Consumers are targeted by new types of scams and fraud as digitalization and innovations in the financial markets boom.
The cascade of crises facing consumers, from COVID-19 to food and energy price shocks due to the war in Ukraine and climate change, puts billions of people in a vulnerable situation.
The digital transformation of economies is also propelling consumer vulnerability to new heights.
Amid the heightened vulnerability, world experts discussed financial consumer protection at UNCTAD’s meeting of the intergovernmental group of experts on consumer protection law and policy held on 18 and 19 July.
“Accessing and benefiting from financial services is a basic consumer right,” said Teresa Moreira, head of competition and consumer policies at UNCTAD, “It’s essential to realizing most economic transactions nowadays and for improving a consumer’s life,” she added.
A UN General Assembly resolution recognizes that “consumer confidence and trust in a well-functioning market for financial services promotes financial stability, growth, efficiency and innovation over the long term.” It’s key to the achievement of any of the Sustainable Development Goals.
Expanding access is the first step
According to the World Bank, in 2021, 76% of the world population had a bank account, an encouraging increase of 50% in the last 10 years. But women, the poor, the less educated and people outside the labour market remain underserved.
Although having a bank account is a major step towards accessing financial services, the growing complexities of these services create more vulnerabilities for consumers, hampering their interests and wellbeing.
Existing gaps in infrastructure and consumer literacy could prevent vulnerable consumers from fully enjoying the benefits of digital financial services, even increasing inequalities in economic opportunities.
“Financial literacy and inclusion are two of the most powerful tools for people’s personal development,” said Cynthia Zapata, director for consumer protection in Costa Rica.
“That is why we are targeting our consumer education campaigns to those who need them the most: women, migrants, refugees and indigenous peoples.”
Call for regulations and enforcement
The UN guidelines for consumer protection include a section on financial services, providing concrete recommendations on protecting financial consumers.
Governments need to enact laws and policies with clear goals of protecting consumers’ access to financial services and regulating business conducts.
Strong oversight and enforcement are needed. “Efforts should be made to ensure that the overall legal framework provides sufficiently comprehensive coverage and to avoid conflicts or lack of clarity,” said Chilufya Sampa, executive director of the Zambia Competition and Consumer Protection Commission.
Some member states also encourage self-regulation initiatives in the financial sector. Engagement of service providers plays an important role in ensuring responsible business conducts.
Educating consumers is also a priority. Better financial education strategies are required, especially to target vulnerable and disadvantaged consumers.
Required policy actions
UNCTAD recommends that member states take the following actions to strengthen financial consumer protection:
- Enact and regularly update adequate legal frameworks to protect consumer rights in financial services.
- Establish and strengthen enforcement agencies and oversight bodies with the necessary authority and resources to carry out their mission.
- Enhance and ensure good business practices, with an emphasis on fair and equitable treatment; ethical behaviour; disclosure and transparency; education and awareness-raising; protection of consumers’ privacy; and availability of dispute resolution.
- Design and implement multi-stakeholder strategies to enhance access to financial services, inclusion, and education and literacy.
- Implement effective policies to address remittances, consumer over-indebtedness and bankruptcy.
- Harness the potential of digitalization in financial services while protecting consumers from emerging threats.
Countries without these statistics face barriers in implementing the policies needed to support businesses in adapting to and benefiting from digital tools and technologies.
As the COVID-19 pandemic has accelerated digital transformation, measuring how businesses are harnessing digital opportunities for economic resilience and sustainable development has become ever more critical.
To support policymakers, UNCTAD’s statistics database has updated the organization’s indicators on the use of information and communications technologies (ICT) by businesses, providing data until 2021.
They provide insights on the extent to which businesses in different countries are adopting digital technologies.
Among the countries providing data, over 80% of businesses have internet connection (95% on average across these countries). Businesses in different countries vary in the extent to which they use the internet to access customer and supplier markets (Figure 1).
On average, across these countries, 68% of businesses have a web presence such as a website or pages on a social network or online marketplace, the data shows.
The share of companies engaging in e-commerce is generally lower, with around 40% of businesses making online purchases from suppliers, while only 25% of businesses sell their products online.
“As the world becomes more digitally dependent, disparities that put individuals and businesses in developing countries at a disadvantage threaten to accelerate existing inequalities,” said Shamika N. Sirimanne, director of UNCTAD’s technology and logistics division.
“More decisive action is needed to bridge the widening digital and data divides,” she added.
Data collection in developing countries
But several developing countries feature among those with the highest rates of businesses selling online, according to the data.
This may be due to differences in countries’ survey methods and coverage, indicating the need for more efforts to promote international comparability in business ICT statistics.
Figure 1: Business internet usage, 2021 or latest
(In order of share of businesses making e-commerce sales)
Source: UNCTAD based on core indicators of ICT use in business.
Notes: For each country and variable, if 2021 data is not available the latest available observation (2018 or later) is used. For e-commerce sales and web presence, the most common reporting year is 2021. For internet use it’s 2019, for e-commerce purchases it’s 2018. Data for India represents manufacturing only and the year 2018. Get information on the classification of developed and developing countries.
UNCTAD’s data provides breakdowns by businesses in urban or rural areas, industry classification and firm size.
Figure 2 shows that, in most countries, large enterprises – those with 250 or more employees – are most likely to engage in e-commerce.
But this is not always the case. In Montenegro, North Macedonia, Qatar and Thailand, medium-sized enterprises lead in e-commerce adoption.
Figure 2. Businesses making online sales or purchases, selected countries, 2021 or latest
Source: UNCTAD based on core indicators of ICT use in business.
Notes: Countries selected on the basis of developing country status and/or on the basis of being an UNCTAD member while not being a member of other organizations involved in international collections of business ICT data (Eurostat/OECD). Get information on the classification of developed and developing countries.
For each country and variable, if 2021 data is not available, the latest available observation (2018 or later) is used. Data for India represents manufacturing only and the year 2018.
These figures illustrate developing countries’ differing experiences in digital transformation.
They also show that only a few developing countries, and none of the least developed countries (LDCs), regularly collect data on these indicators and report them to international organizations such as UNCTAD.
Building capacity for digital transformation
UNCTAD’s indicators on ICT use by businesses provide a baseline for policymakers to monitor and manage their economies’ digital transformation.
The inclusion of countries’ indicators on the database fosters mutual learning and support, as all countries face challenges and impacts of digitalization.
UNCTAD provides the following capacity-building initiatives to help countries measure the digital economy and promote the harmonization of statistical methods to ensure comparability across countries:
- The UNCTAD Working Group on Measuring E-commerce and the Digital Economy, which will meet on 28 and 29 November 2022 to advance cooperation to enhance the availability, quality, comparability and relevance of statistics on e-commerce and the digital economy across countries.
- Capacity-building and support to national statistical agencies seeking to measure business ICT usage as well as e-commerce and digital trade. This includes statistical guidelines set out in the Manual for the Production of Statistics on the Digital Economy and training offered through UNCTAD’s Train for Trade platform.
- Help in sourcing financial and expert support for digital economy statistics from development partners.
More than two years into the COVID-19 pandemic, digitization has clearly accelerated in many areas of the global economy. With technology at their fingertips, society, the productive system, and the state now have more ways than ever to take advantage of the opportunities of the internet age. The unprecedented advance of the online world has made hybrid jobs and flexible working hours a fact of life, along with new services that do not require physical contact.
Lockdowns and social distancing have fast-forwarded us into the future: we now see the doctors via videoconferencing, do our banking using apps, and even go to the gym without leaving home.
This digital-service explosion explains why many entrepreneurs believe that Latin America and the Caribbean (LAC) is heading toward a new growth model. The recent boom in startup investments and the exponential growth in the number of Latin American unicorns are clear signs that times are changing.
Nonetheless, the services sector is very diverse. In contrast to traditional services like tourism and transportation, knowledge-based services that rely on digitization and highly skilled human capital enjoy more dynamic global demand and drive greater spillover effects. The most striking examples in LAC range from business services to software development, biotechnology, and the creative industries such as audiovisual production or video games.
To sound out how the region is faring in this revolution, my colleague Cloe Ortiz de Mendívil and I gathered evidence on trends, costs, and trade policies relating to services. Our study highlights the importance of modernizing the region’s regulatory frameworks to make it more competitive in the global marketplace, and unleash a powerful development driver.
Services are becoming increasingly important in LAC economies. Even before the pandemic, value-added in the services sector (understood as the value generated through production, including the contributions of both labor and capital) accounted for 58% of gross domestic product (GDP). By 2019, the sector was employing 64% of the total workforce.
Between 2005 and 2019, trade in services (imports and exports) grew an average of 6.1% annually, outstripping the average for trade in goods. In 2019 alone, trade in services reached US$377 billion. Over the same period, the share of service exports in GDP doubled, growing from 1.9% to 3.8%.
Further evidence of the sector’s meteoric rise is that in 2019, global service exports came to represent around 15% of total LAC exports on average—a figure that conceals highs of over 40% in the Caribbean and Central America.
Challenges to global competitiveness
Although the sector’s performance was outstanding, it peaked below its potential. A closer look reveals that LAC still specializes in traditional services, such as travel (tourism) and transportation (freight), which account for about 60% of the total.
Exports of services by competitive segment in %, 2013–2018
The study reveals the competitiveness challenges that LAC is facing by breaking down service exports from 2013 to 2018 into four segments: strategic (growing market share in sectors where demand is dynamic), mature (growing market share in industries where demand is stable or contracting), untapped (falling market share in industries where demand is dynamic), and declining (falling market share in sectors where demand is low).
We found, for example, that LAC gained market share mainly in mature segments (50%), especially travel, and only expanded marginally (1%) in strategic segments such as intellectual property. It also lost market share in areas of the untapped segment (26%), including business services such as consulting, customer service, or human resource management.
The benefits of reducing trade costs
In order to make the most of the potential of global trade in services, the region urgently needs to reduce costs related to regulatory and external market access barriers.
According to our estimates, the total costs of trade in services (such as tariff equivalents, non-tariff barriers, and expenses relating to the provision of the service in question) are extremely high for the average service provider in LAC. Although costs dropped from 259% in 2005 to 251% in 2015, they remain higher than in Asia (203%), the European Union (192%), and the United States (151%). They also outstrip those associated with goods exports.
The OECD indices can be used to evaluate restrictions to trade in both general and digital services. They reflect obstacles related to regulatory transparency, competition, market access for firms and individuals, and specific regulations for digital trade that limit connectivity, electronic transactions, and intellectual property protection, to mention a few areas.
A comparison of LAC with global best practices highlights opportunities for reform, but also some success stories. For example, Costa Rica is the country with the least restrictions on e-commerce in the global sample.
These estimates have concrete implications for policy design. For example, empirical evidence shows that a 10% reduction in restrictions contributes to a decrease in trade costs of about 3% and growth in service exports of almost 5%.
To foster growth based on service exports, LAC needs to focus on four strategic areas:
- For starters, there is an urgent need to invest in creating a reliable, detailed, disaggregated information base on trade in services comparable across countries. This is essential to ensure that policymakers are not flying blind in a key sector to the region’s economic recovery.
- To have a significant impact on complex ecosystems in which services firms can thrive, trade, innovation, education, connectivity, and banking regulations -to name but a few- cannot operate in silos. Smart policy coordination is needed to bring down trade costs and position firms competitively in the global marketplace.
- The main factor shaping the competitiveness of services is people’s talent. Investing in training and human capital development according to the dynamic demand of firms is an utmost priority.
- The trend towards digitizing trade in services is rewriting the international rulebook. The region’s negotiators need to bupskill, and the regulatory architecture has to be updated through state-of-the-art international treaties that harness the potential of regional integration.
In short, trade in services is at the heart of the digital acceleration triggered by the pandemic. Latin American entrepreneurs are convinced they have what it takes to become global players, and venture capitalists are taking note of the region’s talent. It is now up to governments to design state-of-the-art public policies that reduce trade costs and unleash the potential of digitization. The IDB can provide operational best practices, business networks, and dedicated forums to support the region on this quest, which is key to post-pandemic recovery.
A proposed open-source research and development centre in Barcelona promises to accelerate the Giga initiative, which is working to connect every school in the world to the Internet. The Governments of Spain, Catalonia, and Barcelona are working with UNICEF and the International Telecommunication Union (ITU) – the key United Nations agencies behind Giga – to move forward on plans for the centre’s establishment in the city.
As Giga partners announced on 18 July, the proposed centre will accelerate efforts to connect all schools in the world to the Internet:
The Government of Spain, the Catalonia Regional Government, and the City of Barcelona in collaboration with UNICEF and ITU are meeting this week to further develop plans for the establishment of a Giga Technology Centre in Barcelona.
The centre will advance the work of Giga – the UNICEF and ITU initiative to connect every school to the Internet. It will drive efforts to equip learners with information, opportunity, and choice through research and product development to increase digital connectivity in schools. The centre will lead on experimenting and creating new connectivity solutions through blockchain, satellite imagery analysis, and artificial intelligence (AI) technologies – all entirely open-source. It will also provide a space for Giga, technology companies, regulators and policy-makers to collaborate on digital policies in support of universal school connectivity.
The Technology Centre in Barcelona will provide Giga with the technological and political capital to complete the satellite mapping of every school in the world. It will position Giga as the preeminent global resource for the network operations data and open-source technology required to sustainably connect all schools to the Internet using AI and satellite imagery to map school locations, blockchain technology to monitor real-time connectivity status, and infrastructure and policy data to model optimal connectivity solutions.
“The essential first step to connect every learner to the Internet is knowing where every school is located and how to reach them. As we set up the Giga Technology Centre, we will continue to build the open-source software to answer these fundamental questions,” said Fayaz King, UNICEF Deputy Executive Director, Innovation. “The engineering work started with support from the Musk Foundation, Ericsson, Dell and others will be developed and scaled in the city that hosts the Mobile World Congress and top global technology firms. This will be a game-changer for millions of learners around the world.”
