make considerable progress on its 2030 Agenda for Sustainable Development in this part of the world.