Exploring Digital Finance’s Real Promises and Challenges for Development
Join the NGO Committee on Financing for Development on Wednesday, 27 April 2022, 8:00 a.m. – 9:30 a.m. EDT for this official side event to the 2022 ECOSOC Financing for Development Forum.
Register here: https://us02web.zoom.us/meeting/register/tZ0qc-6orjsuGdFhyWHfljp7ZNxV526Onoc7
Speakers:
- Ms. Cina Lawson, Minister of Digital Economy and Transformation of the Republic of Togo (TBC)
- Dr. Purva Khera, Economist, International Monetary Fund
- Mr. Johannes Ehrentraud, Senior Advisor, Financial Stability Institute, Bank for International Settlements
- Ms. Sofie Blakstad, CEO of hiveonline and author of Fintech Revolution: Universal Inclusion in the New Financial Ecosystem
- Ms. Anneleen Vos, Seionr Economic Policy Officer, International Rescue Committee
- Mr. Prabhat Labh, CEO, Grameen Foundation India
- Ms. Mercy Buku, Program Leader, Toronto Center
Moderator: Mx. Anita Thomas, Chair, NGO Committee on FfD, Representative to the UN, Women First International Fund
Co-sponsors: ManUp Campaign, Change Management Solutions, Sisters of Charity Foundation, African Development Interchange Network, IBVM
Background:
The UN Secretary General’s task force on digital finance in its report titled “People’s Money: Harnessing Digitalization to Finance a Sustainable Future,” spells out the transformational impact digital finance can have on sustainable development. Providing relief for millions around the world, supporting businesses, and protecting jobs and livelihoods, digital finance served as a lifeline during the COVID-19 pandemic. A World Bank tally of policy responses to the pandemic finds that at least 58 governments in developing countries used digital payments to deliver COVID-19 relief, of which 36 countries made payments into fully transactional accounts that were being used for saving beyond simply withdrawing cash. According to the GSMA, international remittances processed via mobile money increased by 65 percent in 2020.
Proponents of digital finance highlight its strong capabilities to reduce transaction costs, the potential of Artificial Intelligence to provide fair and equitable treatment of credit applicants, and the scalability of cloud technology, through the use of blockchain technology, to allow consumers to transact remotely and seamlessly across multiple platforms.
While the experience of COVID-19 has proven that digitalization can transform economies and lives, it needs to be shaped with both its advantages and potential risks in mind in order to bring everyone into the digital age. For technology to benefit everyone, private sector innovation must be supported by the appropriate public goods such as the public provision of foundational infrastructure, access to electricity, mobile and internet coverage.
As in the case of any disruptive technology, without combining technological advances with sound policy measures, digital technology cannot deliver on its potential to meaningfully advance financial inclusion for everyone, including the more than 2 billion unbanked people globally. Delivering on promises to advance financial inclusion can only be considered meaningful when the account holder has a fully functional account that they utilize to save, make payments, obtain manageable credit, and mitigate economic risks and is simply not utilized to withdraw cash from cash transfers from the government, which is overwhelmingly the case at this time.
By examining successful strategies that maximize digital finance’s potential while minimizing risks to the financial sector, government revenues, and at-risk populations, attendees will gain a better understanding of how digital finance can sustainably advance development objectives.
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CoNGO Notes: The NGO Committee on Financing for Development is a Substantive Committee of the Conference of NGOs in Consultative Relationship with the United Nations.
