18 Feb 2020

The Bangko Sentral ng Pilipinas (BSP) and the Philippine Government recognize digital payments as a policy priority to enable Filipinos to seize the opportunities of the digital revolution.

The Philippines was a global early-mover in digital payments, with the launch of mobile money in 2001. However, as in most countries, the path to widespread adoption and usage has not been straightforward. The first Better Than Cash Alliance diagnostic on the state of digital payments in the Philippines (released in 2015) found that adoption had been limited. The first diagnostic estimated that the share of digital payments in the Philippines was only about 1% by volume (26 million out of 2.5 billion payments per month).

Recognizing that digital payments are an enabler and driver of digital transformation, the BSP set a target of driving the share of digital payments to 20% by 2020. The BSP considers that 20% could be the tipping point, after which the country could expect faster growth in digital payments. The BSP further set out a vision for modernizing the retail payment system, pushing a number of significant regulatory reforms. In turn, the Philippine Government has led by example, becoming the most digitized stakeholder in the ecosystem, with 64% of all government transactions carried out digitally.

Originally published on BTCA’s website


18 Feb 2020

Confirming the positive socioeconomic impact of solar home systems over a longer period of time, Powering Opportunity in East Africa. Proving Off-Grid Solar is a Power Tool for Change finds:

  • An overwhelming majority (94%) of people living with solar home systems reporting improvements to their quality of life.
  • 34% of households report being more economically active with 28% making an additional $46 per month on average.

The research, funded by UK aid from the UK government, and conducted by Altai Consulting, was based on data collected from over 1,400 small-scale pay-as-you-go (PAYGo) solar owners in Kenya, Mozambique, Rwanda, Tanzania and Uganda who owned their solar home system for ca. 15 months.

Originally published on GOGLA’s website


10 Feb 2020

Fintech is being adopted across markets worldwide – but not evenly. Why not? This paper reviews the evidence. In some economies, especially in the developing world, adoption is being driven by an unmet demand for financial services. Fintech promises to deliver greater financial inclusion. In other economies, adoption can be related to the high cost of traditional finance, a supportive regulatory environment, and other macroeconomic factors. Finally, demographics play an important role, as younger cohorts are more likely to trust and adopt fintech services. Where fintech helps to make the financial system more inclusive and efficient, this could benefit economic growth. Yet the market failures traditionally present in finance remain relevant, and may manifest themselves in new guises.

Originally posted on BIS’ website


03 Feb 2020

Digital credit has been instrumental in granting formal credit in ways that were not conceivable a decade ago. It has provided individuals with the tools to manage their day-to-day needs and working capital for small enterprises. Survey data reveals that over six million Kenyans have borrowed at least one digital loan. Beyond these daily use-cases, digital credit is increasingly used to finance non- routine needs such as school fees and pay for healthcare. However, while there are any bright spots, expanding access is just the first step towards realising the potential of credit to create long-term sustainable value.

The expansion of digital credit and the proliferation of digital lenders has increased attention to wider consumer protection issues. Pricing continues to be a concern, even in the presence of market infrastructure that mitigates part of the risk inherent in lending decisions. Access to infrastructure, such as credit information sharing, is disparate across lenders. Data privacy and ownership is starting to emerge as a concern. The absence of an overarching regulatory framework means anyone can lend. When credit is easy to access without safeguards, cases of debt stress begin to surface. Inevitably, there have been growing concerns to regulate the sector with concerns that some of the gains made are being eroded. However, regulation is frequently misrepresented as simply being about restricting what market actors can do. Often, carefully crafted regulation can actually support effective market function.

Research and analysis can play a role in generating a clear case for policy action, providing ex post evidence for success or the need for change in a regulatory area.

Originally posted on FSD Kenya’s website


23 Jan 2020

With the rise of digital technologies, the use of personal data by private companies is growing rapidly. But how do we know they will use this data responsibly and in consumers’ best interests? In emerging and developing markets, the question is particularly acute because the predominant model rests upon obtaining consumer consent to use their data. Informed consent, however, is unrealistic given the complexity of disclosures and particularly so in countries where there are literacy, language and technological barriers. It’s time for a new approach to digital privacy and protection. To safeguard the interests of billions of consumers, many of whom are coming online for the first time and opening up digital financial services, CGAP has identified three key ways for countries to better protect their citizens, especially the poor. The new approaches would shift the burden of responsibility off the shoulders of consumers and onto the data collectors and users.