Established in 2019 with the ambitious goal to connect 2.8 million schools and 500 million children to the Internet by 2030, Giga is progressively closing the digital divide which keeps millions of children from attaining improved learning outcomes. Working with 19 governments and 14 corporate and non-profit partners, Giga has mapped more than 1.2 million schools and connected more than 1.3 million students to the Internet. It continues to map schools’ real-time Internet access, create models for innovative financing, and support governments’ design and execution of enabling policies and efficient contracts for school connectivity.
“This new partnership will be a crucial catalyst allowing Giga to accelerate the development of the world’s most comprehensive open-source technology platform for enabling universal school connectivity,” said Doreen Bogdan-Martin, Director of the Telecommunication Development Bureau, ITU.
Barcelona is a city renowned for its technological innovation and favourable digital policies oriented toward digital inclusion and open-source solutions. It will provide Giga with access to its vibrant ecosystem of tech companies and serve to bring technologists from emerging markets together in one physical space to build, collaborate, and scale solutions for connectivity for children. The Giga team will be working in close collaboration with UNICEF Spain and the regional committee of UNICEF Catalonia.
Giga serves as one of the key pillars of UNICEF’s Reimagine Education, which works towards improved connectivity, affordability of data, access to devices, and engagement with young people. It is also central to ITU’s mission to connect all the world’s people, and to ensure every school and every young person is connected to information and communication technologies. As a fundamental part of the UN Secretary-General’s Digital Cooperation Roadmap and Common Agenda, Giga collaborates with a wide array of partners and is continuously seeking new ones.
We caught up with Hon. Paula Ingabire, Rwanda’s Minister of Information Communication Technology and Innovation and Chair of the recent World Telecommunication Development Conference (WTDC) held in Kigali, Rwanda, by the International Telecommunication Union (ITU).
This was the first WTDC to happen in Africa since the establishment of ITU’s Development Sector in 1992. What does it mean for the host country, Rwanda?
For Rwanda, it’s been a privilege to host the very first WTDC in Africa. We’re going to be part and parcel of shaping the [digital development] agenda over the next four years. More important is the ability to host and give the delegates and visitors a taste of Africa and Rwanda, which in many ways we’ve been able to achieve outside the conference facilities.
The first week included a number of events, including the Generation Connect Global Youth Summit that brought together youth representatives from about 115 countries. It was a highly energized, powerful summit. Youth were keen and very engaged in shaping the telecommunication agenda going forward. Listening to their asks and how they really wanted to contribute was very exciting.
What are the key outcomes from this landmark development conference?
Recent resolutions adopted during the plenary session include [continued support for] the school connectivity project, Giga. As we come out of the COVID-19 pandemic, education is one of the sectors that has been heavily affected. School connectivity is essential as we bridge the digital divide.
As we recover better and stronger, this becomes a priority initiative for all of us going forward. Think about the 2.9 billion people [worldwide] that remain unconnected. What will we do differently over the next four years to connect them? What are some affordable and innovative ways of deploying infrastructure quickly? How do we equip [people] with the right skills, devices and content that will also push [to close] the usage gap? So many people live in coverage areas but haven’t been able to benefit from that.
What do you think will be the major opportunities and challenges for the digital development sector over the rest of the current decade?
In terms of opportunities, one is to understand the challenge at hand. Everyone has a better sense of what it’s going to take to close the digital gap. Whether it’s a declaration, an action plan, or resolutions – all give a broad framework under which respective countries are going to deploy resources to close the digital divide.
In terms of challenges, you have different maturity levels in the digital landscape. Finding a one-size-fits-all set of strategies that will close the gap in different parts of the world may be quite a challenge.
Even as we deploy resources and build the right partnerships to close the digital divide, figuring out how we measure that [progress] is still a sticky point, as is aligning on a set of criteria for how we measure readiness, maturity, and growth.
Telecommunications has not historically been a sector where women have been heavily involved, or where gender parity has been a priority. What are the ingredients needed to ensure full mainstreaming of a gender perspective in ICTs?
Things are changing. We’re starting from a common ground of understanding that it’s urgent and important to think about gender mainstreaming in the different initiatives that we’re taking forward.
At WTDC, you can see deliberate efforts from different countries that want to include women in delegations, so they are part of decisions. Women are capable and can be given opportunities to serve and contribute to the telecommunication development agenda.
Looking forward, we need to think about how to create a critical mass of women who are capable and able to contribute – starting from the education system. How do we encourage more women and girls to take up STEM (science, technology, engineering, and mathematics) careers?
And then expose them to leadership opportunities, [with] training, upskilling throughout, so they have the right skills to contribute in a significant way.
You are a living example of this! How did you get to where you are today?
It all starts with faith – believing in the opportunity and the right to empower women and young people. In Rwanda, that has not been a problem – the leadership has been working on that.
Secondly, being given the right tools and capacity building programmes that allow me to serve adequately in these capacities. I am one of many [women] that have been given the opportunity to serve. Today, our cabinet has over 51 per cent representation of women; our parliament has over 62 per cent.
We’re seeing a lot of that happening in the private sector as well: a deliberate focus on empowering young girls to take up STEM subjects. Over the next few years, we’ll start to see a critical mass of young women leaders at the helm of this transformational work – not just in Rwanda, but across the continent.
Tell us about some of Rwanda’s biggest digital development milestones, particularly in the five years since the last WTDC. How has Kigali managed to position itself, in a relatively short period of time, as one of the key digital entrepreneurship poles on the continent?
By establishing an enabling environment for entrepreneurs and innovators to flourish. We see ourselves as a proof-of-concept destination for innovative companies and start-ups to launch, test, and scale. The public sector’s investment in Kigali Innovation City is a well-known example.
We are also willing to co-create policy and regulations with all concerned parties ; for example, through the Start-up Acts and the Fintech Sandboxing Policy [currently] under development.
We also offer numerous immigration and tax incentives for companies to set up shop in Rwanda as their operating base for an Africa-wide market. Rwanda was ranked the second easiest place to do business in Africa and the 38th globally in the World Bank’s 2020 Doing Business report.
What are the basic principles driving Rwanda’s digital policies in recent years?
Over the years, we have adopted a citizen-centric approach to Rwanda’s digital policies by being:
- Inclusive: ensuring we give a seat at the table to all key stakeholders from private sector, civil society, academia, and others, including citizens in general, during the consultation phase of any policy or regulation development.
- Focused on impact and outcomes: Policies, proposed projects and programmes under development must show clear evidence of positive impact and alignment with the [intended] outcomes of our national digital transformation agenda.
- Data-driven decision-makers: We leverage data to draw insights and ensure that proposed policies are practical for implementation and can drive sustainable socio-economic development. We also use data to monitor the effect of policies and refocus them over time.
- Pro public-private partnerships: We have high ambitions to transition from an agriculture-based economy to a knowledge-based economy, and we can’t do it alone. Our policies make us open to partner with the private sector in developing and implementing projects for mutual benefit.
Our policies are designed to support Rwanda’s participation in the local, regional, and global digital economy, including on exports of skills and services, and position Rwanda as an African innovation hub and proof-of-concept market, exemplary of the African knowledge-based economy.
How is the government addressing the need for sustainable e-waste management within Rwanda’s digital development policies and through solutions such as the Enviroserve Rwanda Green Park?
As a country that’s placing information and communication technologies (ICTs) at the core of our development efforts, we are very cognizant that the growth of our ICT sector and advancement into a digital economy comes with greater generation of electronic and electrical waste.
The global record high of e-waste generation – more than 50 million metric tonnes (Mt) in 2019 –was quite alarming, so we committed to aggressively implementing mechanisms that can help manage e-waste responsibly while strengthening our circular economy, as well as creating green jobs and new revenue streams.
Some of the mechanisms we have in place include national regulation around e-waste management and Enviroserve Rwanda, an e-waste recycling facility that has deployed 20 e-waste collection centres across the country. Together with ITU, we are working on a project to introduce and implement the Extended Producer Responsibility (EPR) concept in our regulatory frameworks. This project includes an awareness campaign to teach the public on how to treat e-waste, along with procedures for disposal.
This interview has been edited and condensed for length.
The UN Capital Development is pleased to announce the 11 FinTechs that have been selected for the upcoming Pacific Islands Fintech Innovation Challenge in Singapore from 27th to 29th July.
The selected FinTechs will be required develop and co-create solutions for an expert panel of judges for specific problem statements addressing the following areas:
- Improving access to financial products and service
- Digitising customer service
- Increase usage of financial products and services
- Streamlining of foreign exchange
- Enabling E-Commerce and in-person POS merchant payment services
Winning Fintechs will receive grants of up to US$50,000 depending on the investment readiness level and outreach potential of the solution proposed.
UNCDF will also provide technical assistance to the winning Fintechs to implement the solutions in Fiji, Samoa, Solomon Islands and Tonga alongside trusted implementing partners.
You can read more about the our implementing partners and the five challenges here: https://www.uncdf.org/inclusiveinnovation/pacific-islands-fintech-innovation-challenge
The Fintech challenge is an initiative of the Australian Government-funded UNCDF Pacific Digital Economy Programme (PDEP) in collaboration with the Market Development Facility (MDF) and the Asian Development Bank (ADB).
Problem Statement 1: Improving Access to Financial Products and Services (Tonga – TDB, Samoa – NBS)
- Infinity PlusOne (Fiji)
- Global Pystech Sdn. Bhd. (Malaysia)
- BPC Banking Technologies (Australia)
- Geniusto International Pte. Ltd. (Philippines)
Problem Statement 2: Digitizing Customer Service (Fiji – FDB)
- ITGalax Solutions (Fiji) Pte Limited (Fiji)
- DirectPay (Pvt) Ltd. (Sri Lanka)
Problem Statement 3: Increasing Usage of Financial Products and Services (Solomon Islands – SINPF)
- YABX (Netherlands/India)
- BPC Banking Technologies (Australia)
Problem Statement 4: Streamlining Foreign Exchange (Fiji – Vodafone)
- BPC Banking Technologies (Australia)
- MHITS Limited (Australia)
Problem Statement 5: Enabling E-Commerce and in-person POS merchant payment services (Fiji – HFC, Samoa – NBS)
- Card Access (Australia)
- Windcave (Australia)
- Brankas (Singapore)
The South Centre, the Malaysian Tax Academy (MTA) and the Permanent Mission of Malaysia to the UN in Geneva co-organized from 24-26 May 2022 a capacity building program for Malaysian tax officials on the OECD Inclusive Framework’s solution for the taxation of the digitalized economy, known as Pillar One. The first two days were closed for Malaysian tax officials and the third day was opened to tax officials from the Group of 77+China. The latter addressed the topic of dispute prevention and resolution which is of interest to many tax administrations. The training was provided by tax officials from the Government of India, experts from the International Lawyers Project and the staff of the South Centre.
The peer exchange capacity building program came at the right time, as per the participants. The OECD’s proposed solution for taxation of the digital economy, known as Amount A of Pillar One, will be codified into a multilateral convention and submitted to countries for signature. Hence, all countries who are members of the Inclusive Framework, in particular developing countries, require a deep understanding of the complex rules of Pillar One so as to allow them to make a right decision.
The program began with welcoming remarks by H.E. Mr. Ahmad Faisal Muhamad, Permanent Representative of Malaysia to the United Nations in Geneva, and Prof. Carlos Correa, Executive Director of the South Centre, followed by opening remarks by Ms. Zinatul Ashiqin Bachek, Director of the International and Professional Training Centre at the Malaysian Tax Academy.
H.E. Mr. Ahmad Faisal Muhamad, Permanent Representative of Malaysia to the UN in Geneva
H.E. Mr. Ahmad Faisal Muhamad recalled that the COVID-19 pandemic has accelerated the advancement of technology, enabling business to operate and generate profit in jurisdictions in which they have limited or no physical presence and diminishing their taxable profit as well. Furthermore, the Ambassador highlighted the fact that globalization has changed the way businesses are conducted and raised new challenges to the traditional mechanisms of taxation thereby depriving certain jurisdictions of tax revenue. In that regard, he commended the South Centre’s capacity building program as a platform for international and local experts to share their knowledge, views and experiences on the latest developments concerning taxation, including the OECD Two-Pillar solution.
Prof. Carlos Correa, Executive Director of the South Centre
Prof. Carlos Correa, after recalling the three pillars of the South Centre work which are i) providing policy-oriented research, ii) supporting developing countries in international negotiations, and iii) providing technical assistance and training, highlighted the fact that taxation has become a very important area of work of the South Centre due to the need for developing countries to mobilize resources for the Sustainable Development Goals, the impact of the digital economy, and the ongoing reform process of the taxation system at the OECD with the Two-Pillar solution.
Ms. Zinatul Ashiqin Bachek, Director of the International and Professional Training Centre at the Malaysian Tax Academy
Ms. Zinatul Ashiqin Bachek gave her acknowledgement to H.E. Mr. Ahmad Faisal Muhamad and Prof. Carlos Correa for their welcoming remarks, thanked the South Centre Tax Initiative (SCTI) and the Malaysian Tax Academy (MTA) for the preparation of the virtual session, and expressed her appreciation to all the participants for their interest in the program.
On the first day of the program, the participants were taken through the rules on the scope, nexus and revenue sourcing. These would outline the process of identifying an in-scope Multinational Enterprise (MNE) and the process of sourcing its revenue to countries or jurisdictions.
On the second day, the discussion focused on the determination of the tax base, the calculation and the distribution of the re-allocable profit under Amount A rules, and the mechanism for elimination of double taxation.
On the third day, as noted, the program was opened to tax officials from the G-77+China. It covered the tax certainty mechanism for Amount A and the mutual agreement procedure.
The main issues addressed were as follows:
The training started with a historical background by the International Lawyers Project to the issue of the digitalization of the economy, the tax challenges arising from that digitalization and the adoption of unilateral measures by countries. John Bush, Program Director for Tax and Fiscal Reform at the International Lawyers Project (ILP), and Michael Durst, Special Advisor for Fiscal Reform at the ILP, provided an overview on the scope rules for Pillar One, such as the revenue thresholds, profit margin, and the exclusions.
