Fiji’s Family Assistance Program

Fiji is a multi-ethnic country in the South Pacific — an archipelago home to a population of 883,000. The Government of Fiji has taken an active role in developing a financially inclusive ecosystem and a key component has been the implementation of the first electronic government-to-person (G2P) payment program through the Department of Social Welfare (DSW). Fiji’s electronic G2P payments program, linked to a savings product, presented a unique opportunity to promote two key pillars of the governmental policy guidelines included in the Peoples Charter for Change, Peace and Progress: (i) reducing poverty and (ii) enhancing public sector efficiency and service delivery.

For any government, minimizing cost while increasing efficiency and performance is a priority. However, with respect to G2P payments, there are many challenges. For instance, in Fiji (and often elsewhere), the payment of social welfare benefits has, for more than 100 years, been manually processed using vouchers. A huge amount of labor and time is required to print, verify, package and distribute more than 48,000 vouchers annually to DSW Offices around the country – no small feat when you take into account the 332 islands which make up Fiji. In addition, system abuse and continuous re-issuance of lost vouchers resulted in additional costs to the government. Perhaps more importantly, recipients spent valuable time and money to reach often distant DSW Offices to receive their payments. Moreover, the only option for unbanked recipients was to withdraw the payment in cash, depriving them of the ability to safely store money and earn interest.

A good example of a dysfunctional G2P program was the Family Assistance (FA) program, one of several Social Protection programs in Fiji. It allocates $15m FJD (approximately 8.2m USD) annually as income support to low-income families. For the reasons referenced earlier, the mechanics involved in disbursing these funds has historically been lethargic, inefficient and costly. In an effort to promote evidence-based policy, the government joined forces with the Pacific Financial Inclusion Program (PFIP) and conducted an Activity Based Costing (ABC) Analysis. Based on this government research, the Minister of Social Welfare recommended an overhaul to the FA Program‘s payment delivery — a recommendation which not only had the blessing of the Reserve Bank of Fiji (RBF-the central bank) but also the formal endorsement of the Fijian Cabinet.

In adopting a new G2P payments system – based on the use of magnetic strip cards – the Fijian government’s purpose was not only to reduce operational costs but also to encourage savings among recipients and provide an entry point into the formal financial sector and its wide variety of products. Since the implementation of the new payments program, the government has enrolled 81% of all recipients in electronic delivery, significantly reducing the workload for staff, enabling more time to review individual case files and identify potential cases for graduation from state welfare assistance. While the benefits to government have been substantial, the electronic G2P payments program has also helped promote financial inclusion by providing access to a no-fee bank account to previously unbanked recipients, including those living in isolated areas. For more details on the electronic G2P payment program, undertaken in partnership with Westpac Banking Corporation of Australia,

There were many challenges in the transition process from manual to electronic G2P payments, including consumer education and identification, intergovernmental coordination and lack of technical expertise. Nevertheless , the Fijian government has learned some valuable lessons. First, electronic G2P payments can streamline government-wide usage of an electronic database. For example, the G2P payments database is now linked with the databases of other government agencies such as those of the Births, Deaths and Marriages (BDM) department and the Fiji National Provident Fund which administers financial security for retirees. Second, it is a myth that the elderly would resist new technology – although there is a need for continuous financial education for G2P payment recipients. And third, the financial infrastructure must be developed such that access to G2P payments is available through widespread points-of-sale (POS) devices. For Fiji, there was an added advantage: before the implementation of the program, the RBF had required that all commercial banks have interoperable POS devices in place, allowing a customer of any bank to withdraw funds from a POS machine in any store rather than going to their bank or an ATM machine.

The ability of G2P programs to positively impact financial inclusion depends largely on government commitment in a context of collaboration among all stakeholders including not only various governmental bodies but also donors, NGOs, commercial banks and other private sector actors. The coordination of implementing agencies is also critical – as is having the required skill set and expertise in rolling out projects.

Fiji is proud of its savings-linked electronic G2P payment system. Not only does the government now provide government payments more efficiently and cheaply, but it also does so in a manner that provides financial access by bringing previously unbanked recipients into the formal financial sector, allowing them to set goals for their future.