Originally published on CGAP’s website


23 Jan 2020

Inclusive and robust identification systems can offer many concrete benefits for governments, as well as individuals, private companies, and development partners. By providing a secure and accurate way of identifying the population, these systems can facilitate the delivery of a wide variety of services that expand financial inclusion, boost economic opportunities, improve access to social safety nets, increase gender equality, and more. In addition to these developmental uses, evidence suggests that strong identification systems have the potential to generate savings and revenue for the public sector, to the tune of millions of dollars per year (or even billions for larger economies). To date, however, our understanding of the full fiscal impact of identification systems is limited due to the scarcity of publicly available data and the methodological challenges associated with quantifying and attributing the effects of these systems. This paper is a first step toward filling this gap. Using the experiences of a handful of countries where data are available, it attempts to summarize existing case studies and build a framework for analyzing the potential fiscal benefits associated with investment in identification systems, including the features, mechanisms, and conditions that may generate (or limit) savings and revenue. In addition to aggregating existing knowledge and developing an analytical framework, this paper also provides a Guide for Practitioners with concrete steps to assist governments and other stakeholders when estimating expected savings and revenue from investment in identification systems. In order to conduct a full cost-benefit analysis, readers are encouraged to consult a complimentary World Bank report on the cost of identification systems (World Bank 2018d) and a companion paper on the financial benefits of these systems for the private sector (World Bank 2018c). We hope that these resources will not only broaden the evidence base and tools available to implementers, but will also encourage practitioners and researchers to undertake more rigorous evaluations of the impact of identification systems on public finances and the broader economy.

Originally posted on World Bank’s website. See additional ID4D publications here.


23 Jan 2020

Starting with microcredit in the late 1980s, there has been a growing movement of multilateral institutions, private foundations, non-profits, corporations and governments that aims to provide formal financial services to low-income market segments around the world. This movement is largely motivated by the conviction that access to financial services reduces poverty. Over time, the focus of this movement has shifted from microcredit towards encouraging access to a wider, more comprehensive range of financial services, including savings, payments and insurance. There is also a growing emphasis on digital finance – the use of modern information and communication technologies (ICT) to help improve the quality and convenience of financial services, while lowering the cost of acquiring and servicing often isolated customers whose income streams support only relatively small or infrequent transactions.

Kenya has become both a posterchild and focal point of this movement. Today, mobile money is a key pillar of the country’s financial infrastructure and is central to commerce, household finance and innovation. Largely as a result of mobile money and later banking services offered on mobile phones through partnerships with mobile money operators, financial inclusion has grown at an astonishing rate of over 9.4 percent per year from 27 percent in 2006 to 83 percent in 2018. And as a share of GDP, banking system deposits increased from 30 to 44 percent between 2000 and 2016.

While there is a growing body evidence on the individual or household-level impacts of the adoption of specific financial products by low income population segments in Kenya, what is less clear are the wider economywide spill-over effects generated by the activity of a larger financial sector, rapid financial innovation and greater financial inclusion, in particular the effects on labour productivity and sustained long-run growth. While poverty reduction is often cited as the key goal of financial inclusion investments, sustained economic growth isn’t often explicitly mentioned as a means to that end, although a key finding of development research is that growth is one of the most effective ways to pull people out of poverty.

This paper proceeds surveys theories of economic growth and describes different facets of Kenya’s own recent growth experience, economic complexity and technology landscape using publicly available data and contrasts Kenya’s experience with of a group of comparison countries. Secondly, it examines the theoretical and empirical links between the financial sector, technological change and growth; provides an overview of key development in Kenya’s financial system and tries to unpack how those developments connect to the growth trajectory described in the first section.


23 Jan 2020

The Financial Health Network, the nation’s authority on financial health, in partnership with Flourish, MetLife Foundation, and AARP, has released the U.S. Financial Health Pulse 2019 Trends Report.  Now in its second year, this year-over-year analysis of peoples’ financial health found that despite a strong economy, only 29% of people in the U.S. are financially healthy.  As signs of a looming economic downturn increase, this indicates that the majority of Americans are still unprepared for short or long-term financial shocks.

Originally published on the Financial Health Network’s website


23 Jan 2020

World Economic Outlook reports are surveys by the IMF staff usually published twice a year. They present IMF staff economists’ analyses of global economic developments during the near and medium term. Chapters give an overview as well as more detailed analysis of the world economy; consider issues affecting industrial countries, developing countries, and economies in transition to market; and address topics of pressing current interest.

As of January 2020, global growth is projected to rise from an estimated 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent for 2021—a downward revision of 0.1 percentage point for 2019 and 2020 and 0.2 for 2021 compared to those in the October World Economic Outlook (WEO).

Originally published on IMF’s website


22 Jan 2020

International funders committed an estimated US$47 billion in 2018 for financial inclusion, a 12 percent increase from the prior year, signaling that financial inclusion plays a vital role as an enabler of many Sustainable Development Goals (SDGs). A third of international funders responding to the CGAP Funder Survey have been purposefully aligning their financial inclusion efforts to the achievement of the SDGs. Many international funders also are committing to help close the SDG funding gap, but it is important that their financial inclusion efforts should crowd in private capital where it is needed.

Originally published on CGAP’s website