Mr. John Bush, Program Director for Tax and Fiscal Reform, International Lawyers Project (ILP)
Mr. Michael Durst, Special Advisor for Fiscal Reform, International Lawyers Project (ILP)
After the International Lawyers Project’s presentation, the scope rules were elaborated further by participants from the Central Board of Direct Taxes (CBDT), India. Mr. Chetan Rao, Director of the Foreign Tax and Tax Research at the CBDT, Ms. Vidyotma Singh, Deputy Commissioner, Foreign Tax and Tax Research Division at the CBDT, and Mr. Sukhad Chaturvedi, Under Secretary, Foreign Tax and Tax Research Division at the CBDT, highlighted the exclusions relating to extractive activities and regulated financial services. They also pointed out the concerns of developing countries regarding these rules.
The second day started with presentations from the CBDT of India and the ILP on the nexus and revenue sourcing rules in Pillar One. The presentation by Dr. Sri Vatsa Sehra, Under Secretary, Foreign Tax and Tax Research at the CBDT, provided details on the rules to be used in identifying the source of MNE revenue in the different market jurisdictions. The different categories of revenues such as finished goods, components, services, etc., and the allocation rules per revenue category were presented.
This was followed by Mr. Bush and Mr. Durst (ILP), who focused on tax base determination and profit allocation. The participants were provided practical examples on the process of calculation and allocation of Amount A to the market jurisdictions, especially the computation of the profit before tax, the residual profit, and the re-allocable profit. The session ended with a presentation on elimination of double taxation mechanisms provided by both the CBDT, India and the ILP.
Example of tax calculation for how much countries would receive under the OECD solution
The third day’s session was opened to tax officials from the Group of 77+ China. It began with welcoming remarks from H.E. Mr. Ahmad Faisal Muhamad, Permanent Representative (PR) of Malaysia to the United Nations in Geneva. He wished that the session will provide an opportunity for intensifying efforts and cooperation on issues that are still under discussion. The PR also noted that it is vital for all of us to work together and galvanize our resources, share our knowledge and expertise in this field so as to minimize the potential risks of revenue losses arising from Amount A related dispute resolution. The program then focused on the dispute prevention and resolution mechanisms in Pillar One with presentations from India’s CBDT team and the South Centre.
Mr. Abdul Muheet Chowdhary, Senior Programme Officer, South Centre Tax Initiative
Mr. Sebastien Babou Diasso, Research Consultant – Tax, South Centre Tax Initiative
The session provided details on the functioning of the tax certainty process. It was of particular importance as for the first time in history, a multilateral structure was envisaged to resolve tax disputes. Hence, the training sought to equip participants with knowledge of how the system was meant to function, as well as the risks involved for developing countries.
The presentation of the South Centre made by Abdul Muheet Chowdhary and Sebastien Babou Diasso focused on some recommendations to improve the design of the tax certainty framework and preventive measures which developing countries could take to prevent disputes from arising. Data was also provided on which countries would be affected by the mandatory binding mechanism.
The last topic of the day was related to the Mutual Agreement Procedure (MAP), presented by India’s CBDT team. The MAP process assumed relevance as if it could not resolve disputes within a stipulated time frame, the disputes would be taken to the multilateral dispute resolution framework. Hence, more effective use of MAP could reduce the number of disputes going to this framework and retain national sovereignty over the process. The CBDT team provided information on the MAP process, the implementation guidance and lessons learnt through experience which could be helpful for other developing countries.
Mr. Fernando Rosales, Coordinator, SDCC Programme, South Centre
The three-day capacity building programme ended with closing remarks made by the Coordinator of the Sustainable Development and Climate Change (SDCC) programme of the South Centre, Mr. Fernando Rosales.
The Intergovernmental Group of Experts on Consumer Protection Law and Policy heard reports by the UNCTAD secretariat on three working groups, respectively focusing on: (i) consumer product safety; (ii) consumer protection in electronic commerce; and (iii) modalities of UNCTAD voluntary peer reviews of competition and consumer protection laws and policies. The experts also considered decisions on the future mandates of the working groups.
Consumer product safety
The presentation on the working group on consumer product safety requested the IGE to renew the mandate of the working group, particularly with a view to: (i) continue work on strengthening consumer product safety frameworks at the regional and national levels; (ii) improving international cooperation to protect consumers from hazards to their health and safety; and (iii) propose practical means for the implementation of the recommendation on preventing cross border distribution of known unsafe consumer products.
In a written contribution submitted prior to the meeting, CUTS International emphasized the importance of certain aspects in consumer product safety, such as: (i) Standards could be made mandatory for more products that impact the health and safety of the consumer; (ii) Governments and regulators should focus more on ensuring the safety of products linked to new technologies and on the challenges posed by online sales growth; (iii) Working towards a sub-regional, regional and global coalition for consumer protection; (iv) Agreeing on some standard rules for product labelling, instructions and safety warnings ; and (v) Need to carry out large-scale sensitization campaigns about product safety, e.g. on basic aspects like Maximum Retail Price (MRP), expiry dates etc.
Consumer protection in electronic commerce
the presentation on the working group on consumer protection in electronic commerce recommended enhancing cross-border cooperation, as well as promoting educational programs and awareness activities. It also called for advances in global online dispute resolution, and for developing a potential model law on consumer protection and dispute resolution in B2C e-commerce transactions. The need for tools to address green claims was also stressed, as most countries lack specific regulations to tackle it. The IGE was requested to extend the mandate of the working group, particularly to continue work on cross-border cooperation aspects.
The working group on modalities of UNCTAD voluntary peer review exercises requested IGE to welcome the revised methodological guidelines for peer reviews and discontinue the working group.
From 18 – 19 July we will join policy makers and global consumer experts gathering for the Sixth Session of UNCTAD’s Intergovernmental Group of Experts (IGE) on Consumer Protection Law and Policy.
Taking part in global conversations such as these is a key part of our influencing role to ensure that dialogue remains relevant to the needs of consumers and to help shape future agendas. Given the current crises we face in energy, food and cost of living, promoting the consumer voice to the top of global agendas has never been so important. To do this well, we bring in the views, insights, perspectives of our Members to the forefront of discussion.
With this in mind, next week we will be sharing Member experiences from the Republic of Korea, Myanmar, Germany, Mexico and more with the IGE. During a session on product safety, we will use our research and Member experience to outline the need to accelerate and address gaps in protective measures for consumers, and as the Sixth Session looks at other concerns in the consumer movement, such as financial consumer protection we will share insights from our other work.
As products transcend borders, they must be fit for purpose
E-commerce has become a default option for many consumer purchases worldwide, in 2021 global online transactions were said to have reached $US 4.2 trillion. In purchasing online, most customers believe that shopping is safe and that product safety is enforced as much as in traditional markets. However, it carries great risk for consumers who may not be equipped to evaluate the safety of each individual product. In a survey of our Members across 89 countries in 2019 we found that in 40% of countries there is no product safety agreement between national authorities and online marketplaces.
On Monday 18 July from 1.30pm – 3pm UTC, we will join, Modalities for the implementation of the recommendation on preventing the cross-border distribution of known unsafe consumer products. Alongside decision makers from Algeria, the US, Argentina and the Competition Commission, Common Market for Eastern and Southern Africa we will address key questions. What legal and institutional frameworks are needed? How can we improve the ways of recalling unsafe products nationally, regionally, globally? What is UNCTAD’s role in helping its member states to improve product safety frameworks?
We will dive into our 2019 survey, reflecting on findings from our Members such as VZBV, Germany and Which?. Whilst the survey showed there are often legal frameworks in place to lessen product safety risks, they have not always been successful in practice. We will also highlight the need to address certain gaps within the frameworks – these include measures to cover foreseeable misuse (an issue found across 35% of survey respondents) and the need for products to specify suitability for use by children, the elderly or disabled people (found across 32% of respondents).
Determined to rectify the issues found, last year we produced our Online Product Safety Guidelines. Developed with our Members around the world, they build on recommendations for marketplaces, sellers and governments to address gaps and ongoing issues. They are centred on:
- Overarching principles of Safety, Responsibility and Information
- Government actions for national regulation and cross-border co-operation
- Online marketplace actions based on compliance and accountability, preventing unsafe entry, identifying and removing unsafe products and information
- Complaints & redress mechanisms – both provided by businesses and mandated by government or through co-regulation
- Consumer information and education – to ensure consumers can be well informed, safe choices.
We will bring these points to the session, to further cross-border solutions, co-operation and see that legislation is both effectively enforced and covers concerns previously overlooked.
Throughout the event we will also share our expertise on other agenda topics, including to protect vulnerable consumers across financial services and promote capacity on consumer protection law and policy. One way we are responding to the risks posed to consumers in financial services is through our Fair Digital Finance Accelerator. This builds a powerful network in an initial 35 countries and a platform for collaborative action, learning and collective influence. Through this, consumer advocates receiving training and the tools they need to enhance knowledge, advocacy approaches and to build bridges with regulators and providers.
Importantly, effective enforcement of the United Nations Guidelines for Consumer Protection (UNGCP), will be a running theme throughout the Sixth Session. As part of our partnership with UNCTAD we have contributed to the Guidelines, to ensure protective measures are put in place for consumers which reflect their essential needs.
As we meet with policy makers and others we will share more on our ‘Consumer Protection and Empowerment Index’. This unique tool presents a global assessment of how countries have implemented (and pursue) the means to build, maintain and encourage safe, fair and sustainable markets. Worryingly, it has shown us how much work needs to be done – with the average global score for the Index as just 53/100. Over the next year we plan to build on the tool, informed by our discussions and further research to launch a public version of it.
In June 2022, a young man in Benin’s Sèmè City—a government-sponsored innovation campus for technical and vocational training (TVET), higher education, and research, as well as a business accelerator and incubator—proudly displayed what he had made using design software, 3-D printing, laser cutters, and other digital tools. He was bursting with excitement about his newly unleashed creativity to envision, design and build precision products in plastic, metal, or wood.
In Ghana’s Design and Technology Institute, a private TVET institute, young women and men are acquiring practical hands-on experience and soft skills to produce and market high-quality goods and services. Its programs in digital innovation, precision fabrication and entrepreneurship, which are also offered to train master craftspersons, exemplify a nascent trend in the modernization of TVET in Ghana.
These two innovative models exemplify TVET programs that can help young people get better jobs, but they are an exception in in most of Africa today. Often TVET is seen as the last resort for youth who are failing in general education, offering few pathways to better jobs or further education. Enrollment in TVET programs is low, averaging less than 4 percent of secondary students in Western and Central Africa. Traditional apprenticeships still account for 80-90 percent of youth engaged in some sort of training, but this training is not geared to jobs in the modern age. At present, more than 90 percent of the region’s youth aged 15-24 work in the informal sector where jobs are typically poorly paid, if at all, and involve low-skill and low-productivity work with limited opportunities for advancement.
For World Youth Skills Day, we are focusing on what can be done to equip African youth with skills for jobs, as well as results achieved in realizing their countries’ aspirations for growth and better lives for all through skills development.
Learning from Asian countries
Today, many African countries look to Asian economies with a record of fast growth driven in part by highly skilled workers (e.g., Singapore, South Korea, China, and Malaysia), for inspiration and understanding of the transformation of their skilling systems. For a small country like Singapore, which lacks natural resources, the country’s leaders have consistently recognized that people are their greatest asset and have crafted policies explicitly to equip their workforce with skills to help grow the economy. It took years of sustained effort to build the organizational infrastructure, design governance frameworks, and create incentives to align these programs with labor market needs and ensure agility in responding to new challenges in workforce development as the economy evolves.
Skills for a digital economy
Digital skills are a key enabler for inclusion and the efficient use, adoption, and creation of digital technologies in Africa’s growing digital economy. Such technologies can transform the nature of both formal and informal work across various sectors. For example, they are beginning to disrupt aspects of the informal economy, increasing access to existing and new markets, promoting financial inclusion, and accelerating cross-border trading.
The World Bank’s Western and Central Africa Regional Education Strategy proposes an ambitious target of training at least 1 million more youth in digital skills by 2025, with 60 percent of them obtaining better jobs . Realizing this target will require governments to collaborate effectively with the private sector and with development partners to invest strategically in the formal, non-formal and informal TVET sectors. For youth who are already in the workforce, innovative avenues will be needed. Given the ubiquity of mobile phones in Africa, mobile-friendly digital platforms offer an especially attractive option to train a critical mass of youth in digital skills —over a reasonable period, at a reasonable cost—and connect them to appropriate job opportunities. Examples include Harambee Youth Employment Accelerator (South Africa), Najja7ni (Tunisia), and the African Development Bank’s Coding for Employment program.
The solution must go beyond short-term fixes. True transformation of skills development requires strategic leadership, depoliticization of skills development, and sustained investments in job-relevant TVET at both the secondary and tertiary levels to give youth the chance to thrive in their jobs in an increasingly digital world. The good news is that innovative and effective skilling models exist across Africa. Underscoring the importance of digital skills, the World Bank currently has some 80 projects in Africa that promote such skills, including Benin’s Vocational Education and Entrepreneurship for Jobs Project and Nigeria’s Innovation Development and Effectiveness in the Acquisition of Skills Project.
The African Development Bank’s Coding for Employment program has selected 500 changemakers, 45% of whom are women, from four countries for the pilot Digital Ambassadors Program.
The selected Digital Ambassadors will embark on a three-month course during which they will be equipped with in-demand digital skills, such as software development, as well as soft skills, such as problem solving, project management and communication. They will then lead a peer-to-peer training model that seeks to expand digital skills to more African youth, especially in rural communities with limited internet connectivity.
The Bank and its technical partner, Microsoft, selected the Digital Ambassadors from more than 21,000 applications received from all over Africa. For this first edition, the 500 Digital Ambassadors were selected from four countries where the Coding for Employment program is operational, namely Côte d’Ivoire (75), Kenya (100), Nigeria (150) and Senegal (175).
“The Digital Ambassadors Program has come at the right time when the Bank is putting finishing touches to the Skills for Employability and Productivity in Africa Action Plan 2022–2025. The Action Plan will equip African youth with the skills that are in high demand; skills the labour market requires. Both will complement each other and will create positive impact on Africa’s workforce and lead to economic transformation,” said Martha Phiri, the Bank’s Director for Human Capital, Youth and Skills Development.
