Costa Rica uses social programs to increase financial inclusion

Costa Rica's government said that 180,000 individuals have been incorporated into the banking sector via social program initiatives at social assistance institute IMAS and the CCSS, a public company engaged in providing social security for workers in Costa Rica.

A statement from the office of President Carlos Alvarado said the increase in banking penetration stems from IMAS and CCSS coordinating the opening of savings accounts with simplified procedures at no cost, efforts designed to ensure greater financial inclusion.

"While it is true that about 70% of adults in Costa Rica have a bank account, there is still a great challenge to achieve higher levels of banking [penetration],” said Edna Camacho, coordinator for the president’s economic team.

“For this reason, the government is making this effort with the segment of unbanked beneficiaries of these social programs, taking advantage of the advantages that exist today for the opening of deposit accounts in the national financial system,” added Camacho.

For his part, Alvarado said with the actions, “We are taking a qualitative leap with the inclusion of these families in the national financial system, which will allow them to save, access credit and even start new businesses."

The government said the opening of accounts and delivery of the debit cards tied to receiving benefits is carried out with an interdisciplinary team consisting of 2,000 employees in the nation’s banking system.

Connecting banking penetration to social programs is a strategy also being employed in Mexico, with President Andrés Manuel López Obrador spearheading a similar initiative in his first months in office with the delivery of debit cards associated with a new welfare ministry, currently in development.

As part of the Costa Rican efforts to bring financial inclusion to the state's transfer programs, 40,000 new beneficiaries of the Avancemos program and the non-contributory pension regime (RNC) are currently receiving their transfers in a bank account.

RNC assistance is primarily for elderly people that did not contribute to any particular pension regime during their working years.

The government said that 100% of the RNC pensioners (120,000) are now banked and in the coming months, a timetable will be implemented for the opening of the approximately 20,000 remaining accounts of youth education assistance program Avancemos and scholarship program FONABE.

In the case of FONABE, the process would begin in parallel to the transfer of the student scholarship administration operation for IMAS.

Social development and inclusion minister Juan Luis Bermúdez highlighted that the government's efforts in making the savings accounts very simple to open with no extra cost for the beneficiaries.