Comoros Financial Inclusion Project

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This project is designed to support financial sector development that is consistent with inclusive growth. The project aims “To increase access to and usage of financial services for adults” through investments and support to improve payment systems, access to financial services, and institutional capacity of the supervisor to promote financial sector stability and integrity. Component 1 supports Increasing Access to and Usage of Financial Services through Automating Interbank Transactions and Develop Digital Payment Interoperability, Facilitating Access and Usage of Digital Financial Services, and Enhancing Financial Stability and Integrity to Facilitate Usage of to Financial Services. Moreover, to make/receive digital payments, adults and businesses need accounts, thus the project will help finance both the systems to make digital payments and physical obtainment of accounts. Component 2 will bolster project management.Sub-component 1.1: Automate Interbank Transactions and Develop Digital Payment Interoperability will lead to building the foundation for an efficient and inclusive financial system. The sub-component will automate interbank transactions (checks and wires), hence, it will finance the establishment of the ATS+ and TA to support its procurement, and to establish and build its unit’s capacity. It also aims to establish and develop digital payment interoperability by financing the national retail payment switch (see Annex 1 for table on differences of ATS+ and switch), its operating costs in the initial year, TA for its procurement, creation of its unit, capacity building for stakeholders (BCC and participants, including the switch implementation committee), and its implementation. Lastly, the sub-component will provide support infrastructure for the national payment system, which includes network access, data centers and emergency sites, a core banking system for BCC, and sub-component management and procurement support. Sub-component 1.2: Facilitate Access and Usage of Digital Financial Services through: the design and implementation of a financial and digital literacy program with a sub-focus on women; support to and monitoring of financial institutions’ efforts to provide access to BTAs; hardware and software for financial institutions to develop agent banking and merchant networks; hardware and software with operating cost support and capacity building for the digitalization of financial institutions; support to government and institutions with large reoccurring transaction flows, including agriculture, remittances, and any COVID-19 related transfers, to support digital payments; hardware and software for the CRC, and capacity building; and payment system regulatory and oversight framework support.Sub-component 1.3: Enhance Financial Stability and Integrity to Facilitate Usage of Financial Services through increased confidence in the financial sector. On stability, the project will finance a banking application for automated reporting and risk analysis to help BCC conduct its financial surveillance, as well as training on how to utilize the system, a resident advisor to assist DSBR, including in building risk-based supervision capacity, and a diagnostic and upgrade of the public credit registry. On integrity, the project will finance TA to enhance the integrity of the financial system as informed by the NRA that is being conducted. As it is likely that the NRA will conclude with recommendations with a wide ranging scope, only reforms specific to the integrity of the financial system will be supported in this IPF. Additionally, the project will finance capacity building for the reinforcement of the financial analysis of suspicious transactions by banks and the Financial Intelligence Unit (FIU).Component 2 will support project management and consultants to support project implementation and Monitoring and Evaluation (M&E), along with support for the management of the payment systems’ governance bodies. Moreover, it will finance: a project coordinator; procurement consultant; accounting, audit, and environmental and social safeguard support; BCC capacity building in DFS; and M&E support. It will also provide financing for capacity building for the National Payments Council (NPC).