After graduation, the Digital Ambassadors will receive information and communication technology toolkits from the Bank and Microsoft so they can offer the same training within their local communities.
The Bank launched the Coding for Employment in 2018 to equip African youth with demand-driven information and communication technology skills to position them competitively for the global labour market. The program has established information and communication technology centers with partner universities across its countries of operation and provided digital skills training to over 150,000 youth, including 135,000 reached through the Coding for Employment eLearning platform and the Digital Nigeria platform.
The Coding for Employment Program is at the center of the Bank’s Jobs for Youth in Africa Strategy, which aims to propel Africa’s youth onto a path to prosperity. By 2025, the Jobs for Youth in Africa Strategy will equip 50 million youth with employable skills and create 25 million jobs in agriculture, information and communication technology and other key industries across Africa.
“We are delighted by the enthusiasm and the passion the candidates have shown for the program. We have sifted through all the applications to identify candidates whose background and qualifications closely match the selection criteria. The 500 candidates will not only acquire skills that can help them find work but will also be able to create their own jobs while also training others,” said Hendrina Doroba, the Bank’s Manager for Education and Skills Development.
Carelle Laetitia, one of the Digital Ambassadors, said, “When I received the selection email, I felt happy and above all proud. I know it was not easy to be selected among hundreds of talented youths. I hope to build a strong network and acquire solid digital skills in order to share them with my community.”
Over the years, the Bank has invested $1.64 billion in programs to prepare the youth for careers in science, technology and innovation. The Digital Ambassadors Program is aligned to the Skills for Employability and Productivity in Africa, and both tie in with one of the Bank’s five priorities—improving the quality of life for the people of Africa.
Students at Carnegie Mellon University in Rwanda, one of the countries where the Coding for Employment Program is being implemented.
The continent’s free trade area, a growing middle class, an emerging consumer market, increased access to financial services and technology, and dynamic private entrepreneurs can help diversify African economies.
African countries must diversify their exports to survive economic shocks from global crises such as the COVID-19 pandemic and the war in Ukraine, says the United Nations Conference on Trade and Development (UNCTAD).
In its Economic Development in Africa Report 2022 published on 14 July, UNCTAD says African countries can diversify their economies through boosting exports of high-value services, expanding private businesses’ access to financial services, tapping into new financial technologies and implementing effective policies.
Despite decades-long efforts to diversify, 45 out of the continent’s 54 countries remain dependent on exports of primary products in the agricultural, mining and extractive industries.
UNCTAD considers a country to be dependent on commodities when these products make up more than 60% of its total merchandise exports. The report outlines how African countries can rethink efforts to diversify their economies.
“Dependence on commodity exports has left African economies vulnerable to global shocks and hindered inclusive development for far too long,” said UNCTAD Secretary-General Rebeca Grynspan.
She said Africa has enormous potential to break commodity dependence and ensure its effective integration into high-end global value chains.
“By addressing barriers to trade in services, boosting relevant skills and improving access to innovative alternative financing, the region’s manufacturing productivity can be enhanced, driving Africa’s economic growth and structural transformation for many years to come,” Ms. Grynspan added.
Promise of knowledge-intensive services
UNCTAD says high knowledge-intensive services, such as information technology and financial services, could be a game-changer for Africa. But they account for only 20% of the continent’s services exports, leaving immense room for growth.
Africa’s services sector is dominated by low-value-added transactions, making it unable to support productive activities for industry, manufacturing and agriculture sectors.
Trade in services is also low in Africa. Between 2005 and 2019, services made up only 17% percent of the continent’s exports. Travel and transport accounted for about two thirds, representing a high concentration of traditional service sectors.
To change its fortunes, UNCTAD says the continent should promote the use of high knowledge- and technology-intensive inputs to enable the manufacture and export of more complex goods and services rather than primary commodities.
The report says technologies and smart services such as blockchain can improve access to diverse and competitive markets both within and outside the continent. More trade in services can also reduce the environmental degradation caused by the exploitation of natural resources.
To diversify economies, UNCTAD calls on African countries to implement policies to better link trade in high-value services with other sectors, especially manufacturing.
Countries also need to cut costs of services trade, remove protectionist policies, expand digitalization and boost the skills of workers in the sector.
Private sector critical, needs at least $416 billion every year
The report also underscores the critical role of the private sector – both formal and informal – in diversifying and transforming Africa’s economies.
This includes small and medium enterprises (SMEs), which account for about 90% of firms on the continent and employ around 60% of its workforce.
Africa has about 50 million formal SMEs, which can help diversify the continent’s exports, but they have an unmet financing need of $416 billion every year, according to the International Finance Corporation.
UNCTAD says countries should better position African SMEs as engines of diversification by facilitating their access to affordable funds and financial services.
Given the huge financing needs and the difficult access to banks’ corporate loans, the report calls for more innovative financial instruments for African SMEs to secure access to financing.
UNCTAD urges African policymakers to help firms access specialized financial and non-financial products and services such as government loan guarantees that can better address the long-term financial needs of SMEs.
The recent growth of financial technology (fintech) firms in Africa is spurring more innovation and investment opportunities. Fintech can improve traditional credit channels and help bridge the huge funding gap facing African SMEs, if countries implement policies to better harness its power, the report states.
UNCTAD also calls on countries to tackle other hurdles facing African SMEs, such as poor integration to regional and global markets and lack of capacity to compete with large public and private firms.
Free trade area needs effective export policies
The African Continental Free Trade Area, which aims to create a single market for the continent’s 1.4 billion people, can also boost export diversification, the report says.
But to make the best of it, African countries must implement policies to boost productive capacities, industrialization, encourage investment, improve regional integration and infrastructure.
UNCTAD warns that global economic shocks, climate change and other challenges could undermine Africa’s export diversification efforts if countries don’t put in place the right policies, regulations and boost institutional capacities.
As the world faces a cost-of-living crisis, 58 million people living just above the poverty line in Africa are at risk of sliding into poverty due to the combined effects of the COVID-19 pandemic and the war in Ukraine, according to a recent report of the Global Crisis Response Group on Food, Energy and Finance.
The co-convenors of the negotiations on e-commerce — Australia, Japan and Singapore — told the participants on 12-14 July that revised ways of working will be introduced to help the initiative build the spirit of compromise needed to achieve a “high-quality outcome”. The co-convenors said that they will be marking a new phase in the negotiations with three more rounds of in-person talks scheduled for the rest of this year to step up convergence efforts.
Ambassador Mina of Australia, who chaired the meeting, highlighted the statement issued at the 12th Ministerial Conference (MC12) by ministers of Australia, Japan and Singapore. This statement included a commitment to revise the working modalities of the initiative to ensure that it achieves progress in the next few months and to issue a new consolidated negotiating text by the end of 2022.
Ambassador Mina said: “We are marking this new phase with a step-up of our convergence efforts that’s going to require a couple of different ways of working.” He said that participants will need to accelerate their work in the small group setting.
Over the three days of meetings, the participants held two new small group meetings on privacy and on updating the telecommunications reference paper in addition to small group meetings on electronic transactions frameworks, e-invoicing, customs duties on electronic transmission, and cyber security. The facilitators of those small groups reported at the closing plenary on progress made in their deliberations to narrow gaps and bridge differences. Participants also heard an update from the group on open internet access and a proposal on how to enable developing countries to harness and implement the initiative’s outcomes on e-commerce.
Ambassador Mina said: “The second big strand in our effort is to extend our convergence building process.” He said the group will be creating a “stocktake small group”, which will look at proposals that had not attracted enough support from the rest of the participants in the negotiations to assess whether proponents of these proposals should step up their engagement or withdraw these proposals. “We’re going to look for some leadership from those delegations that are backing proposals that received limited or no support to reconsider their position,” he added.
The stocktaking session discussed “single windows”, data exchange and systems interoperability.
Ambassador Mina encouraged members to submit bridging and convergence-building ideas rather than new proposals under the negotiations.
Speaking on behalf of Ambassador Hung Seng Tan of Singapore, co-convenor of the initiative, First Secretary Mr Wei Guo Tang said: “We need to work harder and smarter. Working harder means members need to spend more time making creative attempts to resolve impasse and bridge differences.”
He added: “And working smarter requires us to change the way we work and instead of rehashing old positions, we should think out of the box and look ahead rather than constantly looking into the rear mirror.”
Ambassador Mina updated members on the E-Commerce Capacity Building Framework , which was launched at MC12 to offer a wide range of capacity building in support of the participation of developing and least developed countries in the e-commerce negotiations and to facilitate their engagement in the digital economy.
On behalf of Ambassador Kazuyuki Yamazaki (Japan), co-convenor of the initiative, the Deputy Permanent Representative of Japan, Mr Naoki Hikota, noted that members had a good discussion in the stocktaking small group on single windows, data exchange and system interoperability and the unique consignment reference numbers. He invited the proponent of these proposals to make further efforts to gather support from other participants.
UNCDF and Flutterwave join forces to ensure women’s voices are included during the policymaking process on digital financial services. In June 2021, our CEMAC advisory panel shared 23 proposals for accelerating women’s financial inclusion with regulators and public decision-makers in the region. Read the full report here.
A new report, published by the United Nations Capital Development Fund, in collaboration with Flutterwave, proposes 23 measures to reduce the gender digital divide in financial services in Central Africa, where almost two-thirds of women are still excluded from the formal financial sector.
The report aims to ensure the policy and regulatory environment accelerates women’s access to digital financial services, strengthens financial and digital education and improves consumer protection. It pushes forward new ideas and highlights the urgent needs that women in the region have, which have increased as a result of the COVID-19 pandemic.
By providing millions of women across Central Africa with access to financial accounts, digital financial services have the potential to improve their financial lives and economic participation. Ensuring their impact is inclusive requires innovation not only in technology and product development, but also in policies. This report represents a significant step that has been taken toward bringing the experiences of those impacted by policies into the halls of decision-making.
“Women’s voices as community leaders, technical experts, and consumers are essential to designing and implementing policies that have a direct impact on their financial lives. This is particularly the case for consumer protection regulations, where privacy, transparency, and fairness are addressed directly. Women need to be in the room when important decisions are made. That’s how today’s reforms will pay off in the long term.”
— Ahmed Dermish, UNCDF Policy Accelerator Lead Specialist
Despite recent efforts to promote women’s financial inclusion across the Central African Economic and Monetary Community (CEMAC), women still face major legal, social, and cultural barriers which prevent them from using formal financial systems. In addition, their voices are often absent from the process of developing related public policies and regulations.
For the very first time, a participatory initiative underscores the major role civil society organizations have in informing financial inclusion policies, working alongside governments and regulatory authorities across the six countries of CEMAC.
The 23 policy recommendations emanate from the Advisory Panel on Women & Digital Financial Services in Central Africa, which was convened by UNCDF from March 2021 to March 2022 and gathered civil society representatives from across the six CEMAC countries (Gabon, Cameroon, the Central African Republic, Chad, the Republic of the Congo and Equatorial Guinea).
UNCDF and Flutterwave are collaborating with the Panel to turn these recommendations into policy, regulatory, and market solutions.
“Flutterwave is proud to collaborate with UNCDF on such an important initiative designed to facilitate financial inclusion and have a long-term impact on the local communities. Ensuring that all Africans are financially included in the new digital world is our key focus and this cannot happen if we do not first bridge the current gender gap.”
— Bode Abifarin, Chief Operating Officer at Flutterwave
About the UNCDF Advisory Panel on Women & Digital Financial Services in the CEMAC region
In March 2021, UNCDF, through its Policy Accelerator, created an advisory panel on “Women and Digital Financial Services” to facilitate regular dialogue between regulators, policymakers, and civil society representatives from each of the six CEMAC countries (Gabon, Cameroon, the Central African Republic, Chad, the Republic of the Congo and Equatorial Guinea). Since its inception, the panel has presented its recommendations to regional and national regulators and several participants have been invited to contribute to the regional financial inclusion strategy.
African tech innovators converged on Dakar for two major industry events.
From April 25 to 29, 2022, Africa’s innovation ecosystem met in Senegal for two key industry events: the AfricArena West Africa Summit and the AVCA annual conference.
For one intense week in Dakar, the continent’s most promising digital start-ups promoted their talents to a large audience of international companies and investors. Several West African start-ups attended, thanks to the support of the NTF V program. Two of them, Lengo and Survey54, said they used the opportunity to develop new networking and funding opportunities.
Lengo and Survey54: the data revolution is underway
Lengo is based in Senegal and Survey54 in Ghana. Both start-ups made the same observation: without reliable and up-to-date data on African markets, companies struggle to develop their commercial strategy. Foreign investors, however, are increasingly converging on Africa, whose economic potential is undeniable.
To meet their demand, Lengo and Survey54 specialize in market research, marketing surveys and opinion polls. Their promise? To help companies target the expectations of African consumers and better penetrate the market. In just a few months, both Lengo and Survey54 have gained the trust of large international groups. Their exponential growth and value propositions did not go unnoticed during the two major digital entrepreneurship events in Senegal in April.
Survey54 awarded best start-up in its category at the AfricArena Summit
Stephan Eyeson, CEO and co-Founder of Survey54, made his mark during his presentation at the West African summit of tech accelerator AfricArena. “I had the unexpected opportunity to pitch in front of a crowd of investors and major players of the digital economy,” he said. “By winning the award in the Seed Stage category, Survey54 immediately benefited from greater visibility. The press coverage was significant. Since then, we have prepared new partnerships and received funding offers. The NTF V project has followed us for only a few months, so it’s off to a great start.”
Lengo wows investors at AVCA’s Venture Capital Summit
Roger-Xavier Macia, co-founder of Lengo, also found new opportunities at the Venture Capital Summit, organized during the annual conference of the African Private Equity and Venture Capital Association (AVCA). The distinctive character of the exclusive event did not escape him.
“Such an invitation is a privilege. It offers so much credibility and recognition,” he said. “Only around 10 start-ups were allowed to meet the largest investment funds. This means facing the best minds in African Tech. Without the support of NTF V, we would never have been able to create such opportunity.”
