The UN Capital Development Fund (UNCDF) makes public and private finance work for the poor in the world’s 47 least developed countries. Under the strategy—“Leaving No One Behind in the Digital Era”—UNCDF contributes to the development of inclusive digital economies in Africa, Asia and the Pacific. In other words, our ambition is to empower millions of people by 2024 to use innovative digital services while contributing to the SDGs.

By applying a market development approach at the national level, our digital strategy is designed to create a “crowding-in” effect that will incentivize digital finance and digital innovation enablers to enter markets or develop new business models they may otherwise overlook, while continuously seeking and addressing market challenges. This approach looks at all the barriers that prevent people in LDCs from progressing beyond basic mobile services like calling, messaging or money transfers. We are thus looking at leveraging technology and the digital rails (policy, digital infrastructure, payments) to mainstream digital financial inclusion while developing impactful services in the sectors of finance, agriculture, health, education, and energy as well as e-commerce.

Our market development approach is particularly efficient thanks to the in-country presence of UNCDF, which is defined by experts in various domains (policy, payment, innovation), sectors (finance, agriculture, energy, health, education) and segments (women, youth, MSMEs, migrants, refugees). This presence allows our team to design a tailored approach to each market that includes engaging with both the public and the private sector on the barriers that prevent the development of inclusive digital economies.

In lower income countries with poor infrastructure and regulatory environments, digital finance providers of all types have been hesitant to invest in reaching low income market segments, particularly youth, women and smallholder farmers.

• Through the “Leaving No One Behind in the Digital Era” strategy, UNCDF provides a mix of targeted policy, financial and technical support to a range of stakeholders to overcome these barriers in LDCs.
• We also address key policy and regulatory impediments in partnership with central banks and ministries. At the same time, we work intently with banks, mobile network operators, payment service providers, microfinance institutions, fintech companies and the companies that use their services to help them design, to ensure that the benefits of the digital revolution are experienced by those who need it most. A growing part of our work is to support companies in becoming more customer centric and innovative in how they provide or use digital finance and payments.

Digital financial services such as mobile money and agent banking have reached a scale that contributes to building the rails for a next generation of digital services and for e-commerce. UNCDF has played an important role in the establishment of these rails through its initiatives that have connected 18 million people in Africa, Asia and the Pacific to the financial ecosystem. However, to fully reap the benefits of these rails and to ensure e-commerce or other services in energy, education, health or agriculture can blossom, a number of challenges still need to be addressed. In most LDCs, the poor network coverage or lack of infrastructure are among these challenges, together with the issue of accessing a phone.

Beyond access to data and phone ownership, the other challenges pertain to the payment systems and the distribution network. All of these challenges are at the heart of one of our strategy workstreams (Open Digital Payment Ecosystem) that aims at increasing the percentage of the population actively using digital payment services. The aim of this workstream is to accelerate the development of interoperable and open payment ecosystems that make services accessible and sustainable for individuals, providers and enterprises. Supporting payment service providers to expand their agent networks to the next mile, developing customer centric payment services to reach the unbanked, fostering the development of interoperable systems, and advancing open APIs (Application Program Interface) on payment and data are amongst the projects we support, which will benefit the development of e-commerce in the near future. The existence of such an open ecosystem can increase digital payment usage and create the business case to develop, test and scale up more digital innovations, with the potential of speeding the path to reach the SDGs.

More specifically on e-commerce another critical challenge is the lack or poor physical infrastructure and logistics in LDC countries. Poor road infrastructure and logistics services make it impossible to deliver goods safely and efficiently. We are supporting start-ups to develop innovative services to reach the next mile, as well as working in some countries with our UNCDF colleagues to improve infrastructure at local levels. But most of the time, all of these challenges require strong partnerships with other entities. To solve such challenges, we seek to catalyze investments in last mile distribution infrastructure and build coalitions to expand open and shared digital infrastructure.

The development of an inclusive digital economy relies on partnerships that blend funding and expertise from both the public and the private sector. No one can achieve such an ambitious goal alone, which is why we are looking forward to leveraging the complementarities we can find in the UN system and in other development agencies as well as the private sector. The “e-trade for all” partnership is a great platform to reach the partners that share the same vision while having expertise and instruments that complement ours. For instance, our capital mandate and financial instruments are unique in the UN system. The grants, loans and guarantees we offer are designed to de-risk, thus catalyzing the capital required to reach a first level of development or to crowd-in investment from the private sector. Furthermore, our field investment staff works to produce credit ratings of organizations and mitigate risks in investment opportunities in LDCs

UNCDF has developed the Inclusive Digital Economy Scorecard (IDES) to measure and track more easily the level of development of an inclusive digital economy at country level. The pilot version of the IDES has been deployed in eight countries spanning four regions (West Africa: Benin and Senegal; Eastern and Southern Africa: Uganda and Zambia; Asia: Myanmar and Nepal, Pacific: Fiji and Papua New Guinea). The scorecard identifies key market constraints hindering the development of an inclusive digital economy, while helping public and private stakeholders set the right priorities to foster a digital economy that leaves no one behind. UNCDF is seeking contributions from partners across the industry as well as the UN to improve the tool while making it a useful reference to all stakeholders. We are thus looking forward to receiving input from the e-trade for all community as we progress and expand the scorecard to more countries.