Governments, the private sector and international organisations should focus on increasing digitalisation to improve the lives of people and speed up economic recovery from the coronavirus pandemic, a prominent economist from Kenya and an official from the International Monetary Fund said in a joint blog post.
“The pandemic crisis presents the greatest opportunity to enhance the lives and livelihoods of citizens," Patrick Njoroge, a former IMF official and the current governor of the Central Bank of Kenya and Ceyla Pazarbasioglu, director of the strategy, policy, and review department at the IMF, said. "Governments, the private sector, international organisations and citizens must take up the challenge of increasing digitalisation and dare to make a difference."
The economists made three recommendations to boost digitalisation across the world. First recommendation is to place people at the centre of the global financial system, connect citizens to mitigate the digital divide and strengthen the governance of global digital financing platforms.
“Over 700 million people lack broadband connectivity, while over a billion lack formal identification. Countries must invest in digital infrastructure and digital identity so their citizens can access online services. Coupled with that, there has to be investment in numeracy and financial literacy. International co-operation will be needed to support these efforts,” they said.
Mr Njoroge and Ms Pazarbasioglu are also part of the United Nations Secretary-General’s Task Force on Digital Financing of the Sustainable Development Goals.
“The so-called Big Techs are transforming the delivery of services globally including in developing countries. Covid-19 has accelerated this trend as they get more entrenched in everybody’s lives. However, developing countries have not been at the table when the governance of these platforms is discussed,” they said.
“One of the taskforce’s key initiatives is the dialogue on global digital finance governance, that seeks to facilitate a balanced and more inclusive dialogue, particularly involving developing nations, on better aligning Big Tech governance to the sustainable development goals.”
The two economists also said digitalisation in the past few years enabled developing countries in particular “to leapfrog on financial inclusion”. Countries like Kenya, Ghana, Rwanda and Tanzania have made great advances in connecting their citizens to financial systems by leveraging mobile phone technology, they said.
As the pandemic swept through the globe, policymakers also took emergency measures to support and facilitate digital activities, officials said.
The Central Bank of Kenya waived charges and expanded the limit for low-value mobile money transactions, which led to a significant increase in both value and number of transactions, mostly of $10 or less, “helping to cushion the most vulnerable households, and attracting more than 1.6 million additional customers”.
In Rwanda, all charges were waived in March and by the end of April 2020, the weekly value of all kinds of mobile money transactions increased by 450 per cent from pre-pandemic levels.
Businesses have also moved quickly to leverage the power of digital technology. In China, Ant Group partnered with more than 100 banks to launch the Contactless Loans initiative to help small and medium enterprises recover from Covid-19.