Since the summit, Lengo has held discussions with a dozen new partners and is feeling confident. Before the end of 2022, it hopes to raise up to five million euros. This is a key step in developing faster and better information technologies.
The Netherlands Trust Fund V (NTF) (July 2021 – June 2025) is based on a partnership between the Dutch Ministry of Foreign Affairs and the International Trade Centre. The programme supports small businesses in sub-Saharan Africa in the digital technology and agribusiness sectors. It aims at contributing to an inclusive and sustainable transformation of agri-food systems partly through digital solutions, improving the competitiveness of local tech start-ups internationally and supporting the implementation of IT&BPO companies’ export strategies
Expanding people’s access to finance, reducing the cost of digital transactions, and channeling wage payments and social transfers through financial accounts will be vital to mitigating recent economic setbacks in developing countries. Governments and the private sector can help further this transformation in several ways.”
Around the world, high inflation, slow economic growth, and food shortages are hurting the poor the most. Coming on top of the unequal effects of the COVID-19 pandemic, today’s multiple crises have already caused dramatic reversals in development and led to a substantial increase in global poverty.
On the positive side,.
These changes are strikingly evident in the latest edition of the Global Findex database, compiled from a survey of more than 125,000 adults in 123 economies, covering use of financial services throughout 2021. The survey found that 71% of adults in developing economies now have a formal financial account – whether with a bank, another regulated institution such as a credit union or microfinance lender, or a mobile money service provider – compared to 42% when the first edition of the database was published a decade ago. In addition,
This digital transformation makes it easier, cheaper, and safer for people to receive wages from employers, send remittances to family members, and pay for goods and services. Mobile money accounts can better handle high-volume, small-denomination transactions, which help users to access financial services and save in order to cope better with crises. Individual accounts also give women more privacy, security, and control over their money.
. In Sub-Saharan Africa, 39% of mobile money account holders now use their accounts to save. And more than one-third of people in low- and middle-income countries who paid a utility bill from an account did so for the first time after the start of the COVID-19 pandemic.
Importantly,. Government social programs can now reduce delays and leakage by channeling transfers directly to their beneficiaries’ mobile phones. Millions of people in developing countries received payments in this way during the pandemic, helping to cushion the impact of COVID-19 on livelihoods.
Building on these encouraging trends is crucial, especially given the current economic headwinds. Expanding people’s access to finance, reducing the cost of digital transactions, and channeling wage payments and social transfers through financial accounts will be vital to mitigating development setbacks resulting from the ongoing turbulence.
Governments and the private sector can help further this transformation in several critical areas. First, they need to create a favorable operating and policy environment. For example, enabling the interoperability of systems allows for payments across different types of financial institutions and between mobile money service providers. Improving access to finance depends much more on the mobile-phone system than on the physical banking system. Cheap and functional mobile phones and affordable internet access are prerequisites for expanding digital finance. Consumer protections and stable regulations are also needed to foster safe and fair practices that bolster trust in the financial system.
India and the Philippines that government identification programs and financial-inclusion programs can work in tandem to equip hard-to-reach populations with official identification documents and financial accounts. India, for example, has pioneered a successful accessible digital ID system that pays due attention to safety and privacy.. We know from the experiences of countries such as
Another high priority should be to promote the digitalization of payments. The Global Findex data for 2021 show that 865 million account owners in developing economies opened their first account at a bank or similar institution in order to receive money from the government. This helped households directly and also helped build the digital financial ecosystem, because people who received payments into an account were more likely to use their account to make payments and access other services. Digital payments by governments thus serve as a foundation for assembling credible social registers and identifying gaps and overlaps.
As digital payments become more widespread and less costly, many private businesses will be able to pay their workers and suppliers electronically – and should. The digital revolution offers a chance to increase formal-sector employment without making compliance excessively burdensome. At a time of tighter government budget constraints, digital payments can help broaden the revenue base by reducing tax avoidance and evasion.
Finally, policymakers will need to make additional efforts to include underserved groups., and to need support to open and use a financial account. Financial-education programs, especially those that involve peer-to-peer learning (such as through women’s self-help groups) are essential as well.
The World Bank is firmly committed to expanding financial inclusion through digitalization. We will continue to support countries as they enhance mobile-phone networks, rework regulations to foster access to finance, adopt e-government platforms, and modernize social-protection systems. For the many millions of people who still lack an account, we need to redouble our efforts and find creative ways to connect them to the financial system, build economic resilience, and reap the benefits of inclusion.
This piece was originally published by Project Syndicate on July 7, 2022
The African Development Bank Group has released a new report providing a snapshot of results of regional operations financed by its concessional lending window, the African Development Fund (ADF), over the last decade.
The report, “Crossing Borders, Connecting Communities, Changing Lives,” reviews and documents the impacts of the regional operations envelope since ADF-13 (the 13th replenishment of the ADF). Contributing more than 80 active regional projects and programs, the ADF’s regional operations envelope provides vital support to Africa’s 37 low-income countries, 16 of which are landlocked. By supplementing these countries’ resources, the envelope makes it possible for the countries to build regional infrastructure that stimulate their development.
The report also highlights how between 2020 and 2022, the ADF expects to finance 51 projects and programs worth $2.7 billion and mobilize another $1.5 billion in co-financing from development partners such as the World Bank, the Green Climate Fund, the OPEC Fund, and the European Investment Bank.
“At the Bank, we know that regional connectivity will catalyze Africa’s path to recovery,” said Yacine Fal, the Bank’s acting vice president for regional development, integration, and business delivery. “This is especially true in light of climate shocks, debt vulnerabilities, the COVID-19 pandemic, and the Russia-Ukraine conflict. Strong regional operations in ADF countries merit our support. They will lay the foundations of social and economic resilience for decades to come.”
The gap in regional infrastructure spanning African countries runs into billions of dollars. Financing the shortfalls is especially challenging for Africa’s low-income countries. Yet roads, transmission lines, financial systems, and other infrastructure that crosses borders are essential for countries to trade, innovate, and prosper.
“The resources required for Africa’s low-income countries to recover, rebuild, and integrate are staggering,” said Jean-Guy Afrika, acting director of the Bank’s Regional Integration Coordination Office. “This report shows how investing in regional operations generates social and economic benefits for millions of women, men, and young people, from small-scale traders, consumers, and households to investors, business teams, and entrepreneurs. We are particularly grateful for the generous support of ADF donors and hope that the evidence in this report will spur even more financing for Africa’s development.”
The report underscores how regional roads, bridges, railways, ports, airports, border posts, power stations, and communication networks financed by the regional envelope, are connecting communities, and changing lives.
- The regional operations envelope is increasingly focused on areas experiencing fragility. Under ADF-15, more than 43% of resources were allocated to fragile regions such as the Sahel, the Horn of Africa, and the Lake Chad region, surpassing the Bank’s initial target of 20%.
Regional transport, power, and ICT projects make up close to 80% of operations approved during the last three ADF cycles. This has produced thousands more kilometres of paved roads, bridge projects, and one-stop border posts across corridors in West, East, Central, and Southern Africa.
Click here to read the report and to find out more about the impact of the ADF’s regional operations envelope over the last decade.
In 2021, the World Bank conducted a study to assess the financial technology (Fintech) and digital financial services landscape in Côte d’Ivoire. The findings contributed to an acceleration of ongoing national and regional work in improving the enabling environment, as well as access to finance for Fintech companies. It also opened a dialogue between Fintech entities, the Ministry of Finance, and the Central Bank West of African States (BCEAO). Additionally, the study identified women-led Fintech companies as key players to drive access to digital financial services in Côte d’Ivoire.
In Côte d’Ivoire, many individuals and small businesses are financially excluded, and access to finance can be a challenge. Women are especially at a disadvantage, although mobile money has helped to reduce the gender gap in access to financial services. According to the 2017 Global Findex database, which tracks financial inclusion and access to finance, only 41 percent of Côte d’Ivoire’s citizens had access to financial services. The study identified 37 Fintech initiatives, many of which are affected by a lack of funding, limited business and digital skills, as well as an unclear operating environment. Three key challenges prevent Côte d’Ivoire from fully reaping the benefits of a digital economy through the full participation of its citizens and businesses: (i) limited digital inclusion in rural areas; (ii) poor policy and regulation; and (iii) gaps in financing for private sector development.
Based on desk research, questionnaires and interviews, the study assessed the constraints to Fintech development. It suggested ways to improve digital financial inclusion for poor households and micro-entrepreneurs, including women. It specifically focused on the legal and policy framework, financial and telecommunications infrastructure, and the business environment for Fintech startups. This analytical work led to a multi-stakeholder workshop, as recommended by the Bank. The workshop aimed to improve the enabling environment for Fintechs, as well as boost financial inclusion. The event, organized on October 21-22, 2021, facilitated the creation of a Roadmap for 2022-2024 to improve the Fintech sector in Cote d’Ivoire. The workshop also proposed actions to undertake in four key areas: the legal and regulatory framework, access to finance, capacity building, and the organization of the Fintech ecosystem.
The study revealed the potential for the development of a new generation of financial service providers. It also identified the capacity-building needs of the Fintech companies. Over time, efforts for a more supportive environment are expected to promote private sector-led growth and the development of human capital in Côte d’Ivoire. Building on the study findings, the Agency for Financial Inclusion (APIF) took concrete steps in the form of stakeholder workshops, contributions to future regulations, as well as the organization of innovation fora to help Fintech companies access markets and finance by developing marketing ideas and strengthening business skills.
The study helped to identify a pronounced gender gap in the Fintech sector, finding that women led only 2 of the 37 Fintech companies operating in Côte d’Ivoire. It also found that most companies are active in urban areas, leaving rural parts of the country without access. The findings spurred several recommendations to work toward reducing both gender and urban-rural gaps in access to digital financial services. More specifically, the action plan laid out commitments to: (i) increase women’s interests in technology-based financial products; (ii) integrate financial education modules in literacy curricula for women; (iii) sensitize rural populations in the use of Fintech services and products; and (iv) support the creation of incubators in each district of the country.
It is expected that the results of these actions will help the country reach the financial inclusion objectives set forth in the newly approved project to “Enhance government effectiveness for improved public services” for Côte d’Ivoire.
Bank Group Contribution
The study was conducted under the Côte d’Ivoire Jobs and Economic Transformation Project that was approved in June 2021.
The Bank team worked with the Agence Française de Développement (AFD) to leverage funding for the Agency for Financial Inclusion. The AFD also played a key role in providing a technical review of the study.
Looking ahead, the Government plans to implement the 2022-2024 Roadmap to Improve Fintech in Cote d’Ivoire. In this regard, it incorporated major recommendations from the World Bank study, including actions to improve alternative finance, promote women-led Fintechs, as well as gender-focused product designs. The Roadmap is expected to contribute to ongoing work related to the revision of the enabling environment for Fintech in the West African Economic and Monetary Union (WAEMU). Efforts are being led by the Central Bank of West African States (BCEAO), including the creation of an innovation lab at the national level. Additionally, the Roadmap includes measures to build the capacity of Fintech business owners and strengthen Fintech support organizations, such as incubators. The Bank team also shared the report with regulators in Madagascar and Nigeria. Both countries have found the study useful and have requested the Bank’s support for a similar study using the same methodology. The Central Bank of Madagascar will host its first Fintech workshop on June 17, 2022, thanks to the joint support of the World Bank and the International Finance Corporation (IFC).
“As a female entrepreneur, I was pleased to have the opportunity to be part of the Regulatory Committee established by the Côte d’Ivoire Agency for Financial Inclusion (APIF) under this World Bank-supported initiative. The APIF is the first public institution to allow Fintechs in Côte d’Ivoire to have a voice. This initiative gathered key players of the financial services ecosystem, which jointly worked on a roadmap for Fintech development to accelerate innovation and financial access.” said Nadine Ebelle Kotto, Chief Executive Officer (CEO) of MQash. (MQash is a Fintech specialized in providing innovative market solutions in the payment industry).
The recent World Telecommunication Development Conference (WTDC) in Kigali, Rwanda, underlined the growing commitment to ensure gender equality in digital development along with pushing for meaningful global connectivity.
On 12 June, conference delegates and local residents alike joined Walk2Connect, a seven-kilometre walkathon organized by the International Telecommunication Union (ITU), the Ministry of Information and Communications Technology and Innovation, the Rwanda Utilities Regulatory Authority, and the City of Kigali. Held as part of Kigali’s Car Free Day, the walkathon aimed to raise awareness about bridging the gender digital divide and promote equal participation of women in the global digital agenda.
“There really aren’t enough women in the digital world. We are trying to encourage them more and more to get interested in it,” said Sandrine Takeu, a delegate from Cameroon at WTDC. “Today’s world is progressive, but if women are left behind, we will never reach the parity we want between men and women,” she added.
ITU, as the United Nations specialized agency for information and communication technologies (ICTs), has increasingly applied a gender perspective and wider sustainable development awareness throughout its work. Beyond ITU’s organizational culture, ensuring gender balance at key global conferences matters for the long-term trajectory of global digital development.
“The three Network of Women events held during WTDC – the Network of Women luncheon hosted by Qualcomm, the Network of Women Breakfast supported by Australia, and of course, our Network of Women Walk2Connect Walkathon – have helped strengthen the connection between female delegates, enabling us to share our experiences, solidarity, and commitment to gender empowerment in the digital sector,” said Doreen Bogdan-Martin, Director, Telecommunication Development Bureau, ITU.
The Network of Women (NoW) in ITU’s Development Sector (ITU-D) was formed last year to boost the number of female delegates ready to take on leadership roles, such as chairing committees and workings groups, in WTDC. To further diversify the perspectives being brought to the negotiating table, NoW in ITU-D has been established in each of ITU’s six regions.
A few steps forward
Ultimately, the registered delegates onsite in Kigali were 64 per cent male and 36 per cent female – a clear an improvement over the last WTDC (Buenos Aires 2017), where they were 74 per cent male and 26 per cent female. This remains far from the gender-balanced conference that ITU is committed to achieving.
