EXCLUSIVE INTERVIEW

Would you like to tell us how UNCDF work and activities specifically touch upon e-commerce and the digital economy?

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

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

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

What type of support do you offer on digital payments?

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

• Through the “Leaving No One Behind in the Digital Era” strategy, UNCDF provides a mix of targeted policy, financial and technical support to a range of stakeholders to overcome these barriers in LDCs.

• We also address key policy and regulatory impediments in partnership with central banks and ministries. At the same time, we work intently with banks, mobile network operators, payment service providers, microfinance institutions, fintech companies and the companies that use their services to help them design, to ensure that the benefits of the digital revolution are experienced by those who need it most. A growing part of our work is to support companies in becoming more customer centric and innovative in how they provide or use digital finance and payments.

According to your organization, what are the key challenges that developing countries will have to tackle in order to fully reap the benefits of e-commerce and digital transformation?

UNCDF champions inclusive digital economies and digital finance solutions that leave no one behind and help advance the Sustainable Development Goals. In 2023, it supported policy and regulatory reforms to enable digital economies, and the piloting and scaling up of private-sector-led digital and financial services that benefited millions of people and thousands of micro-, small and medium-sized enterprises. 

In the Pacific in 2023, UNCDF in partnership with UNDP and UN Trade and Development (UNCTAD) supported 12 innovative solutions in the areas of digital finance and digitally enabled climate and disaster risk insurance. 

However, to fully reap the benefits of the digital economy and to ensure e-commerce or other services in energy, education, health or agriculture can blossom, a number of challenges still need to be addressed. 

Policymakers in least developed countries (LDCs) face formidable challenges in navigating digital transformation. Often working with limited resources and underdeveloped infrastructure, they struggle to gather the necessary data and insights to drive effective policy decisions. This lack of actionable information results in fragmented efforts and missed opportunities to create inclusive digital economies. As a result, many communities remain disconnected from the benefits of the digital revolution, exacerbating existing inequalities.

What prompted UNCDF to join a multi-stakeholder partnership such as “eTrade for all” and what are your expectations out of it?

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

Is there something else you would like to share with the eTrade for all community?

Towards developing data for better decision-making on digital transformation, UNCDF implemented the HYPERLINK "https://ides.uncdf.org" Inclusive Digital Economy Scorecard in 25 countries in 2023. The scorecard identifies market barriers and supports governments in setting priorities for inclusive digital development with public and private stakeholders. Since its inception in 2019, the scorecard has helped 120 government agencies and other stakeholders to track digital transformation and design digital strategies and policies. Scorecard data have informed 17 draft and 10 enacted policy actions, with 10 countries officially adopting the scorecard as their official digital transformation measurement tool. UNCDF is seeking contributions from partners across the industry as well as the UN to improve the tool while making it a useful reference to all stakeholders. We are thus looking forward to receiving input from the eTrade for all community as we progress and expand the scorecard to more countries.