Still, Belinda Exelby, representing mobile industry association GSMA, observed real progress being made at this latest WTDC, evidenced by “so many women chairs and vice-chairs – which is fantastic to see.”
Men also joined the walkathon to support their female counterparts and promote gender mainstreaming. “In the Malaysian delegation, two out of seven representatives are women,” noted Ahmad Norhad Zahari, from Malaysia’s Ministry of Communication and Multimedia. “We hope to increase this number in the future.”
The future starts NoW
Among the hundreds of resolutions and pledges made by the global digital development community under the auspices of Partner2Connect was a commitment to “foster sustainable development and address current and future challenges, such as poverty alleviation, job creation, gender inequality and cybersecurity.”
Along with strengthening the key ITU-D Resolution 55 on gender equality, the conference endorsed the continuation of the work of the NoW Advisory Board, composed of two representatives per region.
Next stop: ITU Plenipotentiary
The upcoming Plenipotentiary Conference – or PP-22 – in Bucharest, Romania brings together ITU’s highest governing body to set the direction of ICT coordination, standardization, and development for the next for years.
This, too, aims to be a gender-responsive conference, with ITU Secretary-General Houlin Zhao calling for women to make up at least 35 per cent of PP-22 delegates, up from 29 per cent at PP-18.
WTDC concluded with a call for the Plenipotentiary Conference to keep building on and consolidating gender mainstreaming in ITU’s development activities. Beyond making each new conference progressively more gender-responsive, this means providing the financial and human resources to integrate a gender perspective consistently in the years ahead, delegates said.
Learn more about the Network of Women for ITU-D.
ESCWA organized the Lebanese Digital Economy Forum on 27 June, to revive the country’s digital economy and create a bridge between individuals and the private and public sectors.
The Forum, held in Beirut, brought together entrepreneurs, government representatives, owners of small and medium enterprises (SMEs), startup founders, corporate leaders, NGO representatives, and other key players in the digital economy. Discussions revolved around future steps to rebuild trust and resilience.
Participants also discussed the importance of a digital economy able to spur national recovery following the devastating effects of COVID-19, and the disastrous economic downturn in Lebanon affecting organizations and individuals alike.
The Government of Maldives and the World Bank today signed two grant agreements totalling US$34 million (MVR524 million) to strengthen pension and safety nets for Maldivian workers and improve their employability, and to leverage digital technologies for development and climate resilience.
The grant agreements were signed at the Ministry of Finance in Male’ by Honorable Ibrahim Ameer, Minister of Finance, and Faris H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka.
“The Maldives and World Bank has enjoyed a strong partnership spanning over four decades and across a wide range of sectors such as fisheries, renewable energy, education, financial management,” said Hon. Ibrahim Ameer, Minister of Finance of Maldives. “As we look towards a better future for our country and our people, the two grants will give us the fiscal space to kick-start social protection programs, and to leverage new technologies to accelerate our growth and development.”
A US$24 million grant for the Sustainable and Integrated Labor Services (SAILS) project will help the government establish an unemployment insurance scheme and an employment services scheme. Employers and employees will contribute jointly to a fund that will pay unemployment benefits. Safety nets for workers are currently limited to pensions, leaving them vulnerable to external shocks. The SAILS project will also provide counselling, job search assistance, training and coaching to assist jobseekers.
A US$10 million grant for the Digital Maldives for Adaptation, Decentralization and Diversification project will help the government promote competition in the broadband market through regulation and modernize the national identification systems to facilitate online services and transactions. In addition, the project will improve climate-related data and analytics by tracking emissions, deploying modern technologies such as drones, and using existing data more efficiently for policymaking. The project will help government and businesses make informed decisions in managing and protecting the Maldives’ coral reefs and marine ecosystems.
“The World Bank is pleased to support the people of Maldives with these two grants we have signed today. This financing will help the government protect workers from future economic shocks and help those who have lost their jobs during the COVID-19 pandemic get back into the job market,” said Faris. H. Hadad-Zervos, the World Bank Country Director for Maldives, Nepal and Sri Lanka. “It will also help harness the power of digital technologies to help protect the Maldives’ magnificent marine ecosystem on which so many Maldivians and their economy depend.”
The SAILS project will be jointly implemented by the Ministry of Economic Development and the Maldives Pension Administration Office. The Digital Maldives for Adaptation, Decentralization and Diversification Project will be implemented by the Ministry of Environment, Climate Change and Technology, in partnership with the Communication Authority of Maldives, National Centre for Information Technology, and Department of National Registration.
Throughout the years, Laxmi Shrestha and her husband saw the opportunities that opening an online shop could bring to her family business.
“Looking at the trend of TikTok and other sites, we thought selling online could help us but we weren’t technically sound,” said Laxmi, the owner of Laxmi Hastakala Store, in Banepa, Nepal, and part of a family of artisans.
As she learned about selling online, she picked up on how to market her shop digitally and, according to Laxmi: “It has surely given our business a push we always wanted. Recently we started selling our products online and we also receive payments online.”
Laxmi Hastakala Store is among the 1,800 women-led micro, small and medium enterprises (MSMEs) in Nepal being trained on digital and financial literacy by Sparrow Pay – one of the winners of the Women Fintech MSME Innovation Fund launched in 2019 by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the United Nations Capital Development Fund (UNCDF).
Sparrow Pay has created a local digital marketplace where women-led MSMEs can offer products and services to its existing 800,000+ digital payment service users. Additionally, Sparrow Pay is supporting these women entrepreneurs in adopting digital payments and creating a payment history to support access to additional financial services.
MSMEs are a vital source of employment and a significant contributor to a country’s GDP. However, more than 45 per cent of MSMEs in Asia and the Pacific are constrained from accessing finance and other support for their businesses. Socio-cultural norms mean women-led enterprises have to overcome gender-specific barriers to access institutional credit and other financial services.
ESCAP and UNCDF aim to encourage easy access to digital finance for MSMEs in Asia and the Pacific, break the financial barriers surrounding women-led enterprises and support entrepreneur-centric growth and inclusiveness throughout the region. Initiatives by the 10 winning fintech companies are currently supporting more than 9,000 women-led MSMEs in Bangladesh, Cambodia, Fiji, Myanmar, Nepal, Samoa and Viet Nam.
Just like Laxmi, these women business owners plan on successfully growing their companies in the digital area.
The Women Fintech MSME Innovation Fund is part of a regional programme “Catalyzing Women’s Entrepreneurship: Creating a Gender-Responsive Entrepreneurial Ecosystem,” which seeks to support the growth of women entrepreneurs in Asia and the Pacific by enabling a policy environment for such business owners, providing them with access to finance and expanding the use of ICT for entrepreneurship.
For more about the Women MSME Fintech Innovation Fund and the ten winners: https://express.adobe.com/page/nRfb6azvvA968/
The pandemic was difficult for families and businesses across the world, yet many believe it accelerated growth in digital payments as people were less physically mobile during lockdowns and cash was perceived as a vector for COVID-19. Beyond these changes in customer behavior, there were other conducive actions taken by governments and providers to grow the use of digital payments systems.
GSMA’s COVID-19 Response Tracker presents data from 32 countries on mobile money policy responses to COVID-19. Most regulators instituted fee waivers and increased transaction and balance limits. Just under half conducted social and humanitarian transfers, and just under a third allowed for flexible Know Your Customer (KYC) and on-boarding procedures. For example, regulators like the Central Bank of Kenya(CBK) and National Bank of Rwanda (BNR) raised the transaction limits on mobile wallets, and BNR went further to zero-rate transactions on mobile money transfers, transfers between bank accounts and wallets, and merchant transactions. Further, providers like M-PESA in Kenya and Paga in Nigeria offered free transfers up to US$10 and US$15 respectively.
Beyond these facilitating policies, governments and aid agencies have been infusing payments systems with cash transfers. The World Bank estimates that during the pandemic period (between 2020 and May 2021), US$2.9 trillion was devoted to cash transfer programmes, which reached about 1.3 billion people (17% of the world’s population). Individual cash transfer programmes in India and Pakistan alone reached over 200 million and 100 million people respectively.
COVID-19 Created Goldilocks Conditions for Mobile Money
The combination of changing customer behavior, relaxed mobile money regulations, reduced transfer prices, and massive cash transfer programmes seem like the perfect storm to create goldilocks conditions for accelerated growth in mobile money. However, the loss in income and reduced ability to make purchases in countries that did not have developed e-commerce systems also may have played a strong countervailing role. Further, mobile money is a cash-based system that relies on agents to cash people in and out of the system. If COVID-19 affected their ability to operate, mobile money services may have suffered. This article examines the GSMA supply-side data to ascertain the degree to which COVID-19 may have impacted mobile money systems.
Measurement and Methodology Decisions
There does not seem to be a single correct method for conducting this analysis and more work should be done on this topic. While many countries began lockdowns in March 2020, others waited until mid-year and they all varied in severity and length, as do the supportive measures that were instituted to lessen their economic impact. This analysis defines the COVID-19 period from March 2020 through December 2021.
In the previous article, Have We Reached Peak Mobile Money? UNCDF notes that the growth in active customers, and volumes and values of transactions has been decelerating. Therefore, accelerated growth due to COVID-19 may appear as decreased deceleration. However, given the volatility of deceleration over time, it is difficult to isolate the potential effect of COVID-19, given it seems to be small or non-existent for key indicators.
To address this on the global level, UNCDF presents charts mapping the growth of key indicators during the COVID-19 period and compares them to growth over the two proceeding periods. The Pre-COVID-19 period is the period directly preceding COVID-19, and the Pre-Pre-COVID-19 period is the period before that. Beyond these charts we examine the comparative average growth rates over these intervals.
COVID-19 does Not Seem to have Catalyzed Significant Active Customer Growth
The 2020 GSMA Global Adaptation Survey interviews mobile money users in five key markets and finds that 13% of mobile money users in those markets cited COVID-19 as their reason for using the system. Therefore, it is reasonable to assume that active customer growth accelerated during the COVID-19 period. However, the GSMA data does not clearly show this.
The first period from March 2016 to December 2017 had an average quarterly growth rate of active customers of 7.4%. That average growth rate decreased to 4.5% in the subsequent period from March 2018 to December 2019. During the pandemic, active customers grew at an average rate of 4.1% per quarter. Therefore, the deceleration in growth is continuing during the pandemic, but potentially slightly less quickly due to the pandemic. At most it seems like the pandemic may have increased growth by a percentage point or two, but nothing more significant than that.
COVID-19 May have Limited Agent Growth During Lockdowns but Growth Recovers
The 2020 GSMA Global Adaptation Survey reported agents struggled during the beginning of the pandemic. During lockdowns, particularly the first ones in the period from March through June of 2020, many agents closed, had significant liquidity issues and witnessed decreases in customers who were cautious of the health risks of cash transactions.
For example, agents in Uganda had limited ability to travel to rebalance, and had to use working capital to support their families. In Kenya, agents reported income dropping by over 50% during the initial lockdown in 2020. This would predict a depressed growth rate in active agents during the beginning of the pandemic, and it will be interesting to observe if this growth rate subsequently recovers.
The GSMA data does seem to show decreased growth in the first two quarters of the pandemic, but then it seems to increase to normalize for the overall pandemic period. Average quarterly growth for active agents during the pandemic was 5%, compared to 5% and 4% in the March 2016 – December 2017 and March 2018 to December 2019 periods respectively. Therefore, it is also possible that active agent growth was increased by a couple percentage points, but nothing more significant than that.
Was there Growth in Transaction Volumes or Values?
Even though it does not appear that COVID-19 significantly accelerated growth for active mobile money customers globally, existing customers may have been more active, driving growth in volumes and values of transactions. Reports are mixed, from evidence in Rwanda that both volumes and values of transactions skyrocketed, to the 2020 GSMA Global Adaptation Survey reporting that most customers did not report an increase in the frequency of their transactions. It is very possible that disparate trends developed across countries given unique circumstances, and that would be a fascinating study to compile.
Globally, the GSMA data likely show continued deceleration in transaction volume growth in comparison to a constant growth rate in transaction values. The average quarterly growth rate in volumes decreases consistently over the periods from 10% to 7% and finally to 5% during the COVID-19 period. While the growth rate in values stays fairly constant from 8% to 7% to 7% during the COVID-19 period. This data supports the conclusion that mobile money was not used more frequently during the pandemic, but was likely used differently, which is discussed in the next section.
What Could Explain the Growth in Average Transaction Value?
Given transactions values grew relative to volumes during the pandemic, the average value of a transaction increased. During the subsequent two periods, the average transaction value had been slightly declining, and during the pandemic it increased by an average quarterly growth rate of 2.2%. There are potential explanations for this in the literature, which note that customers shifted to use different mobile money products during the pandemic.
2020 GSMA Global Adaptation Survey states that users reported a slightly decreased number of incoming transactions (i.e. receiving a P2P transaction). For example, in Kenya 34% of users reported receiving transfers less frequently versus the 16% that reported receiving them more frequently. Most significantly, users across the five focal countries reported increases in the usage of the following mobile money services as a direct result of the pandemic:
- 10%-20% of users started receiving salaries
- 4%-24% of users started purchasing products and services
- 17%-22% of users started paying bills
- 2%-16% of users took a mobile money loan
- 3%-15% of users saved
- 4%-11% of users received a pandemic related humanitarian or social transfer.
The increased use of these products during COVID-19 is significant and likely explains the increased average transaction values. If the growth in these product categories continues, or even if gains just remain, this would be an important legacy of the pandemic for mobile money. Especially important are the growth in salary payments and merchant payments, and further research should track their future growth trajectories.
While Many Mobile Money Providers Engaged in G2P, Few Customers Benefited
The above data showing that only 4%-11% of users reported receiving a pandemic-related social or humanitarian transfer in the five focal countries can be confusing and is worth discussing. For clarity these are also referred to as bulk transfers or government to person (G2P) payments in the literature. The 2020 GSMA Global Adaptation Survey concludes, “responses received do not suggest a significant surge of this type of transaction.” At first glance this seems strange given the GSMA 2022 State of the Industry Report (SoTIR) notes that:
“Based on responses to the 2021 Global Adoption Survey, more than half of mobile money providers stated that they helped disburse COVID-19 relief funds and, between September 2020 and June 2021, the number of unique customer accounts receiving government-to-person (G2P) payments grew by more than 50 per cent.”
However, UNCDF believes that these statements are likely consistent. It is helpful to understand that while globally US$2.9 trillion was devoted to cash transfers during the pandemic, reaching 1.3 billion people, those numbers are heavily skewed away from low-income countries that do not have the funds, experience, or systems for scaling these transfers. Low-income countries are also the only countries where mobile money has proliferated (reaching an average of 18% of adults in 2017 versus 4% of adults globally). Therefore, there is a mismatch between countries that have scaled G2P systems and countries with mature mobile money systems.
Findex (2017) reported that only 6% of adults in low-income countries had received a G2P transfer in the last year. For pandemic-related transfers, the World Bank notes that low-income countries were only able to cover 4.5% of their populations. Further, while the global average spend per capita was $345, it was driven by a value of US$847 in high-income countries and constrained by a value of US$4 in low-income countries. Lastly, the global average duration of transfer is only four months.
Thus, more than 50% of mobile money providers could have helped disburse COVID-19 funds, yet they were limited in value, volume, and population coverage. This could still have produced a 50% growth rate, given UNCDF noted in the article, Does Mobile Money Increase Financial Inclusion?, that bulk payments, which include G2P, only accounted for 6% of mobile money transaction volumes and 11% of values by the end of 2021. Hence, a 50% pandemic growth rate would have increased volumes 3% and values by 5.5% given their small base. This is significant and laudable, yet also puts this robust growth rate in context to explain why most customers do not report receiving transfers.
UNCDF hopes that donors and governments will focus on scaling cash transfers in low-income countries as they have significant developmental impacts and are crucial to achieving the Sustainable Development Goals. One of the crucial lessons from the pandemic is that for mobile money to have a more significant role in delivering those cash transfers, better systems must be built before crisis strikes.
For example, in 2018, an estimated one billion people did not have an official identification, including 50% of women in low-income countries. In most countries this prohibits them from registering for a mobile money service. And further, for most cash transfer programmes, a registry is required to determine the most at risk populations in need of these transfers. Governments generally do not have these prepared. During the pandemic more advanced countries like Brazil and South Africa where able to register millions of people online, while governments in least developed countries like Bangladesh, Myanmar, and Madagascar were forced to send government officials to physically register people. Digital tools for identification and registries, combined with internet connectivity, digital skills and smart devices will ensure governments are more prepared in the future and deserve public sector funding.
Globally Mobile Money Growth Rates Decreased During the Pandemic
The most accurate summary of this data is that if there was accelerated growth in mobile money during the pandemic, it was small and difficult to observe. Overall, growth rates continued to decrease, but at a slightly slower rate than the two subsequent periods, which may be related to the pandemic. The areas for future work are at the country-level and investigating the indicated shift in use cases to understand if they continue over time.
It is somewhat disappointing that many of the Goldilocks factors did not seem to drive more robust growth, but their were countervailing factors as well. Further, the pandemic emphasized the importance of cash transfers, and the divide in the ability to execute them at scale between high-income and low-income countries.
Mobile money is not a perfect delivery mechanism for these payments and a functioning mobile money system will not be sufficient to deliver them. However, in low-income countries, mobile money systems often have the largest population penetration and geographical reach and are therefore the best candidates for customization to deliver humanitarian and social cash transfers. UNCDF looks forward to working with mobile money providers to adapt systems to this need, and better facilitate payments to those that need them most.
Reader’s Note: This article is part of a series which uses the last 15 years of mobile money to reflect on progress in the sector and gauge where we are in answering some of the big questions still being debated.
Dr Lili Yan Ing, ERIA’s Lead Advisor on Southeast Asia, was invited as one of the main speakers at Jakarta Post’s ‘Spotlight 12’ which is part of their Road to G20 Series, along with Dr Sri Mulyani Indrawati, Indonesia’s Finance Minister, Dr Joan José Daboub, Co-chair of B20 Task Force of Trade and Investment, and Mr Pamitra Wineka, CEO of TaniHub Group. The event addressed the theme: G20 Digital Transformation: Resilient MSMEs for Global Economic Recovery’. Dr Ing presented the key ingredients necessary to support strong and resilient MSMEs during the COVID-19 pandemic. First, it is important that the government supports both supply- and demand-sides, like what the government of Indonesia (GOI) has provided since 2020, particularly for MSMEs in 2021. In 2020, IDR112 trillion was allocated for interest rate subsidies and tax subsidies. In 2021, the GOI allocated IDR187 trillion in corporate financing to support MSMEs to continue their operations during the pandemic. Second, the government needs to ensure that the allocated funds and assistance will be well distributed and reach the targeted beneficiaries.
Dr Ing also discussed the digital divide between countries and the integration of MSMEs into digital trade. There are three significant technological gaps: internet speed, internet usage, and technology production. Compared to developed countries, developing countries, including Indonesia, are experiencing huge technological gaps that hinder businesses, including the MSMEs, to apply digital trade. The regulatory framework provided by the government will play an important role in integrating MSMEs into digital trade through the provision of good electricity, knowledge on international market standards and service qualifications, and assistance in digital transformation.
Following Dr Ing’s work on Indonesia’s G20 presidency, she highlighted the global challenges in digital transformation and digital trade: privacy, cyber security, competition, and the digital divide. Dr Ing expressed the importance of having a better privacy and competition laws in supporting digital transformation as well as tackling the digital divide, especially between developed and developing countries.
Three quarters of adults now have a bank or mobile money account; gender gap in account ownership narrows
The COVID-19 pandemic has spurred financial inclusion – driving a large increase in digital payments amid the global expansion of formal financial services. This expansion created new economic opportunities, narrowing the gender gap in account ownership, and building resilience at the household level to better manage financial shocks, according to the Global Findex 2021 database.
As of 2021, 76% of adults globally now have an account at a bank, other financial institution, or with a mobile money provider, up from 68% in 2017 and 51% in 2011. Importantly, growth in account ownership was evenly distributed across many more countries. While in previous Findex surveys over the last decade much of the growth was concentrated in India and China, this year’s survey found that the percentage of account ownership increased by double digits in 34 countries since 2017.
The pandemic has also led to an increased use of digital payments. In low and middle-income economies (excluding China), over 40% of adults who made merchant in-store or online payments using a card, phone, or the internet did so for the first time since the start of the pandemic. The same was true for more than a third of adults in all low- and middle-income economies who paid a utility bill directly from a formal account. In India, more than 80 million adults made their first digital merchant payment after the start of the pandemic, while in China over 100 million adults did.
Two-thirds of adults worldwide now make or receive a digital payment, with the share in developing economies grew from 35% in 2014 to 57% in 2021. In developing economies, 71% have an account at a bank, other financial institution, or with a mobile money provider, up from 63% in 2017 and 42% in 2011. Mobile money accounts drove a huge increase in financial inclusion in Sub-Saharan Africa.
“The digital revolution has catalyzed increases in the access and use of financial services across the world, transforming ways in which people make and receive payments, borrow, and save,” said World Bank Group President David Malpass. “Creating an enabling policy environment, promoting the digitalization of payments, and further broadening access to formal accounts and financial services among women and the poor are some of the policy priorities to mitigate the reversals in development from the ongoing overlapping crises.”
For the first time since the Global Findex database was started in 2011, the survey found that the gender gap in account ownership has narrowed, helping women have more privacy, security, and control over their money. The gap narrowed from 7 to 4 percentage points globally and from 9 to 6 percentage points in low- and middle-income countries, since the last survey round in 2017.
About 36% of adults in developing economies now receive a wage or government payment, a payment for the sale of agricultural products, or a domestic remittance payment into an account. The data suggests that receiving a payment into an account instead of cash can kickstart people’s use of the formal financial system – when people receive digital payments, 83% used their accounts to also make digital payments. Almost two-thirds used their account for cash management, while about 40% used it to save – further growing the financial ecosystem.
Despite the advances, many adults around the world still lack a reliable source of emergency money. Only about half of adults in low- and middle-income economies said they could access extra money during an emergency with little or no difficulty, and they commonly turn to unreliable sources of finance, including family and friends.
“The world has a crucial opportunity to build a more inclusive and resilient economy and provide a gateway to prosperity for billions of people,” said Bill Gates, co-chair of the Bill and Melinda Gates Foundation, one of the supporters of the Global Findex database. “By investing in digital public infrastructure and technologies for payment and ID systems and updating regulations to foster innovation and protect consumers, governments can build on the progress reported in the Findex and expand access to financial services for all who need them.”
In Sub-Saharan Africa, for example, the lack of an identity document remains an important barrier holding back mobile money account ownership for 30% of adults with no account suggesting an opportunity for investing in accessible and trusted identification systems. Over 80 million adults with no account still receive government payments in cash – digitalizing some of these payments could be cheaper and reduce corruption. Increasing account ownership and usage will require trust in financial service providers, confidence to use financial products, tailored product design, and a strong and enforced consumer protection framework.
The Global Findex database, which surveyed how people in 123 economies use financial services throughout 2021, is produced by the World Bank every three years in collaboration with Gallup, Inc.
Global Findex 2021 Regional Overviews
In East Asia and the Pacific, financial inclusion is a two-part story of what is happening in China versus the other economies of the region. In China, 89% of adults have an account, and 82% of adults used it to make digital merchant payments. In the rest of the region, 59% of adults have an account and 23% of adults made digital merchant payments—54% of which did so for the first time after the beginning of the COVID-19 pandemic. Double-digit increases in account ownership were achieved in Cambodia, Myanmar, the Philippines, and Thailand, while the gender gap across the region remains low, at 3 percentage points, but the gap between poor and rich adults is 10 percentage points.
In Europe and Central Asia, account ownership increased by 13 percentage points since 2017 to reach 78% of adults. Digital payments usage is robust, as about three-quarters of adults used an account to make or receive a digital payment. COVID-19 drove further usage for the 10% of adults who made a digital merchant payment for the first time during the pandemic. Digital technology could further increase account use for the 80 million banked adults that continued to make merchant payments only in cash, including 20 million banked adults in Russia and 19 million banked adults in Türkiye, the region’s two largest economies.
Latin America and the Caribbean saw an 18 percentage -point increase in account ownership since 2017, the largest of any developing world region, resulting in 73% of adults having an account. Digital payments play a key role, as 40% of adults paid a merchant digitally, including 14% of adults who did so for the first time during the pandemic. COVID-19 furthermore drove digital adoption for the 15% of adults who made their first utility bill payment directly from their account for the first time during the pandemic—more than twice the developing country average. Opportunities for even greater use of digital payments remain given that 150 million banked adults made merchant payments only in cash, including more than 50 million banked adults in Brazil and 16 million banked adults in Colombia.
The Middle East and North Africa region has made progress reducing the gender gap in account ownership from 17 percentage points in 2017 to 13 percentage points—42% of women now have an account compared to 54% of men. Opportunities abound to increase account ownership broadly by digitalizing payments currently made in cash, including payments for agricultural products and private sector wages (about 20 million adults with no account in the region received private sector wages in cash, including 10 million in the Arab Republic of Egypt). Shifting people to formal modes of savings is another opportunity given that about 14 million adults with no account in region—including 7 million women—saved using semiformal methods.
In South Asia, 68% of adults have an account, a share that has not changed since 2017, though there is wide variation across the region. In India and Sri Lanka, for example, 78% and 89% of adults, respectively, have an account. Account usage has grown, however, driven by digital payments, as 34% of adults used their account to make or receive a payment, up from 28% in 2017. Digital payments present an opportunity to increase both account ownership and usage, given the continued dominance of cash—even among account owners—to make merchant payments.
In Sub-Saharan Africa, mobile money adoption continued to rise, such that 33% of adults now have a mobile money account—a share three times larger than the 10% global average. Although mobile money services were originally designed to allow people to send remittances to friends and family living elsewhere within the country, adoption and usage have spread beyond those origins, such that 3-out-of-4 mobile account owners in 2021 made or received at least one payment that was not person-to-person and 15% of adults used their mobile money account to save. Opportunities to increase account ownership in the region include digitalizing cash payments for the 65 million adults with no account receiving payments for agricultural products, and expanding mobile phone ownership, as lack of a phone is cited as a barrier to mobile money account adoption. Adults in the region worry more about paying school fees than adults in other regions, suggesting opportunities for policy or products to enable education-oriented savings.
Entrepreneurship is flourishing— a key step toward tackling development challenges.
Alittle help. That’s what Koray Bahar needed.
In 2016, the Turkish entrepreneur founded Figopara, an online marketplace for small business loans. The platform would allow business owners to use pending invoices as collateral – a revolutionary idea in Türkiye – and see big banks compete for their business.
While the concept was sound, some Turkish lenders balked at joining a potentially disruptive platform. That’s when Bahar would mention that IFC was an investor in Figopara.
“We were the new guys. The IFC brand helped us a lot,” said Bahar, whose company now works with several major banks and serves 4,000 businesses. “It opened doors and the deals started turning.”
IFC’s backing of Figopara was part of a larger effort to support Türkiye’s technology scene, especially companies that have the potential to create jobs, funnel capital to small businesses, and tackle long-standing social and environmental problems. Since 2014, IFC has committed $95 million in venture capital funds that specialize in Türkiye and Eastern Europe, including $19 million since the start of the pandemic.
“Technology has the potential to make the lives of everyday people better,” said Ufuk Demirci, IFC’s global lead of venture capital funds. “That’s especially important in developing countries, like Türkiye, where it can democratize access to everything from bank loans to healthcare.”
A ways to go
Investments in Turkish startups have risen 10-fold in the last decade and the technology sector has seen the minting of several unicorns, companies worth $1 billion-plus. Those include delivery app Getir, which was valued at more than $7.5 billion following a funding round in mid-2021, Peak Games, which was acquired by Zynga in 2020 for $1.8 billion, and Trendyol, which was valued at $16.5 billion in 2021.
But capital remains hard to come by for many startups. From 2014 to 2020, venture capital investments in Türkiye were $48 per capita, according to market research firm PitchBook Data. In the United States, it was $2,253 and in Israel, $3,922.
That’s why IFC in recent years has focused on channeling money to entrepreneurs through Türkiye-focused venture capital funds. In 2020, the institution invested €15 million in a vehicle from Revo Capital that focuses on more established companies. In 2021, through its Startup Catalyst Program, IFC invested 2.5 million euros in a fund from 500 Istanbul, which targets early-stage startups. The idea is that those investments will help provide cash-strapped entrepreneurs with the funding they need to bring potentially game-changing ideas to market.
“No bank will listen to an early-stage startup. Five university students working out of their garage have no place to go,” said Sobhi Mahmassani, an IFC investment officer who specializes in venture funds. “Through investments in funds like 500 Istanbul we can reach hundreds of entrepreneurs and help set them on a path to success.”
One company that benefitted from IFC’s work is electronics retailer Anka Mobile. The Istanbul-based firm uses Figopara’s online service to convert pending invoices into working capital.
“Thanks to the service provided by Figopara, we can now access finance much faster,” said CEO Burcu Genç.
The middle-income trap
For years, Türkiye and its neighbours in Eastern Europe have leveraged low labour costs to become manufacturing and outsourcing hubs. But as they’ve become more prosperous, wages have risen and growth has slowed – the dreaded middle-income trap.
Technology is seen by many as a way for Türkiye to free itself from that and transition to a model of growth built on innovation.
That’s become increasingly important amid COVID-19. Since the start of the pandemic, a World Bank analysis found that 1.6 million people in the country have slipped into poverty.
“While growth has rebounded in the last year, the reality is that Türkiye needs to be thinking about how it can continue to be competitive over the long term,” said Arnaud Dupoizat, IFC Country Manager for Türkiye. “Embracing technology – and re-enforcing the whole startup ecosystem – is a way it can do that.”
Istanbul-based electronic payment provider Paycore is emblematic of that promise. Founded two decades ago, the company now reaches clients in 35 countries and employs more than 400 people. Its products include software that turns a tablet or phone into a point-of-sale device, a setup tailor-made for retailers.
“For businesses, including smaller ones, advanced technology leads to lower costs, better service quality, and increased production, all of which ultimately help create jobs,” said Ali Kancal, Paycore’s CEO. (Revo Capital owns 5 percent of Paycore.)
“Technology is also helping Turkish businesses expand their horizons,” said Kancal. “For companies in our region, it is opening up a global market.”
Success stories like Paycore are why IFC plans to ramp up its investments in the technology space in Türkiye, said Mahmassani.
“Getting involved with startups and venture funds is a way to have a large impact with a modest investment.”
Shared taxis, informal minibuses and other forms of paratransit are a popular way of getting around in Sub Saharan Africa (SSA), yet governments and development partners have little data on how these services operate. Urban transport practitioners traditionally rely on manual vehicle and passenger count surveys conducted at terminals and on vehicles to gain insights into public transport travel demands and operations. Most SSA cities cannot afford that kind of data collection, which is both expensive and time-consuming. This means city governments have a limited understanding of system characteristics and performance (frequency of services, on-time reliability, safety, etc.), and can only respond with ad-hoc, retroactive and small-scale interventions, if any.
In recent years,They also allow for rapid customization and variation in survey design. Building on this, several programs have leveraged mobile applications to collect data on urban transport in Sub Saharan Africa, mostly to create maps of paratransit and other urban transport services. These initiatives helped several cities get a more complete picture of their urban transport networks, but said little about how transit services were run.
So, how can we harness the power of mobile technology not just to map out transport services, but to improve the service itself? To answer this, the World Bank’s transport team, with the support of the Digital Development Partnership (DDP) and the Public-Private Infrastructure Advisory Facility (PPIAF), formulated a digital approach that applies mobile app-based data collection to transport operations diagnosis.
During 2021 – 2022, the team successfully conducted demonstration projects in Maseru, Lesotho and Gaborone, Botswana in collaboration with city officials and the local paratransit associations, gathering new data on the operational characteristics of their paratransit networks and offering each city a starting point for sector reform. Additionally, the team was able to demonstrate the field data collection to the local operators, effectively transfering this knoweldge to the sector. Here are some the key findings that emerged from this exercise:
- Paratransit users. Users in Maseru and Gaborone are mostly lower-income individuals. Female riders are disproportionately impacted by lack of security. Work is the dominant trip purpose, followed by education and personal trips.
- Governance and regulation: The public sector institutional environment is fragmented in both cities, with no clear locus of responsibility for public transport in either case. Paratransit regulatory oversight and budgeting for transport development fall under the purview of the central government in both countries. In the majority of cases, cities tend to issue permits for new services in response to operators’ requests, regardless of whether there is true demand for the additional services.
- Operations and service quality: Both cities have the paradox of extensive minibus networks at the cost of limited operating hours, poor accessibility, and low frequency. There is no network planning, no fare regulation, and no system in place to define the roles of minibuses vs. shared taxis or determine which mode is better suited to each corirdor/market. This results in excessive service overlaps and destructive competitive behaviors (see illustration of network duplication below). In Maseru, 4+1 sedan taxis—which carry up four passengers and one driver—have overtaken the minibus market in recent years. The large number of shared taxis plying the roads mean lower passenger loads, which in turn results in lower productivity for the 4+1’s and worsening traffic congestion.
- Fleet: The paratransit fleet is well beyond the manufacturer’s useful life, minibus vehicles averaging 18 years of age in Maseru, and 16 years in Gaborone. They are also poorly maintained and polluting, with an adverse impact on road safety and air quality.
- Infrastructure and facilities: The infrastructure and facilities that support the system, such as roads or transit terminals, are in dire need of improvement. Neither city has developed city-wide infrastructure supportive of public transport as the preferred transport mode. The road infrastructure needs in Maseru are more pressing. Maseru’s feeder roads are largely unsurfaced. This has a significant impact on safety and operating costs due to higher rates of wear and tear.
In Maseru and Gaborone, mobile app data collection provided a low-cost, practical and efficient way to deepen our understanding of the complex paratransit operations . This work has allowed us to identify priorities for improving urban transport operations in these two cities, including: developing road infrastructure and transit facilities that are convenient, accessible, clean, safe, and secure; rethinking regulations to improve safety and comfort, better matching supply and demand; implementing data technologies such as tracking to guide transport reform; exploring capital subsidies to support fleet renewal, including the consideration of electric vehicle technology.
With this diagnosis, the governments in Lesotho and Botswana now have a solid basis of data-driven evidence to initiate meaningful conversations with the sector and its workforce on how to transform the paratransit business model and how to do this in a more collective way. This could take the form, for instance, of a business improvement project for a limited number of operators to prove the business case. The methodology and approach from the Bank team can be replicated in other cities across Africa and beyond.
The report can be downloaded here: https://openknowledge.worldbank.org/handle/10986/37301
ITU DataHub is the world’s richest source of internationally comparable digital technology statistics and regulatory information.
The International Telecommunication Union (ITU) has launched a new data platform featuring some 200 statistical indicators on digital connectivity, trust, markets, governance, sustainability, and affordability.
The ITU DataHub offers an intuitive, mobile-friendly interface complete with country and regional profiles and data tables, allowing users to quickly find, view, compare, and download statistics on all aspects of information and communication technologies (ICTs).
“Industry and governments alike depend on rich, reliable data to drive effective ICT decision-making,” said ITU Secretary-General Houlin Zhao. “ITU’s increasingly accessible global statistics will contribute to achieving a sustainable digital transformation based on meaningful connectivity for all.”
Intended to support evidence-based policy- and decision-making, the new platform will help ITU Member States, industry players and other stakeholders identify gaps, priorities, and opportunities in the accelerating global digital transformation. It will also help to assess the effectiveness of past and ongoing policy interventions to close the digital gap, with 2.9 billion people worldwide still offline.
Doreen Bogdan-Martin, Director of ITU’s Telecommunication Development Bureau, added: “Our new ITU DataHub highlights the richness of the extensive data collected by Member States around the world, as well as by ITU directly.”
Multi-dimensional data set
A third of the indicators offer disaggregated data, such as by gender, location, or technology. Many indicators are also reported with different units of measurements. In total, the DataHub hosts over 1,700 distinct time series.
Additional features, including charting and analytical tools, enhanced shareability and download options, and thematic pages, are to be introduced over the coming months.
Please share any feedback and suggestions on the ITU DataHub with the ITU Indicators team (email@example.com).
Resources and background information:
Link to the platform: https://datahub.itu.int/
On 24 June 2022 the WCO Council endorsed the revised versions of the Framework of Standards on Cross-Border E-Commerce (E-Commerce FoS) and the Technical Specifications to the FoS resulting from the first periodic review of the Framework and the tools that support its implementation and form part of the WCO E-Commerce Package.
The periodic review that started in January 2021, after the completion of the E-Commerce Package, confirmed the relevance of the key principles on which the E-Commerce FoS is based, namely: Advance Electronic Data and Risk Management; Facilitation and Simplification; Fair and Efficient Revenue Collection; Safety and Security; Partnerships; Public Awareness, Outreach and Capacity Building; Measurement and Analysis; and Leveraging Transformative Technologies.
As a result of the review, a new standard on data quality has been included in the E-Commerce FoS, and reinforcing language has been inserted in the existing standards on risk management for facilitation and control, and advanced technologies and innovation. The technical specifications for these standards have also been expanded. Certain annexes to the Technical Specifications have been enhanced based on practices and experiences shared by Members.
Furthermore, the Council endorsed the 3rd edition of the Compendium of Case Studies on E-Commerce. Ten new case studies have been added to the Compendium bringing the total number of case studies to thirty-four. Other updates in the third edition include the addition to Section II of a reference table on the different revenue collection models, as well as updates by Members to some of the case studies provided for the previous editions of the Compendium.
The Compendium of Case Studies on E-Commerce supports the WCO membership with practical examples of how individual Members address priority issues such as the exchange of advance electronic data, facilitation, safety, security and revenue collection (including de minimis levels). The information included in the Compendium can supplement the annexes to the Technical Specifications dealing with Reference Datasets for Cross-Border E-Commerce and Revenue Collection Approaches.
The revised versions of the above-referred documents are now publicly available in English and French on the dedicated section of the WCO web-site.
More Information : E-Commerce Package
Despite certain advances in the scope of women entrepreneurship in France, the latter remains far from the ideals of gender parity. To accelerate the progress, La Poste France breaks the silos and lends its hand to the most creative and impactful start-ups across the country.
According to a 2021 report by French firms EY and France Digitale, just 12% of digital start-up founders in France are women. The report, Social and Economic Performance of French Digital Start-ups Barometer 2021, surveyed more than 780 participants in France in 2020 and 2021. It also found that only 11% of respondents’ CEOs are women – up from 9% in 2018.
The reported noted that even with this upward trend for women CEOs as well as an increase in the overall parity among employees – 43% were women, versus 36% in the previous edition – more still needs to be done to support female digital entrepreneurs in France. One company seeking to do just that is the French postal operator, La Poste.
For the past three years, La Poste, along with its key partners, has run the #FemmesduNumérique Coups de Coeur awards, which are aimed at women entrepreneurs who have an innovative digital project or a digital service solution.
According to Vanessa Chocteau, Director of Transformation and Start-up Co-Innovation at La Poste, the awards “encourage women to realize their projects, by making them visible and by obtaining the first financing.” They also act as “a first step towards entrepreneurship,” she added.
La Poste’s communications department launches and monitors the award campaign each year. Women entrepreneurs are encouraged to put forward their ideas, after which La Poste’s innovation team brings in its expertise and works with its ecosystem of more than 100 partners to go through all the entrants. A shortlist is then drawn up, which includes two entrants from each region in France. The public is then asked to vote for the overall winner – the “Coups de Coeur”.
“Finally, KissKissBankBank [a collaborative platform for funding innovative projects] assists in setting up the financing campaign on its crowdfunding platform,” Chocteau added.
This year, there were 13 award winners and one “Coups de Coeur,” which went to Laurence Havé, who created the Stand Me App. This application helps patients with cancer to practice physical and cognitive activities, according to Chocteau. Every award winner received €2,000 and the “Coups de Coeur” received €4,000.
Looking at the reasons behind the selection of these particular winners this year, Chocteau explained, “They are impact-driven innovations – all the chosen digital solutions have a positive impact on society, economy, and the environment.”
For La Poste, one of the key benefits of running such an awards programme is that the winning start-ups could end up being future partners of the company. “If detected and supported at the earliest opportunity, the projects can turn into solid companies and future partners of our Group,” said Chocteau. “They can then be supported by our other programmes for entrepreneurs and open innovation.”
One of those other programmes is La Poste’s business accelerator project, French IoT. French IoT supports start-ups at a more advanced level of maturity than those in the Coups de Coeur awards. The programme assists them with market launch and growth.
“Every year since 2015, we have selected around 15 start-ups for the French IoT programme,” Chocteau said. “They then follow a six-month programme meant to boost their project alongside experts with bootcamps, coaching and workshops. They develop business and investor connections to help develop their business and create more value. They also take part in the most popular innovation events within our Group.”
According to Chocteau, the French IoT project is a win-win for both La Poste and the start-ups. “Our ambition is to co-develop with the start-ups new digital useful services to answer the challenges of our society. The Group brings in its power and the start-ups – their agility. Together, we create value. Since 2015, we have had more than 30 active partnerships, with 14 projects currently under test, from around 110 accelerated start-ups. There have been more than 260 workshops led by experts and 180 hours of individual coaching and mentoring. Furthermore, today there are more than 300 start-ups who are part of the French IoT community, a pool of innovation for La Poste Group and its partners.”
The French IoT programme is also focused on economic empowerment of women, just like the Coups de Coeur awards are. “For the past three years, we have selected as many start-ups created by women as by men [within French IoT]. Thanks to the implementation of this parity goal, we have gone from 9% of start-ups created by women to 50%. We are proud of this progress, which promotes the leadership of women in the digital sector,” concluded Chocteau.